Balaji Telefilms is now entitled to buy back the shareholding itself, or sell it to a third party, for an aggregate price of $4.35 (Rs190) per share.
The two companies are also ending their agreement, signed in April 2007, relating to the launch of joint venture regional-language channels.
However, the relationship between Star and Balaji Telefilms (BTL) as broadcaster and content provider will not be affected, according to a statement.
'The content supply agreements between the two for various shows produced by BTL will be modified to remove the restrictions imposed upon BTL relating to exclusivity on certain prime time slots', the statement said. Six shows produced by BTL current air on the Star Plus channel in India.
Rupert Murdoch said earlier this month that he planned to invest $100m to launch six regional TV channels in India via Star.
BTL also produces feature films through its 100% subsidiary, Balaji Motion Pictures, and has produced and distributed Hindi-language films such as Shootout At Lokhandwala, Sarkar Raj and Bhool Bhullaiya.