Star's previous plans to increase its stake in Tata Sky were dropped initially on the grounds that the acquisition appeared to contravene existing cross media ownership rules, and possibly foreign ownership regulations. However, Star always maintained that it would continue to seek ways to go ahead with the acquisition. Star currently has a 20 per cent direct stake in Tata Sky - the maximum permissible limit for foreign direct investment. Its acquisition of a 49 per cent stake in TS Investment and the subsequent acquisition of a 20 per cent stake in Tata Sky by TS Investments will see its ownership in Tata Sky reach 29.9 per cent. However, Star has argued that under revised foreign investment rules introduced by the government last year, investments made by companies that are majority owned and controlled by Indian companies would not be counted towards the limit.

A second more crucial stumbling block to the acquisition was cross media ownership regulations. Regulations introduced last year state that broadcasting companies and channel operators are not allowed to hold more than a 20 per cent stake in distribution platforms, and vice-versa. However, the regulators define a broadcaster or channel operator as an entity that owns an uplink or downlink licence in India. This apparent loophole appears to have been exploited by Star, as its 20 per cent stake in Tata Sky is through two offshore entities - Netherlands-registered Star India BV and its Dubai-based subsidiary NDDS - neither of which own uplink or downlink licenses. The government's approval of Star's increased investment now throws into question the effectiveness of existing regulations, and the level of separation that can be maintained between broadcasters and distribution platforms. Now that a precedent has been set by the government, it is safe to assume that more firms are likely to use the loophole to circumvent existing laws.

Star's acquisition of an additional stake in Asianet is a further interesting development, though not completely unexpected. News Corporation owner Rupert Murdoch has long indicated his interest in expanding further into the high-growth regional-language television sector, having acquired a majority stake in Jupiter Entertainment, the parent company of Asianet Communications, in late 2008. Asianet Communications owns and operates general entertainment channels in all four southern Indian states, and is a competitor to regional powerhouse Sun TV group. During the economic crisis, regional language majors escaped the crisis relatively unscathed, while national channels saw significant declines in advertising revenues.