MURDOCH Vs CHANDRA: INTERNET BATTLELINES ARE BEING DRAWN

Two media magnates are gearing up for an online battle. One has left his imprint in most parts of the world. The other is without parallel in his country - India. In fact, he has given his global baron partner a run for his money in the television business and is today dictating what he can do in the Indian market, by stalling his DTH and further localisation plans.

The two men in question, no prizes for guessing right, are Zee TV supremo, Subhash Chandra and News Corp caliph Rupert Murdoch. Last week the latter got into a joint venture with Japanese software giant and one of the biggest internet bank rollers Softbank to help invest and facilitate the entry of US firms into India and Britain, New Zealand, and Australia. And it was last week that Chandra made his announcement that he was setting up a new media venture called E-Connect (see interview below) in partnership with his managing director Vijay Jindal. The new firm will sashay into every segment of the online business- be it banking, e-commerce, portals, access, content, technology development, Internet access via cable, satellite and via copper lines. It will function as a driver for Chandra's Internet gambit.

And it is here that Chandra and Jindal will run head to head in competition with Murdoch and Softbank. Because Murdoch is quite likely to try and make inroads into the Indian Internet market. The ISP policy states that foreign investment in ISPs is to be restricted to 49%. This could come as a bit of a hurdle for his suddenly-found-enthusiasm for the Internet. Murdoch has a huge cash trove, which he is hoping to invest - $50 million in all, through the new jointly-held firm E Ventures. And there's a lot more moolah which he and Softbank CEO Masayoshi Son can pump in.

There's little information on how much Chandra is willing to pour into the new media company. Figures range from Rs 500 million to Rs 2,000 million. But he has got Mumbai stock market financers, his own resources and financial institutions behind him. Last week he managed to raise a Rs 700 million loan for his Rs 1,570 million digital television bouquet from leading financial institution ICICI. Currently, a pilot project is on in Bangalore to launch cable delivered Internet through Siticable. Chandra is pinning his hopes on these tests to get him into the fast lane of the Internet access business, oodles of cash in the hi-tech city, and the rest of the country thereafter.

The only hitch here is that Murdoch is an equal partner with him in the lynchpin of his television business, the cable TV operator, Siticable. However, Chandra has said that Murdoch will have to match him dollar for dollar that he invests in Siticable or see his equity stake dwindle. He told investment analysts exactly this last month as though it was a foregone conclusion that the Ozzie-turned-American's stake would go down. Morever, Murdoch will have to perforce accede his holding to Chandra to below 49% if Siticable is to offer Internet access in keeping with the ISP policy.

Of course, Murdoch can find ways to get around equity restrictions as he has done for his television ventures by setting up partnership companies overseas which could then invest in India. But then it's quite likely that Murdoch is tiring of the tardiness the broadcasting business as far as regulations are concerned. Hence, he may well continue as just an investor or venture capitalist for his new forays in the Internet medium.