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| Trai says broadcasters can't control distribution |
| BS Reporter / New Delhi Feb 26, 2009, 00:56 IST |
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The Telecom Regulatory Authority of India (Trai) today said that broadcasters should not have any control over cable distribution platforms. In case they do, the broadcasters will have to restructure their holding to 20 per cent or below within three years.
This move is likely to impact broadcasters, including Star India and Sun TV — both of which hold stake in cable distributing firms over and beyond the prescribed limit. Star has a 50:50 partnership in a Multi System Operator (MSO) called the Digital Entertainment Networks (DEN), while Sun TV has 100 per cent stake in Sumangali, sources say.
In its final recommendations submitted to the government on media ownership, Trai said any entity having more than 20 per cent equity participation in a broadcasting company cannot have more than 20 per cent equity in cable distribution platforms, that includes MSO, cable operators, or direct to home (DTH), head end in the sky (HITS) and Mobile TV platforms.
Reacting to the recommendations, A Mohan, executive vice-president, Essel Group and head of corporate affairs, said: “In my view, the recommendations in itself are inherently contradictory when you take into account the recent government moves to ease the restrictions on foreign direct investments.”
The recent changed made to the FDI norms clearly enable foreign investors to step-up their investments in any Indian entity across a number of categories including media, but Trai is taking about putting restrictions on Indian broadcasters on several fronts, Mohan said.
On consolidation in the media industry, Trai said there was a need to ensure that plurality and diversity of views were maintained while suggesting the Ministry of Information and Broadcasting to conduct a detailed market study and analysis for identifying and determining safeguards. “After working out required safeguards, merger and acquisition guidelines for the sector may be issued to prevent media concentration and creation of significant market power,” Trai said.
The regulator, however, said at this point of time no restriction should be imposed on cross control or ownership across telecom and media separately and the issue could be reviewed after two years.
Trai had issued a consultation paper in September last year seeking comments from stakeholders on cross-media holding and ownership.
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