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Broadcasting bill: In a soup - Views on News from Equitymaster
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  • Nov 27, 2000

    Broadcasting bill: In a soup

    The media sector has laid a lot of store on the Broadcast Bill after the recent legislation on the Direct to Home (DTH). The basic hope is that the regulatory framework would facilitate the process of establishing the Direct to Operator model. This would imply that the cable operator becomes a mere distributor and there is an underlying shift in the revenue model in favour of the broadcaster.

    However, the players themselves would also have to adjust to new regulations. For instance, the 1997 Broadcast Bill (which was brought in by the United Front government and lapsed after the government fell) laid restrictions on the ownership of broadcasting companies, the extent of cross media holdings and made it compulsory for all of them to uplink from India. Most of the players would actually be glad to comply with compulsory uplinking since this would facilitate rupee advertising. (All the broadcasters have to be paid by the advertisers in foreign exchange currently and this restricts the smaller companies from advertising on satellite channels.)

    Restrictions on. Foreign ownership Cross media holding Number of licenses Uplink from the country
    Doordarshan Govt owned NA NA Yes
    Star Plus News Corp stake to be
    restricted to 49%
    NA Stake in Hathway &
    foray into DTH needs review
    Will have to uplink
    from India
    Zee Network Subhas Chandra
    owns 66%
    Restrict stake in Asian Age Stake in Siticable will
    have to be sold
    Already plans an
    uplinking facility
    Sony Columbia Tristar's
    stake restricted to 49%
    NA NA Will have to uplink
    from India
    Sun TV Indian ownership None Stake in Sumangali Cable
    Vision would have to be sold
    Will have to uplink
    from India
    Eanadu TV Indian ownership Owns a regional newspaper;
    will have to divest stake in
    Eeanadu to 20% or less
    NA Will need to uplink
    from India

    However, whether they would be happy on the restrictions of license, one is not sure. This condition implies that each broadcaster can have a license (sounds familiar?) for only one media vehicle. Thus some one like Zee or for that matter Sun TV would have to choose between owning a stake in the satellite channel or their cable ventures viz. Siticable and Sumangali Vision respectively.

    Also, Star and Sony would be required to bring down the stake of their promoter groups (News Corp and Columbia Tristar respectively) to 49%. While the companies do require funds for expansion in India, whether they would do it via an Initial Public Offering remains to be seen.

    Though the necessity of a restriction on foreign ownership could be argued, specially keeping in mind the fact even Star TV and MTV (owned by Viacom) had to localise content to succeed in India the fact remains that it still remains unpalatable for the politicians. Also, this could lead to calls for allowing foreign ownership in the print media. And that would ruffle a few feathers too!



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