New DELHI, May 17: As Star TV's mega $ 450 million direct-to-home (DTH) venture is waiting to take-off in India, Rupert Murdoch's effort of establishing a global media network has suffered a set-back.

Echo Star Communications Corp, which was to provide News Corp (owner of Star TV) with a satellite foothold in the North American market, is now planning to sue News Corp for breach of contract.

According to a Reuter report,Echo Star has alleged that News Corp has violated the terms of an agreement, the two companies had signed earlier, by dropping its plans for picking up a 50 per cent stake in the former. As per terms of the agreement News Corp was to make a payment of $ one billion in cash and asset to Echo Star in order to obtain 50 per cent equity-holding.Echo Star has also alleged that because of News Corp's failure to meet its obligations, including a $ 200 million loans, it can no more fulfill its business plans.

The company has said that Echo Star would seek damages worth over $ 5 billion in order to cover damages resulting from News Corp's material breaches of contract. The venture between the two companies was to offer up to 500 channels of digital TV, internet services and local broadcast TV signals to the US market.According to US media analysts in case News Corp waits for its own satellite to be launched its efforts of becoming a major player in the North American Digital TV market might be seriously undermined.Analysts are also expecting that News Corp would try and woo another satellite company Prime Star. However, 50 per cent stake in Prime Star is held by the Time Warner Inc, owner of CNN, due to which News Corp's effort of getting any foothold in its satellite may not be entertained.

Significantly, Star's Indian DTH plans have so far been stalled by the Ministry of Communication notification dated December 19, which banned reception of broadcasting in frequencies above 4800 MHz without a valid licence issued to that effect. Till the Broadcasting Law is enacted in the country there is little possibility that Star would be able to initiate its DTH venture in India.

Further, most of the highly placed officials in Star TV, India, have dismissed the possibility of its DTH venture becoming a major money-spinner in a short duration after its launch.