Star TV halts Indian dotcom funding

By Staff and wire reports

MUMBAI, India (CNN) -- Star TV, the Asian satellite broadcaster of Rupert Murdoch's News Corp., is withholding $100 million in second round investment for dotcoms in India.

During a visit to India last year, Rupert Murdoch announced a wave of News Corp. investments to target the Indian market, including a $200 million package for local Net-based ventures.

But shaken by the crumbling valuations of Internet ventures worldwide, the chief executive of Star TV's Indian operations told reporters in India its $100 million investment cache would be put on hold.

Consolidating its investments

Star chief executive Peter Mukerjea told India's Economic Times that the company is halting its $100 million in investment funds originally targeted for Indian Net firms Bazee.com, IndiaProperties.com and Explocity.

In its first round of Indian net investments that is estimated to be around $100 million, Star claimed stakes ranging from 26 to 40 percent in at least six firms. Star-invested dotcoms include Indya.com, Bazee and IndiaProperties.

Star is not selling its stakes to recoup its investments. Rather, the satellite broadcaster is consolidating its properties into the Indya.com portal.

"There was no point selling our sites," Mukerjea told the Economic Times. "We would not have got very much."

Analysts are not surprised that Star TV is backing out of the loss-making sector.

"Star TV is a huge success in India… but the (Internet) business will take a much longer gestation period," said one Mumbai-based analyst who covers India's broadcast sector.

"Star is trying to focus on broadcasting while rationalizing funding for new ventures. The environment has changed since last year, and this a reflection of that."