India's Star Wars

Rupert Murdoch's Star cable network's entertainment, movie and sports channels are among the most popular in the burgeoning Indian market. Star News is the No. 2 Hindi news channel in India and its market share is growing.

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Last week, though, Star News was making headlines rather than broadcasting them. Murdoch was suspected by Information and Broadcasting Ministry officials of sidestepping a government rule intended to keep foreigners from controlling local media. The issue is a regulation passed earlier this year requiring that news broadcasters be 74% Indian-owned. When Star News launched in 1998, it bought its programming from New Delhi Television (NDTV), an Indian-owned company, working out of a state-of-the-art production center in a converted movie theater in New Delhi. Murdoch bowed out of that partnership in April, and Star News says its content is now produced by a majority-Indian-owned company called Media Content and Communication Services (MCSS). Star admits MCSS has paid-up capital of only $2,200 and its 200 staff members draw their salaries from Star News advertising revenue. The production equipment has come from "another company," says Yash Khanna, senior vice president of corporate communication at Star News.

Star says it's obeying the law and simply suffering the wrath of jealous competitors. "The attack by our fellow Indian media groups has been triggered by our success," says Khanna. "The channel is home to some of India's most experienced and respected journalists." Indian regulators have sent Star a list of 37 questions about that domestic arrangement. Star News' license to uplink from India is now being renewed one week at a time.