DTH operators to challenge I&B Ministry’s notice on arrears

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By indiantelevision.com Team Posted on : 27 Mar 2014 04:53 pm

NEW DELHI: Operators of private direct-to-home (DTH) platforms, who recently received a notice from the government with regard to licence fee dues amounting to Rs 2,066 crore, plan to challenge the notice on the ground that the matter is subjudice and is pending in the Supreme Court.
 
However, the DTH Operators Association of India is yet to decide whether the challenge will be in the form of a reply to the Ministry or an application in Court.
 
According to the notice sent earlier this week, the six private operators have been asked to pay the amount within fifteen days.
 
However, most of the operators contacted by indiantelevision.com said they had cleared the dues of licence fee.
 
The operators say the licence fee as demanded under the rules is on gross revenue (GR) whereas they have been asked to pay the fee on the basis of actual gross revenue (AGR). The operators have said the fee should be only on subscription revenue and not on allied earnings such as dividend and interest income.
 
When the operators insisted that they had been paying the licence fee on the GR, the government went to the Supreme Court on the issue and the matter has been pending for the past four years and is now expected to come up early next month.
 
However, Information and Broadcasting Ministry secretary Bimal Julka told indiantelevision.com that the Ministry was justified in sending the notices since the apex court had not levied a stay order in the matter. Asked about possible action after 15 days, he said this would be done according to the provisions of the licensing rules.
 
Tata Sky MD & CEO Harit Nagpal said that the demand of Rs 2,066 crore is the differential between the GR and the AGR.
 
He also said that I&B Ministry had itself asked the Finance Ministry to reduce the fee from 10 per cent to six per cent but the latter had not taken a decision on this so far.
 
According to the notices sent to the operators, Dish TV has to pay Rs 625 crore while Tata Sky has been told to pay Rs 620 crore. Airtel Digital TV has to pay Rs 298 crore, while Sun Direct has to clear Rs 230 crore. The Videocon-owned d2h has to pay Rs 157 crore while Reliance Digital TV has to pay Rs 136 crore.
 
While DTH companies provide for 10 per cent licence fee on overall revenue in their profit and loss account, they pay less (only on subscription revenue net of content cost) at about five per cent of overall revenue. The rest is booked as a provision in the balance sheet, along with applicable interest.
 
As of 31 March 2013, Dish TV’s closing provision pertaining to regulatory dues (including interest) stood at Rs 653.66 crore.
 
Some of the DTH operators were hopeful that the Telecom Regulatory Authority of India would bring down the licence fee from 10 per cent to six per cent, as proposed by the I&B Ministry to the Finance Ministry. TRAI itself had recommended last year that the actual gross revenue should be brought down to eight per cent.
 
Meanwhile, the Parliament was told in April last year that the six private DTH operators paid Rs 307.8 crore as licence fee to the government for the year 2011-12, compared to Rs 177.8 crore in 2010-11 and Rs 126.2 crore in 2009-10.
 
The revenue in 2008-09 was Rs 89.3 crore from four operators, since both Airtel Digital TV (Bharti Telemedia) as well as Videocon d2h (Bharat Business Channel) had not commenced services.
 
The other DTH players are Dish TV, Tata Sky, Sun Direct TV, and Reliance Big TV.    
 
Under the agreement with the government, the platforms pay a non-refundable entry fee of Rs 10 crore and an annual fee equivalent to 10 per cent of its gross revenue every financial year. Thus, the platforms have paid Rs 60 crore as one-time entry fee.
 
According to figures furnished in the reply to the Parliament, Tata Sky paid licence fee of Rs 79.3 crore in 2011-12 as against Airtel Digital’s Rs 61.87 crore and Dish TV’s Rs 30 crore. Sun Direct paid Rs 36 crore, Reliance Big TV paid Rs 9.5 crore, and Videocon d2h paid Rs 5 crore.
 
DTH services are governed by the DTH guidelines and terms and conditions issued by the I&B Ministry on 15 March 2001 and amended from time to time.    
 
The seven DTH players in the country including Doordarshan’s free-to-air Freedish cover around 3.5 crore TV homes. Freedish currently has 59 slots including 22 of its own and which it hopes to increase to 97 by the end of this year and ultimately to 250 slots over the next two years.

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