Star TV/Zee Tie-Up Seen in India

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New Delhi, India -- Two media titans are expected tofurther meld their Indian programming assets, according to high-level sources on bothsides of the negotiations.

Indian media company Zee Telefilms, headed by SubashChandra, has been offered a 50 percent stake in New Television India (NTVI), Zee sourcessaid. NTVI is the local marketing arm of Star TV, the pan-Asian programmer owned by RupertMurdoch's News Corp.

Under the proposed deal, Zee would take over managementcontrol of Star's Indian channels -- Star Plus, Star News and Star Movies -- andreceive a management fee from Star, according to a senior Zee source.

However, a senior source at Star indicated that Star andZee could proceed directly to a merger, although no time frame was specified.

Star and Zee already have established corporate links. NewsCorp. and Zee are joint partners in Asia Today Ltd., a Hong Kong-based company that ownsthree Zee-branded Indian channels.

For Star, either deal would provide considerable leverage-- courtesy of Chandra's local clout -- in an unstable media-regulatory environmentthat could grow increasingly unfriendly to foreign players. There is also speculationabout a possible tie-up between Star and Zee in direct-to-home distribution.

And the deal would bring increased leverage to the businesssides of Star and Zee, both of which have posted strong ad-revenue growth over the pastyear, a Star source said.

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