| In the end, it looks as if the double burden of not
having a presence on the most powerful cable and satellite network,
Star as well as on the terrestrial network Doordarshan, proved too
much for HLL.
The sticking point till now on the issue of the eight per cent
service tax has also been resolved in Star's favour, it is learnt.
Star officials have not commented on this aspect however, except
to say that the negotiations that had been going on since 1 August
have finally reached a satisfactory conclusion.
As reported in the Economic Times, it was over the service
tax issue that HLL lost the sponsorship rights to the India-New
Zealand-Australia cricket series starting 8 October. When DD first
signed the deal with the sponsors, unlike other private channels,
it was exempt from service tax. But in late July, the government
issued a circular that henceforth Prasar Bharti will also be subjected
to the tax with retrospective effect from 1 April.
DD, which has exclusive telecast rights of the series for India,
immediately directed its three main sponsors — Pepsi, Hero
Honda and Lever — and five associate sponsors — Perfetti,
Castrol, Maruti, Pidilite and LG — to cough up the eight per
cent service tax over and above the Rs 42.5 million and Rs 32 million
that the main sponsors and the primary sponsors, respectively, had
individually paid.
While others paid up, HLL refused to play ball. It was after this
that DD cancelled HLL’s sponsorship rights.
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