The Hindu : Star and stratagem

Online edition of India's National Newspaper
Thursday, Jul 17, 2003

Opinion

Opinion - Editorials

Star and stratagem

MANY COUNTRIES, DEVELOPED and developing, have a broadcast regulatory framework prescribed by law. India does not have any such arrangement. However, the Government has fallen into the habit of tackling media-related issues piecemeal, issuing guidelines and rules and often ending up making ad hoc decisions. Against such a background, the modus operandi employed by the Rupert Murdoch-owned Star TV to seek permission for uplinking its news channel out of India is instructive. If allowed to go through, Star's stratagem will make a monkey of what little broadcast regulatory authority is in place. The rules restrict foreign shareholding in news channels uplinking from India to 26 per cent. They also stipulate that the majority of the board of directors should be resident Indians, a provision to ensure that proprietary and especially editorial control is in Indian hands.

Star's uplinking application, however, was filed by an odd and, until recently unknown, company called Media Content and Communication Services (MCCS), an empty shell with a paid up capital of Rs. 1 lakh. This shell company has no studios, no cameras, not even uplinking equipment. All these facilities integral to a news channel have been transferred to another shell company called Touch Telecontent (TT). It is clear that the companies are a fiction — a mere cover to allow the Australian-American media baron to control its Indian news operations by parcelling out shares to a cosy group of associates (a motley collection of businessmen, lawyers, actors and editors) who have no interest in running the company. Instead of diluting the equity of `Star News', his 24-hour news channel, Mr Murdoch has come up with a caricature of compliance.

Several questions arise from Star's stratagem. How does a company with a capital of Rs.1 lakh lease a satellite transponder for Rs. 2.5 crores per annum? Who owns the uplinking equipment and the OB vans? Who hires the numerous journalists and production staff? Faced with such awkward questions, which have been posed finally and belatedly by the Government, Star TV has clarified that it will raise the equity of its shell company to Rs. 4 crores. In an environment where comparable news channels are reportedly valued in excess of Rs. 300 crores, the contrast is telling.

The issues involved here go far beyond the fate of the Star news channel. They concern the covert flouting of foreign investment norms and rules by foreign media houses and the urgent need to plug the loopholes that allow them to do so. Questions have been already raised about how a shell company of Mr. Murdoch's has been allowed to run FM radio stations when Government guidelines permit no foreign direct investment and only 26 per cent foreign institutional investment. Also under scrutiny is Mr. Murdoch's application for DTH through another company called Space TV, which was floated by two Star group employees for similar reasons. Star's stratagem of getting around the foreign equity rules for broadcasting can serve as a dangerous precedent for flouting norms and rules laid down for foreign investment in the print media. Until recently, the Government of India turned a Nelson's eye to Star's unacceptable modus operandi. It has certainly done the right thing now by challenging Mr. Murdoch on the structure of its news channel operations. The existence of a clear-sighted policy backed by an objective and transparent legal regulatory framework suitable for the present times would have prevented such a flagrant ruse. In its absence, it is imperative to ensure that foreign equity caps in the media are adhered to in both letter and spirit.

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