Foreign direct investment in media encounters static over ownership norms

Issues raised by foreign broadcasters include investment norms in DTH

Updated - March 24, 2016 12:13 pm IST

Published - December 27, 2015 12:06 am IST - NEW DELHI:

CHENNAI, 29/12/2011: Satellite dish antennas for DTH service atop a building at T. Nagar in Chennai. 
Photo: B. Jothi Ramalingam

CHENNAI, 29/12/2011: Satellite dish antennas for DTH service atop a building at T. Nagar in Chennai. Photo: B. Jothi Ramalingam

Prime Minister Narendra Modi’s dinner with world media heads in the U.S. three months ago fuelled speculation of an impending rush of investment in the industry. Last month, the government announced the relaxation of FDI limits in news channels, and FM radio from 26 per cent to 49 per cent. Foreign broadcasters now say the government needs to do more to attract investment in the sector.

The overseas broadcast companies are seeking the removal of the requirement that stipulates the single largest Indian shareholder of news channels to have 51 per cent of the total equity. Many broadcasters feel foreign investors are unlikely to invest in a news company without any beneficial rights in the management or finances of the company.

A delegation of broadcasters under the aegis of the U.S. India Business Council met the Information and Broadcasting Secretary Sunil Arora this month and submitted a memorandum to officials. Confirming the meeting, Mr. Arora said he will be meeting members of the delegation sometime around January 15 for detailed discussions. Senior officials in the Ministry are also said to be currently examining the concerns raised by the council, including the “critical” issues that are impeding foreign direct investment in news and distribution platforms like cable, Direct to Home (DTH) and IPTV.

Distribution platforms

Other issues raised by foreign broadcasters include the investment norms in Direct to Home (DTH) and distribution platforms. While the limit has been raised to 100 per cent from 74 per cent, this has brought little cheer as cross-media restrictions of 20 per cent, which stipulates that a broadcasting company cannot own more than 20 per cent in a distribution platform and vice versa, still exist in the media-ownership policy.

This, according to foreign broadcasters is unreasonable as it does not give them a level-playing field with domestic media companies. Some of them point out that while domestic players acquire licenses for distribution and broadcasting under different subsidiaries, foreign companies are unable to do the same as their investments are subject to FIPB approval. The foreign broadcasters have also pointed that given the multiple outlets Indian viewers have today, such restrictions are totally misconceived.

While appreciating the government’s concern over ensuring that editorial control of news stays in Indian hands, the foreign broadcasters have flagged the need to incentivise investment in news companies in order to introduce best journalistic practices and enable investments in cutting edge infrastructure and technology.

The position taken by the foreign broadcasters is in contrast to the recent commentsby Union Industry Secretary Amitabh Kant who said India has become one of the most open economies for foreign direct investment, following the liberalisation of norms in 15 sectors, including media. Mr. Kant said that many foreign investors are in the process of firming up plans to invest across sectors and FDI flows that grew by 35 per cent in the first 17 months of the NDA government (compared with the previous 17 months) would rise by another 40 per cent in the coming year, thanks to the new round of liberalisation in FDI norms.

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