Time Warner said on Thursday that next year would be critical in the war for supremacy in India’s prime time pay television market, as the country becomes a battleground for the largest US media groups.

Time Warner, which formally announced a $126.5m deal to take over Hindi general entertainment channel NDTV Imagine, expects the deal to boost its India revenue by 40 per cent as it takes on the market leaders, Viacom’s joint venture, Colours, and News Corp’s Star.

“With the fight for the nights that we’ve seen for the past year or two, the kind of hegemony that Star used to enjoy in the past decade is long gone,” said Sameer Nair, chief executive officer of NDTV Imagine, which broadcasts reality TV shows and soaps. “It’s an open battle and I think 2010 is going to be quite a defining year for everyone.”

India’s foreign ownership regime in the broadcast media sector is liberal compared with rivals such as China, making it an ideal target for US broadcasters seeking to tap Asia’s growth.

The second-largest pay-TV market in the world by subscribers after China, India has become the most important country for News Corp’s Asian regional business. It is also the biggest revenue earner for Turner, the Time Warner division which operates channels such as Cartoon Network, Warner Brothers and Pogo in India as well as CNN under a franchise agreement. The India operations generate 25 per cent of Turner’s Asia-Pacific revenues, a figure that is expected to rise to 35 per cent once NDTV Imagine’s sales are incorporated. But India’s television market, particularly the general entertainment genre, is highly competitive following the launch of a swathe of channels over the past two to three years.

Turner’s initial foray into Indian general entertainment with Real, a joint venture with local company Miditech, has failed to get off the ground in terms of ratings, leading the two companies to “reassess” their partnership.

The partners are in negotiations on Real’s future that are expected to be completed by the first half of next year, Steve Marcopoto, president, Turner Broadcasting System Asia-Pacific said on Thursday.

Under the deal with NDTV, Turner will invest $50m into NDTV Imagine, which will continue to be run by Mr Nair.

The channel is ranked about fifth by television ratings – behind the top three, Colours, Star and local channel Zee – and is losing about $10m-$15m a quarter, according to analyst estimates.

“The question is: if you’re not in the top three, are you anywhere?” said Vivek Couto, executive director at Media Partners Asia. “Yes you can hold the fourth and fifth spots, but can you make money?”