"Murdoch reduces his participation, but it is participationin an asset that has greater potential. It is smart and it pays," Richard Read, senior analyst at Credit Lyonnais Securities in New York, said. The joint ventures involved in the deal include Zee TV, Zee News, Zee Cinema and Siticable. The total value of the deal is about $300 million -- half in cash, half in Zee Telefilm stock.

"India is proving to be a difficult market for non-Indian entities to launch television networks. Acombination of some dramatic regulatory shifts and enormous levels of piracy, with cable television wires strung through trees, has made it very difficult to establish a strong presence," Chris Dixon, PaineWebber media analyst, said. The deal leverages Star TV's experience in India and at the same time aligns it with one of the primary producers and suppliers of products in "Bollywood," one of the most prolific movie industries in the world, said Dixon.

Star TV, Asia's leading satellite TV broadcaster, was established in 1991 and became a wholly-owned subsidiary of News Corp in 1995. Its channels provide both subscription and free programming to over 300 million people in 53 countries in Asia, India and the Middle East.

The deal also makes financial sense, analysts said. "It's a good number for News Corp," said Dixon about the purchase price. Media industry sources who spoke to Reuters earlier Friday in Asia were meanwhile mixed in their impressions of the deal. While some analysts said Zee made a gooddeal by having to pay Murdoch what they considered a relatively small sum, others said Zee may have overpaid based on concerns that among media holdings, broadcasting is a relatively risky investment.

"The valuations appear to be a little stretched," said Devina Mehra, director research at First Global Finance. Mehra also voiced concern over a recent move by Zee's Subhash Chandra, to fold his own private media holdings into the public company he heads.