Star has option to take majority in JV firm with DEN

Star Group has the option to take, from January 2010, majority control of the distribution company it set up with DEN Networks Ltd. If Star decides to exercise this option of acquiring an additional one per cent stake, DEN will then have the right to sell its entire stake in the joint venture company to Star. Currently, Star and DEN have equal stake in Star Den, the joint venture company set up in early 2008. Star will get to purchase at a 20 per cent discount to the fair market value of such interest. "Star also has the right to hike its 50 per cent stake in the joint venture by one per cent in case there is a default from us," a source in DEN says.

Star has the right to exercise its option to up the stake within a 30-day window once a year. "The joint venture agreement contains certain non-competition provisions. In addition, the agreement sets out certain funding and contractual obligations, including performance targets for Star DEN that we are required to meet," the source in DEN adds. Star DEN currently has the exclusive right to distribute 23 television channels, including the entire Star and Disney group of channels to providers of various television distribution platforms, such as cable TV, DTH and IPTV, in India, Bhutan and Nepal. It also distributes select Network18 channels, the Times Group channels and MGM. For the fiscal ended March 2009, DEN's consolidated revenue stood at Rs 7.19 billion and it incurred a net loss (after minority interest) of Rs. 151.13 million. Star DEN contributed 51.11 per cent of DEN's consolidated revenue for FY'09. The joint venture also helped DEN reduce its loss after tax by 11.86 per cent on a consolidated basis.