[icernet] FDI in TV news channels

[Arul Selvan]

The business of television news and current affairs has entered a new 
phase in India with the Governments recent decision on foreign direct 
investment (FDI) in news channels. The Government has placed television 
broadcasting on par with the print media for foreign investment, thus 
providing a level playing field for both.

The Government had allowed 26 per cent FDI in news and current affairs 
publications in June, 2002. It has reviewed the policy for satellite 
uplinking from within the country for news channels by introducing a cap 
of 26 per cent on foreign investment.

In the news category of print medium, FDI is capped at 26 per cent with 
one of the riders being that one single Indian shareholder should hold 
51 per cent equity. In the non-news category, foreign investment up to 
74 per cent is permitted.

The decision to restrict foreign equity to 26 per cent of total equity 
will mean that only joint venture television channels would be possible. 
This will automatically restrict the number of foreign channels since 
many foreign media groups would like to enter the Indian market with 
their respective brands. With 26 per cent equity, a foreign owner cannot 
control the television channel or its editorial policy because his 
equity will allow him only to have one or two nominees on the Board of 
Directors.

The foreign equity cap in a news broadcaster that is either uplinking 
from India or using Indian facilities or infrastructure for news 
transmission, will have to be 26 per cent, the Government announced on 
March 18, 2003. One year has been given to those broadcasters that are 
already uplinking from India to bring down their foreign equity to 26 
per cent, those using other technology options such as VSAT and 
satellite videophones to uplink from say, Hong Kong or Singapore hubs, 
get only three months to adhere to the law of the land.

Under the new policy, any news channel uplinking from India, 
irrespective of what technology it is using, will have to limit its 
foreign investment to 26 per cent. So, whether a news channel is using 
an Indian earth station or uplinking hub or using the VSAT 
point-to-point technology or any other Indian facility to uplink from a 
hub abroad, the new norms will apply.

Background

Although the Government has been talking about making India an uplinking 
hub for broadcasters around the world, the new uplinking policy is being 
seen as restrictive. But according to the officials of the Ministry of 
Information and Boradcasting, control of content is not the idea behind 
capping foreign investment at 26 per cent for news broadcasters seeking 
to use Indian uplinking facilities. Rather, the whole objective is to 
give an edge to Indian channels for newsgathering, they say.

The policy seeks to segregate entertainment from news. Entertainment is 
completely free. But, if one wants to do news and current affairs, it 
has to be done within the broad contours of 26 per cent equity. The 
channel seeking to uplink from India must have 76 per cent Indian ownership.

Guidelines

The guidelines issued on March 26, 2003 specify that broadcasters 
seeking to uplink from India should be registered or incorporated in 
India under the Companies Act, 1956. A majority of its board of 
directors, CEO of the company and all news editors of the channel should 
be resident Indians.

The Information and Broadcasting Minister, Shri Ravi Shankar Prasad, who 
announced the new uplinking policy described it as "channel neutral" and 
"technology neutral".

Significantly, the new norms will apply only to channels with any news 
or current affairs elements. Meanwhile, for channels with no news or 
current affairs content which want to uplink from India, there is no cap 
on foreign investment.

The guidelines state that permission for using facilities or 
infrastructure for live news/footage collection and transmission, 
irrespective of the technology used, will be given to only those 
channels that are uplinked from India. Also, the channel must ensure 
that its news and current affairs content provider, if any, is 
accredited with the Press Information Bureau.

Besides, the channel/company needs to take prior permission from the 
Ministry of Information and Broadcasting before changing the foreign 
shareholding pattern or making alterations in its board of directors. 
Also, the channel/company must keep the Information and Boradcasting 
Ministry in the loop in case foreigners or NRIs are employed by it for 
over 60 days. Channels will have to use a transponder on a satellite in 
C-Band only and the "same should have been coordinated with INSAT system".

Reacting to the new guidelines, every broadcaster said it would comply 
with the new policy. Among others, STAR News President, Ravina Raj Kohli 
said, "We welcome the guidelines and will comply with them".

As per the guidelines STAR and CNBC India get three months to comply 
with the foreign investment cap. Channels like Zee already uplinking 
from India have been allowed up to one year to reduce its foreign equity 
to 26 per cent.

Ensuring that the uplinking policy is not bypassed, VSAT point-to-point 
uplinking, which is being used by some broadcasters for sending their 
data to a foreign port, will be more streamlined now. Separate 
guidelines will be issued by the Ministry of Communications and 
Information Technology soon on the same.

Significantly, the Government has defined a news and current affairs 
channel to mean one that has any element of news and current affairs 
programme in its broadcast. This would, therefore, include even those 
channels which have a few news broadcasts but are mainly entertainment 
channels.

Live Coverage

However, channels like BBC and CNN have been kept out of the pale of the 
policy and their live coverage of some Indian events will be permitted 
on a case-to-case basis. In the policy aimed at giving the Indian news 
channels an edge, the Government has clarified that facilities and 
infrastructure for live news coverage and transmission will be given 
only to channels uplinked from India.

Those uplinking from overseas centers will not be able to carry live 
coverage, but will have to work out ways of delayed telecast. Permission 
for point-to-point transfer or relaying of news content for broadcast 
using satellite video phones of VSAT links will have to be applied for 
separately.

The Government recently told Parliament that 12 applications seeking 
permission to uplink 24-hour news channels have been received. Of these, 
seven have been granted permission while the remaining five are under 
examination.

New Channels

Television news viewers are spoilt for choice now, but TV news operators 
may have to really battle it out for viewers. Two news channels began 
operations on March 31 and two more may get on air shortly. Add to the 
ones already in existence and market observers wonder if India has the 
audience for all of them!

However, is the Rs. 6000 crore annual advertisement pie large enough to 
sustain a slew of new channels? News channels grossed between Rs. 
250-300 crore in 2002. Even if they were to earn an additional Rs. 330 
crore this year, keeping a 15 per cent growth rate in mind, the money 
may not be sufficient to sustain all new national channels.

Advertisers have always operated on the basis of offering alternative 
fares for high and low viewership categories.

Currently, media consolidation has turned news into a highly developed 
commodity. It is hoped that the entry of foreign capital does not 
transform the Indian electronic media into a commodity producing machine 
that is more focused on the bottom-line than its critical role in the 
continuing nation-building. Foreign investment in the electronic media 
should lead to improvement of standards, both editorial and 
technological. More than that our talented journalists will be able to 
get more benefits and opportunities.

Competition and international linkages generally lend positive 
influences. It is expected that foreign entry will lead to more coverage 
of hard news, better understanding, calibrated views, less trivia and 
stereotyping. Quantity can hardly make up for the severe shortfall in 
the quality of news channels.

Source:
http://pib.nic.in/feature/feyr2003/fapr2003/f250420031.html
(PIB Features)