Sun18 can commence operations; gets temporary relief from Bombay High Court

In a fresh development related to the Sun18 and MSM Discovery row, the newly formed distribution venture between Network18 Group and Sun Network is free to commence operations. It's because as of now, Bombay High Court has refused to grant any order in favour of MSM Discovery. However, the matter has been posted for hearing on August 17, 2010.

This announcement comes in the wake of a recent petition filed by MSM Discovery against Viacom18 in Bombay High Court, where it was argued that Viacom18 terminated its three-year-old distribution deal with MSM Discovery midway.

In fact, Viacom18 has initiated legal action against MSM Discovery before the TDSAT (Telecom Disputes Settlement and Appellate Tribunal) for damages, material breaches, misrepresentation and under-reporting of subscriber base.

Viacom18 has claimed Rs 127 crore as damages from MSM Discovery. The interim application has been kept for hearing before the TDSAT on July 21.

Rajesh Kaul, president, MSM Discovery, refused to comment on the matter, since it is sub-judice.

Earlier, MSM, operating under OneAlliance, had entered into a pact with Viacom18 to distribute the latter's general entertainment channel, Colors. As per the agreement, both parties also agreed to renew their contract, whereby MSM Discovery would distribute the other three channels of Viacom18 -- MTV, Nick and Vh1 -- effective from April 1, 2009.

As per industry reports, OneAlliance had agreed to pay a minimum guarantee (MG) of Rs 3 billion over three years as part of the agreement.

Commenting on the possible reasons for Colors parting ways with MSM Discovery, an industry observer, on condition of anonymity, points out, "Since the channel went pay from April this year, the management believes that by aligning with regional leader, Sun Network, it can negotiate a better deal at higher prices."

The media expert stresses that with a bunch of its sister channels under the Viacom18 banner, Colors, coupled with Sun Network's vast bouquet of regional channels, will form a formidable offering in the marketplace. This would enable the channel to enjoy clout with distributors, and thus, command higher prices.

As far as the breach of contract with MSM Discovery is concerned, people related to the development state that there are certain clauses for termination and breach of contract included in the original contract agreed upon by both the parties, which will be suitably examined in the court of law before arriving at any decision.