Former creative allies Star TV and Balaji Telefilms [Get Quote] are now going to battle it out in the southern entertainment broadcasting market.

After the dramatic end of the Star-Balaji proposed joint venture -- formed to launch regional channels -- Balaji has signed a content deal with leading southern broadcaster Sun Network, wherein the production house will exclusively produce content for channels such as Udaya TV, Sun TV [Get Quote], Gemini TV and Surya TV.

Confirming the development, Balaji Telefilms Chief Executive Officer R Karthik said, "We have decided not to launch regional channels in partnership with anyone. Instead, we have spoken to the Sun Network to provide them with exclusive content for their channels. As and when they have the required time slots, they will air our shows," he said.

Balaji's move will set the battleground between Star and Balaji as the Murdoch company is believed to be partnering with Kerala-based broadcaster Asianet for its regional foray. Star's plans with Asianet is the main reason for the Star-Balaji joint venture not taking off. Star is looking at leveraging Asianet's strong regional presence and its distribution network, which reaches out to around 60 countries across the globe.

The proposed joint venture between Star and Asianet will house Asianet's entertainment channels Asianet Plus in Malayalam and Asianet Suvarna in Kannada. That apart, the partners will launch a Telugu channel.

Star has been wanting to foray into the regional television market for a while now and has a Tamil channel Star Vijay. Its aborted 51:49 JV with Balaji was to launch entertainment channels in Telugu, Kannada and Malayalam. Balaji also bought over the 26 per cent stake held by Star in Balaji Telefilms.

Balaji had an 'exclusivity contract' with leading Hindi broadcaster Star Plus according to which Balaji could not produce shows for other television broadcasters during the time band that it showcased its soaps on Star Plus.

In turn, the channel paid Balaji a premium which was almost 200 per cent higher than what other production houses charged. Post the Star-Balaji fallout, the exclusivity agreement was not renewed.

However, in the Sun-Balaji case, the production house cannot command a premium considering that Sun Network operates on a sponsored model as opposed to the traditional commissioned model that other broadcasters follow.

In a sponsored model, the production house pays the channel to air its shows. Industry estimates that the half-hour slot price varies depending on the broadcaster's popularity and leadership position of the channel in a particular market. For instance, a half-hour telecast slot on Sun TV Network could cost around Rs 180,000 prime time on a Tamil channel while on a Kannada channel, it could cost Rs 80,000.

Also, in case of a sponsored model, the production company also earns ad revenues during the serial's telecast. Ad slots on regional channels are substantially lower than the tariff on Hindi general entertainment channels.

For a 10-second slot, the rates are in the range of Rs 6,000-20,000, while the Hindi general entertainment channel is between Rs 20,000 and Rs 300,000. A production company could earn between Rs 25,000 to Rs 100,000 per episode margin on a leading network in case of a sponsored model.