Star will seek buyers for the 26% stake in Balaji that it has owned for four years. Balaji's founders are entitled to buy back the shares now valued at 3.2 billion rupees ($74.3 million).

Early last year Star and Balaji announced plans to launch regional- language channels in South India, but progress was slow and the pair ended that deal Monday.

Balaji will continue to supply TV content to Star, though the separation will mean that some primetime exclusivity terms in their contracts will be altered. There are six Balaji shows on air via Star Plus. On a visit to India earlier this month News Corp. supremo Rupert Murdoch announced that the company would invest $100 million launching six regional channels (Daily Variety, Aug. 5). Three of these channels will be in the Bengali, Marathi and Gujarati languages.

It is an open secret that Star and Fox are close to announcing a joint initiative in India's growing film production business initially focused on making Hindi-language movies.

The Star-Fox plan could also include distribution, creating a slate of Indian and Hollywood movies that work in the country's growing multiplex circuits and have the built-in marketing muscle of Star's 17 Indian TV networks.

Although ratings have been eroded by myriad new channels, Star continues to be the country's dominant paybox.

News Corp. is also understood to be looking at ways to expand its digital and mobile presence in India and is seeking greater collaboration between Dow Jones Newswires and Star.

Balaji, which supplies 1,600 hours of drama per year to many competing TV congloms, says it will also benefit from the separation.

Balaji will be "able to cater to the wider needs of the high-growth Indian broadcasting industry. (Balaji) is also exploring strategic initiatives in various other segments of the Indian media and entertainment industry," said Balaji managing director Shobha Kapoor.

The Balaji joint venture was one of the first moves unveiled by Star's incoming CEO Paul Aiello in April 2007.

Venture was to be 51% controlled by Star, with Balaji paying a reported $14.2 million to buy into Star's Tamil-language Vijay channel and a Telugu channel to be launched at the end of the year. Further bows in Kannada, Malayalam and other languages were to have been started within two to three years.

© Reed Business Information, a division of Reed Elsevier Inc. All rights reserved.

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