The general entertainment channel wars are hurting the mass entertainment conglomerates hard. Mint reports Star India, a News Corp (NYSE: NWS). subsidiary, is mulling divesting 25.9% of its stake in K-Serial konglomerate Balaji Telefilms. The reason is a strain on the exclusivity agreement between Star and Balaji since Balaji now has many more buyers with the new channel launches.

Balaji is a clear leader in the TV software segment, estimated at Rs 25 billion, with a 11% market share. In a market with over 6,000 production houses, over 60% of the pie is captured by the small-medium sized ‘Others’ segment with a small but profitable sliver occupied by Balaji, UTV and others.*

Balaji’s K series of serials (Kyunkii Saas Bhi Kabhi Bahu Thi and Kahani Ghar Ghar Ki amongst others) defined prime time for Star Plus and propelled it from being a laggard to a market leader. The exclusivity arrangement, according to Mint, refers to no Balaji show running on the same time bands as a Balaji show on Star Plus. Eros and ADAG are slated as suitors vying to buy Star’s stake in Balaji. Balaji however has first right of refusal if Star was to sell stake and may buy back its own equity.

Star had purchased 21% stake in Balaji for Rs 123 crore in 2004 and subsequently followed it with an open offer to raise stake to 25.4%, pegging the value at an approximate Rs 325 crores.

Balaji content created for Star also includes online and mobile distribution rights.

Balaji has also had its own ambitions including it taking its production house international, starting with the Middle East and Dubai specifically. The Kapoor family run firm (the family together holds 40% stake), headed by Ekta Kapoor, has to its credit the longest running soaps on Indian television, which still occupy a top 5 berth amongst the most watched serials on TV today. (Un)Fortunately, the impending launch of Reliance’s TV effort as well as another 80 channels this year has put enormous pressure on production houses to churn out clutter breaking content. Another alternative which Balaji can explore is launching its own properties like another recent production house, BAG did, with the launch of their own TV and online properties, News 24 and E 24.

*Note: Statistics on the production market segment have been gleaned and verified from multiple industry sources who wish not to be named