TV ratings: Ownership & FDI questions

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By Vishaka Chakrapani Posted on : 14 Jan 2014 06:54 am

MUMBAI: To have foreign direct investment (FDI) in TV ratings or not, that is the question. And the recently-cleared TV ratings guidelines by the Cabinet Committee of Economic Affairs (CCEA) have brought this to the fore by their silence on this score. While announcing that the CCEA had given the go ahead to the ministry of  information and broadcasting (MIB) last week to the Telecom Regulatory Authority of India (TRAI)-recommended  guidelines for a regulatory framework for TV ratings in India,  minister Manish Tewari had this to say.
 
“In so far as FDI is concerned we would make a separate reference to TRAI with regard to the quantum and need of FDI that should be permitted in ratings agencies. After the TRAI recommendations, the question of allowing FDI would be looked at. So as we speak, no FDI will be permitted in TV ratings agencies till we don’t have a recommendation on it."
 
Although the 2013 recommendations do not have any mention of FDI, it is noteworthy to point out that TRAI's 2008 consultation paper on TV ratings does. The paper says that stakeholders feel that FDI should be restricted to 20 per cent in a TV ratings agency.  It also goes on to suggest that since no security issues were involved and little or no competition was prevailing (only two agencies existed at that time – TAM and aMap  and no regulation existed), that it would be okay of no if no FDI limit was imposed.  "Generally FDI encourages world class technology and international best practices," TRAI had stated in the paper.
 
So even as the TRAI was of the opinion that FDI was all right in 2008, in 2013 it gave the issue an ignore. Currently FDI limits for broadcasters are 100 per cent  for non-news and current affairs channels, for news channels 26 per cent, for cable TV 74 per cent, for DTH 49 per cent, for print 26 per cent for general news etc.
 
Tewari stated that the question of FDI would be looked at after the TV ratings guidelines are notified by the ministry. Could the earlier recommendation of 20 per cent work as a guideline today? Or is the government going to be averse to FDI totally?
 
Let us take a look at the other major guideline of cross holding in the TV ratings provider. The guideline states very clearly:  ‘No single company/legal entity either directly or through its associates or interconnect undertakings shall have substantial equity holding that is, 10 per cent or more of paid up equity in both rating agencies and broadcasters/advertisers/advertising agencies.’
 
If one looks at the holding pattern of Mediametrie - the French ratings agency - which is soon to be announced as the Broadcast Audience Research Council's (BARC's) ratings partner,  France Televisions holds 22.89 per cent equity in it, TF1  10.8 per cent, Radio France 13.5 per cent and Union des Annonceurs 11.77 per cent.
 
France Televisions in turn owns 49 per cent of TV5 Monde while AEF (formerly called France Monde) that runs France 24 owns 12.6 per cent of France Televisions. Quite a convoluted holding structure, but clearly one where broadcasters could be owning more than 10 per cent equity in the TV ratings provider.
 
However, BARC officials are quick to clarify that it is BARC which will be providing the ratings and not Mediametrie. The latter is only a technology supplier and ratings are being outsourced to it. It owns no equity in the ratings company which is BARC. Hence, the question of more than 10 per cent equity ownership by broadcasters in Mediametrie is irrelevant and there will be no violation of TRAI's guidelines, they emphasise.
 
BARC, on its part is a non-profit organisation under section 25 of the Companies Act, with nominated representatives from the Indian Broadcasting Foundation, Indian Society of Advertisers, and Advertising Agencies Association of India. In a response to TRAI's consultation paper, BARC had stated that even though the three may have conflicting interests in the ratings process, its articles of incorporation clearly state that "each has an equal voice in the design, and monitoring of the rating system, and in the administration of BARC, irrespective of the funding pattern."
 
TAM, on the other hand, has woes on both fronts as it not only does not comply with the FDI guidelines it also is has issues on the cross holding guideline as it is owned jointly by the WPP group and AC Nielsen. It is even listed on the WPP site as one of its companies.
 
The key question that everyone is asking at the time of writing is whether TAM Media will move court against the guidelines, as they have come into force so many years after it has been operating in India with the equity and cross holding structures that it has. Or will it give up the fight and pack up just like Coca-Cola did in the seventies, when the government ordered it to reduce the FDI in it to 40 per cent.

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