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NEW
DELHI: Most stakeholders in the broadcasting sector are in
favour of raising the foreign investment limits to 74 per
cent. They also feel there should be no separate sub-limits
for foreign institutional investment or foreign direct investment
(FDI).
Responding
to a Consultation Paper on the subject issued early last month
by the Telecom Regulatory Authority of India (Trai), a majority
of the 15 respondents are also of the opinion that the FDI
should be at par with the telecom sector.
Of
the respondents, only Zee, Reliance, Bennett Coleman’s
Times Now and Zoom and one representative of a consumer group
opposed any move to increase the foreign investment to 74
per cent.
Those
who have responded are: Bharti Airtel Limited, BITCOM-INDIA,
Hathway Cable & Datacom Private Limited, IndusInd Media
and Comunications Ltd, NDTV Ltd., NDS Asia Pacific Ltd., Ortel
Communications Limited, Reliance BIG TV Ltd., Times Global
Broadcasting Company Limited, Zoom Television Ltd, and Zee
Networks Ltd. among the companies. The individual respondents
consisted of Deepak Dahiya (advocate), Gopala Krishnan (of
Mobile2win India Private Limited), Kumar Sanu (singer) , and
Liyakat Ali (representing Upbhogata Margdarshan Samiti).
Most
respondents feel that the foreign investment limits (both
FDI and foreign institutional investor) should be standardised
throughout the entertainment industry, with restrictions,
if any, only on news channels as it is a sensitive issue and
requires security clearances, etc.
The
multi-system operators (MSOs) particularly feel that if the
cap on similarly placed alternative distribution platforms
like DTH (currently 49%) and Headend-In-The-Sky (no policy
yet) is being hiked to 74 per cent, the cable TV sector should
also be treated at par.
"There
shouldn't be a Mumbai Club like situation. Just because DTH
has not penetrated well, it shouldn't be the reason for giving
them a 74 per cent FDI leeway. We are subsidising digital
set-top boxes. If we don't raise capital, where will we go?
Besides, there is no restriction on essential commodities
like cement and steel," said Hathway Cable & Datacom
MD and CEO K Jayaraman while participating in an open house
discussion on this issue organised by Trai in Mumbai on Friday.
Jayaraman
also pointed out that the FDI should be extended to the last
mile operator. "If local cable operators form a group,
they should have the opportunity to raise FDI and compete,"
he said.
Agreed
Cable Operators & Distributors Association (Coda) president
Ganesh Naidu. "If DTH gets 74 per cent FDI and cable
doesn't, it will be very unfair. DTH is a competition to us
and they will take away our subscribers," he said.
Indusind
Media & Communications Ltd (IMCL) supports a raise to
74 per cent across the board as it would create a level-playing
field for all players.
Ortel,
a leading MSO in Orissa, feels there should be a clear distinction
between "Carriage Services" and Content Services."
Carriage services should have increased FDI. From present
49 per cent it should increase to 74 per cent initially and
after observing impact on growth and security for few years,
it may be increased to 100 per cent.
Bharti
Airtel, which will be launching its DTH and IPTV service,
feels no classification is required of Broadcasting Sector
into Content Services and Carriage Services for fixing different
foreign investment limits. "There should be parity between
content and carriage service within the broadcasting sector
except News Content Service which is a sensitive area in view
of national security and thus a conservative foreign investment
limit is tenable," Bharti said.
Further elaborating, Bharti said: "We feel that in the
long run all artificial barriers in terms of FDI restriction
can be removed both for Telecom and Broadcasting sectors.
However, in the short run, it may not be practical in view
of the sensitivities pertaining to national security etc.
Therefore presently, the foreign investment may be restricted
to 74 per cent in the Broadcasting Sector as is applicable
in Telecom. It is imperative that in view of the growing convergence
of technologies, the limits for foreign investment in both
Telecom and Broadcasting Sector are kept at par."
Zee
Network, however, believes that there shouldn't be any revision
in the foreign investment levels to 74 per cent, but be retained
at 49 per cent (FDI+FII) in services such as Cable TV, DTH,
Teleports and be also extended to new media services such
as IPTV and Mobile TV.
