Breaking News Broadcast Sector Reform: FDI upto 74% to be allowed

[IndianMascot]

In a major decision to liberalise the broadcast sector, the government on Friday decided to raise FDI cap to 74 percent in various services of the sector, except the TV news channels and FM radio where the cap of 26 percent will apply.

The decision of the Cabinet Committee on Economic Affairs (CCEA) will apply to broadcast carriage services providers, including Direct-to-Home, Head-end in the Sky (HITS), Multi-Service Operators (MSOs) and cable TV to bring about uniformity.

Till now, 49 percent FDI was allowed in cable TV and DTH while it is 74 percent in HITS.

HITS is a satellite multiplex service that provides TV channels for cable operations.

Among other segments, 74 percent FDI was allowed in Mobile TV, which is an area of future growth.

Briefing mediapersons after the meeting, Commerce Minister Anand Sharma said of the 74 percent, 49 percent will be through automatic route while the rest will be allowed through government route, implying Foreign Investment Promotion Board (FIPB) clearance.

However, for TV news channels, current affairs, FM radio and content providers, the FDI limit will stay at 26 percent.

India is estimated to have about 106 million households with cable and satellite TVs in India, of which 26 million use DTH and 80 million get feed from the cable network.

 

[harshbardhan]

What would be its repurcussion? Will this be beneficial for the subscriber?

 

[IndianMascot]

Yes, Cable and DTH Industry will see a major breakthrough in coming years. Now with 74% FDI in broadcast sector, we would be able to see Foreign Investors buying stakes in Indian firms. So, Indian DTH and Cable services will move to more advancement in coming time.

The Article which we all saw few weeks back regarding foreign investment into Videocon may come to reality now. Similar kind of improvements will be seen in Broadcasters like Star, MSM, Zee etc etc.

 

[IndianMascot]

Industry players welcomed the increase in FDI limit for cable network and DTH. "It is a welcome step for the sector as it will not only fulfill capital needs for digitisation, but will lead to technological improvement in India," said Salil Kapoor, chief operating officer, Dish TVBSE 4.07 %. According to Hathway Cable and Datacom's managing director and CEO K Jayaraman, the government's decision will provide the much needed boost for digitisation of cable network that's likely to kick off from November this year.


"It is good news for the entire sector as well as individual companies," Jayaraman said. When asked if Hathway will invite foreign capital into the company, he said, "We already have foreign investments, but it has not reached the earlier 49% limit yet." "FDI increase in TV is a step in the right direction. This will help step up the process of digitisation where investments are required to be made by the cable industry. This timely announcement will enable the TV distribution industry meet the deadline for mandatory digitization," said Smita Jha, leader - entertainment and media, PwC India.

Industry observers are of the view that allowing foreign companies into Indian media space is not restricted to pure economic impact. "The government has taken a bold and big decision by further relaxing the FDI limit. It will have a much larger political and social impact," says Ankur Jain, managing director, Noida Software Technology Park Ltd (NSTPL).

Striking a different note, Roop Sharma, president of Cable Operators Federation of India, said it will create vertical monopoly of international media firms in India. "This will only strengthen big broadcasters in India who will continue to monopolise the broadcasting space in India," he said.

Full text of the government notification that announced allowing 74% FDI in various broadcasting sector:

Financial Restructuring of Prasar Bharati (Broadcasting Corporation of India) based on the Recommendations of the Group of Ministers on Prasar Bharati

The Union Cabinet today approved the proposal of the Ministry of Information and Broadcasting for financial restructuring of Prasar Bharati (Broadcasting Corporation of India). The proposal is based on the recommendations of the Group of Ministers (GoM) on Prasar Bharati (PB), constituted under the chairmanship of the Home Minister, to examine various issues pertaining to the functioning of Prasar Bharati.

On the basis of the recommendations of GoM, the Cabinet has given its approval for the following in order to improve the overall financial management of Prasar Bharati (PB):-

i. During the next five years from 2012-13 to 2016-17, Government non- Plan support will be made available to PB for meeting 100 per cent expenses towards salary and salary related expenses. All other operating expenses to be borne by PB out of internal revenue earnings.

ii. Plan capital support by the Government to PB will be in the form of grants-in-aid only and not in the form of loan.

iii. Accumulated interest on loan-in-perpetuity, interest on capital loan and penal interest thereon payable by PB to Government will be waived off.

iv. Loan-in-perpetuity and capital loans provided to PB will be converted into grants-in-aid.

v. Accumulated arrears of space segment and spectrum charges accrued to PB upto 31.3.2011 of Rs. 1349.54 crore, to be waived off.

vi. Property and Assets will be transferred on book value to PB as per provisions of Section 16(a) of thePrasar Bharati Act, 1990. Normal accounting principles will be followed to determine their future value; and

vii. Director General of Audit, Central Revenues (DGACR) will continue to be the nodal auditor of PB and will be assisted by qualified commercial audit staff for the audit of the annual accounts.

Background:

The Prasar Bharati (PB), the Public Broadcaster in the country, has been grappling with various financial and human resource/employee issues since its inception, which have adversely affected its functioning as an autonomous organization. In view of the problems being faced by PB, a GoM was constituted under the Chairmanship of the Hon`ble Home Minister on 7th March, 2006 to examine the issues of PB. The GoM was again reconstituted on 21.2.2011 which considered PB`s future revenue earning potential given its public service broadcasting mandate, and made a number of recommendations for making PB a financially viable and sustainable organization.


ET

 

[people]

this is the only reason videocon gear up their activity.dish tv also expect some benifite.

 

[IndianMascot]

Yes, Comments of Salil Kapoor suggests Dish TV too was waiting for increase is disinvestment.

 

[IndianMascot]

Govt notifies and confirms increased limits for teleports, DTHs


As per Cabinet's approval on proposal to allow more FDI in key broadcasting areas, the government today notified the increased limits for teleports, Direct to Home (DTH), cable networks and mobile television.

The government had earlier decided in favour of increasing the foreign investment limits in those areas of broadcasting which deal with carriage but had refrained from doing so in areas which were related to creation of content.

After the confirmation from government notification, now all these proposals are effective.

PTI