Indian operations formed 95% of WorldSpace biz.

Madhumathi D.S.

K. Giriprakash

Bangalore, Jan. 6

Two weeks after satellite radio pioneer WorldSpace abruptly tuned out of Indian homes on New Year's eve, its 300-odd employees (including 150 part-timers on contract) in the country continue to clutch at straws of hope, of getting their final settlement dues.

Sources say parent WorldSpace, Inc. or the new owner of its assets owe the Indian subsidiary around Rs 45 crore (which also includes around Rs 18 crore as subscription refund) by way of “services performed by it.” This includes sale of the special radio sets, production and programming of channels, royalty to music companies and the money they owe to subscribers. All the receivers were sourced from the BPL Group.

The ground and space assets of WorldSpace have passed on to a new owner, US-based media major Liberty Media. Liberty also has 40 per cent stake in the US satellite radio provider Sirius XM Radio - the merged entity of two players that were in the same business as WorldSpace in the US.

A top BPL executive, however told Business Line that WorldSpace does not owe any money to it as the receivers it manufactured were against orders. “We hardly have any sets (receivers) left with us,” he said.

Those left in the lurch are content creators, radio receiver sales personnel and administration staff. The tenancy of two adjacent rented offices of the company is due to expire any time.

“Until then, some of us keep meeting at the idling studios, where we once ideated,” a source there said. About half of the 300-strong India team included part-time RJs (radio jockeys).

Salaries have been paid until December-end, but as the operations have been closed abruptly, “We should get some compensation in the absence of the mandatory one-month notice as well as leave encashment and gratuity,” the source said.

One affected staffer said, “The employees of WorldSpace India are the worst affected because of this unfortunate decision. It is learnt that while Liberty Media and WorldSpace Inc, the US, have cleared employee dues and followed due processes in every other country, certain loopholes in the Indian legal system are being misused to escape from the responsibilities of orderly closure of the business affecting both subscribers and employees.”

The Indian operations formed 95 per cent of WorldSpace Inc's business and was promising to grow. When it closed, it had 1.5 lakh direct subscribers - who got their music at Rs 2,000 a year: which meant an approximate annual revenue of around Rs 30 crore from subscriptions alone.

Through a tie-up with Bharti Group, it got into another 3 lakh homes of AirTel DTH users, but at lower subscription rates. Bharti recently announced that it has dropped WorldSpace and replaced it with a bouquet of services from All India Radio.

WRONG SIGNALS

According to a staffer, “The WorldSpace India team was neither a party to the decision to close down the Indian operations nor was aware of this possibility till this decision was communicated to it (at the end).”

All through the uncertainty, the parent directed the management and employees in India to continue “business as usual”.

The Indian team was unaware of what was in store for it and even launched a new Christmas channel, Holly, the source said.

While operations of WorldSpace were being wound down globally, senior officials of Liberty Media were in touch with the India team and gave the impression that Liberty was keen on continuing with this region.

During September-October 2009, it also got due diligence done through at least one reputed Indian firm.

Finally, on December 24, the Chief Restructuring Officer appointed by Liberty said though the new owner was acquiring the satellite assets and technology related to the India operations, it was not keen on continuing the India operations; and gave the final word to shut down the same day.

A senior executive said, “With a little bit of funds infusion, the Indian operations could have been kept going. The team would like to continue operating and servicing its subscribers, but for that, we should get to use the WorldSpace transponder,” which is based on an encrypted system.

According to this person, “The employees in India continued operations in the ordinary course, being led to believe that the operations would be sold along with the assets as a going concern. Against all odds in these difficult circumstances, the India team did its best to meet the aspirations of the subscribers and spearheaded WorldSpace India to its best ever financial and business performance in the last 12 months. All along, no instructions were issued to WorldSpace India to stop the sales of the receivers and subscription packs of WorldSpace Inc., and the service agreement was still in force.”

WorldSpace brought satellite radio broadcast to the country around 2000, at a time FMs were making the radio fashionable once again.

The US-based WorldSpace Inc, (later rebranded 1worldspace, except in this country) was running radio broadcasts on multiple channels through its subsidiary WorldSpace India Pvt Ltd. The parent operated two regional satellites, AfriStar and AsiaStar, but went bankrupt and filed for protection under Chapter 11 of US laws in October 2008.

Related Stories:
WorldSpace files for bankruptcy in US
It’s business as usual for WorldSpace in India

(This article was published in the Business Line print edition dated January 7, 2010)
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