"Mere
increase in the FDI cap is not going to bring additional/new
investment in this sector. In this context, it is pertinent
to point out that at present the cable sector is totally un-organized
and fragmented. There is neither any transparency in the system
nor any well-defined revenue share mechanism at each stage
of the distribution chain because of lack of transparency,"
Zee said.
The underlying rationale for restricting FDI in media sector
both at content creation and carriage level is to prevent
the foreigners from gaining management control of the media
entities. "It is a well known fact that media plays a
very crucial role in shaping public opinions. Through skilful
presentation of news and views in a particular manner, the
electronic media can manipulate viewers mind. Giving controlling
stake in a media business whether in content or in distribution
platform to the foreigners may lead to the danger of gradual
manipulation of the public views and ultimately can destroy
the delicate fabric of composite culture, value system and
secular nature of the country," Zee said.
Fearing that FDI would wipe out the livelihood of last mile
operators, Cable Operators Federation of India president Roop
Sharma believes the government should play a supportive role
in form of providing technical education and loans from institutions.
"Nobody should forget the view of the last mile operator,"
she said.
Reliance
does not feel there is need to revise the FDI limits for DTH,
HITS and Teleport services, particularly as the competition
is emerging in the distribution of satellite TV channel market.
"Therefore we propose that foreign investment limits
in case of Teleport (Hub), DTH, HITS, Mobile TV and Cable
TV should be limited to 49 per cent," it said.
Reliance feels that foreign investment limits in case of FM
radio and satellite radio should be revised to 49 per cent
and the Ministry of Information and Broadcasting/TRAI should
review the foreign investment policy in case of Radio/ TV
channels news /current affairs for raising the foreign investment.
Satellite radio operators should be subjected to payment of
license fee of 4 per cent of gross revenue and entry fee equivalent
to entry fee paid by a FM radio operator (calculated for all
India on pro-rata basis) for each channel.
In the private FM radio sector, the government has proposed
a hike in the FDI limit from 20 per cent to 24 per cent. For
satellite radio, it has proposed a FDI cap of 74 per cent.
There is no policy as on date on satellite radio.
There
is sharp division on the issue of increasing the FDI cap in
news channels from 26 to 49 per cent as proposed by Trai,
with many respondents feeling that this is a crucial sector
involving national security and so status quo should be maintained.
Times
Now and Zoom do not want a change in the cap of 26 per cent
on news channels. "The reason why the foreign investment
limit for news channels (and Print media) has been capped
at 26 per cent is that the media has special obligations,
given its protected and privileged status under the Constitution,
under Article 19 (i) (a)."
Not in favour of a uniform foreign investment regime, Times
Now and Zoom say there is no need for change in any other
sector of TV broadcasting. Cable networks should remain at
49 per cent as this does not require huge amounts of capital
investment, and Indian companies are more than able to raise
these sums. Moreover, since cable operators are also allowed
to run their own cable channels (including news), there should
be no further hike in FDI for cable networks.
Times
Group applies the same argument for DTH and other broadcasting
infrastructure since unlike telecoms, the investments required
are not huge and can be amply raised by Indian corporates
including via the stock market or debt, without ceding control
to foreign interests.
NDTV,
however, wants the FDI limit for news and current affairs
channels to be hiked. "We propose that this limit be
increased to 49 per cent at the very least, if not higher.
The Uplink policies of the MIB already impose the terms under
which news channels can operate, including on hiring of Indian
nationals, etc. The increase to 49 per cent will not result
in management or editorial control passing to foreign entities,
but will make available sources of funding for the sector,"
NDTV said.
NDTV also said that the proposed limit of 24 per cent in FM
Radio is far too restrictive, and recommends increasing the
FDI limit to 49 per cent.
The
consumer group, Upbhogata Margdarshan Samiti, stated that
large-scale foreign investment can harm national interests.
Trai
had in its consultation paper on 3 March sought stakeholders'
suggestions on the series of FDI caps proposed by the government.
Tra had also put a query on whether foreign investment limits
should be raised to 100 per cent to permit companies incorporated
in India but with 100 per cent foreign holding to provide
broadcasting services in the country, with appropriate monitoring
mechanism in place coupled with content regulation through
programme and advertising codes.
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