Rupert Murdoch's Star TV has chosen ABP, the Kolkata-based publishing firm, as its partner for its news operation in India.

The rival bidder, Nusli Wadia of Bombay Dyeing, was informed on Saturday. A formal announcement is expected in a day or two.

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ABP will pick up 74 per cent of the equity, with Star holding the remaining 26 per cent - in line with the government's new rules for TV news companies.

Previous investors in a controversial dummy company with Rs 4 crore (Rs 40 million) equity, including Suhel Seth and Hemendra Kothari, will presumably be bought out.

ABP is expected to pay over Rs 75 crore (Rs 750 million) for its stake in the partnership, which places the Star News valuation, pre-investment, at about Rs 25 crore (Rs 250 million), and post-investment at Rs 100 crore (Rs 1,000 million).

The valuations for rival TV channels have been much higher in recent deals.

New Delhi Television, for instance, has sought government approval for investment by Stanchart, in a deal valued, post-investment, at approximately Rs 350 crore (Rs 3,500 million).

The equity investment stops well short of Star News' financing requirements.

The peak cash flow requirement before the channel achieves viability is expected to be around Rs 250 crore (Rs 2,500 million); consequently, there will be substantial debt incurred over the next four or five years, or fresh equity injection.

ABP will have a three-fourths majority on the board of the joint venture with Murdoch, and the company is expected to be board-run.

Wadia's bid is understood to have been capped at Rs 40 crore (Rs 400 million). Other bidders, including Hindustan Times Ltd, Bennett Coleman and the Hindujas, were not seriously considered.

ABP, which has so far been a pure print play, sees the investment in Star News as only the first in a series of acquisitions it plans in order to move into the electronic media and entertainment sphere.

On the cards, according to informed sources, are possible bids for FM radio stations and a foray into film production.

There has been speculation that the Ambanis of Reliance have offered ABP's Aveek Sarkar financial help in the bid, in their keenness to keep Nusli Wadia out.

ABP sources denied this and said the Star News investment would be funded out of the current year's profits.

If that is true, it makes ABP the second most profitable publishing company in the country - the first being Bennett Coleman - on a turnover of about Rs 400 crore (Rs 4,000 million).