Star TV-Nimbus distribution deal in Soup

Televisionpoint.com Correspondent
When the drama between Nimbus and the BCCI has settled down, the Star TV-Nimbus distribution deal is creating problems for the newly-christened cricket broadcaster Neo Sports. The deal was in trouble, as Star India is in discussion with Nimbus to revisit the minimum guarantee amount agreed upon by both parties. Apparently, Star which inked a Rs 1,000 crore deal with Nimbus last year for the next four years is looking at reducing the MG by Rs 400-450 crore.

The basis of the reduction is the culmination of various factors, the most pertinent being the government bill that has made it mandatory for private broadcasters to share feed of cricket matches with DD. With this clause, Neo Sports loses all its exclusivity of content, making it difficult for Star India to hardsell the channel on the ground. Secondly, when the contract was inked, Nimbus had priced both its channels, Neo Sports and Neo Sport Plus, at Rs 57.50, which was brought down to Rs 37.25 by the Telecom Regulatory Authority of India (TRAI).

"With all clauses revoked, it does not make sense for Star to continue with the same MG amount," says an source. MSO sources also said that Star had stop pushing Neo's boxes on the ground for the last three months and cable operators are also not keen to distribute the channel. The Star source also said that the last payment made to Nimbus by Star was in December, and that no payment had been made for the past four months. However, this information could not be confirmed.

Market information gathered states that Star India garners close to Rs 360-400 crore annually from distribution revenue, and Rs 40-50 crore revenue because of Neo Sports is too marginal an amount to continue with the deal with the current terms and conditions. The reduction of the MG amount or the deal falling apart will have serious repercussions for Nimbus. The Rs 400-crore reduction, if it happens will be a significant dent for Nimbus' distribution revenue, and moreover if the deal falls apart, Nimbus will be in lurch without a platform for its channel.

However, when contacted Star, a spokesperson said, "On account of the confidentiality of the contract, we will not be able to comment on the issue." Nimbus officials were not available.

The discussions at Star are being spearheaded from Hong Kong, and the outcome is likely to finalised by June. It must be noted that when the deal was struck, none of the above factors were taken into account, with exclusivity and the bouquet price, both significant drivers of the distribution deal.

Meanwhile, The Delhi High Court on Friday refused to grant Nimbus' request to restrain Tata Sky and Dish TV from broadcasting live the ongoing India- Bangladesh cricket series. The High Court is believed to have refused to grant a stay to the two direct-to-home (DTH) operators, and ruled that transmitting Doordarshan, which is also telecasting the matches, was not a violation of copyright.