Us Cos Against Foreign Equity Cap In Satellite Broadcast Ventures

The sub-committee on broadcasting of American Business Council (ABC), an umbrella organisation of US investors in India, feels that there is a misconception over foreign equity cap norms prevalent in the United States and elsewhere.

The Indian broadcast bill proposes a 49 per cent cap on foreign equity.

According to ABC sources, most countries, including the United States, treat satellite and terrestrial broadcasting separately and do not constrain equity holding in the former category.

The foreign equity cap in the US pertains only to terrestrial/domestic broadcasters. Most Eurpoean countries also follow similar regulation, whereby they differentiate between transnational and domestic channels, while the Indian bill makes no such differentiation, the sources told Business Standard yesterday.

 

The sub-committee members are of the opinion that auctioning of licences, as has been proposed in the broadcast bill, including direct-to-home (DTH) services, would increase the cost of viewership as service providers would pass on some portion of the cost incurred on to the subscribers.

The ABC sub-committee also feels that mandating uplinking in every country will be economically wasteful and commercially untenable for broadcasters.

The broadcast bill proposes to make uplinking from India mandatory for all broadcasting services.

However, the American broadcasters and media companies feel that should the government offer incentives, both technologically and financially, for broadcasters to uplink from India, most broadcasters would consider this aspect in their future plans once their current long-term arrangements comes to an end with other countries. Most of the existing satellite channels are uplinking from Singapore and Hong Kong.

According to the broadcast bill, the broadcast authority may allow continuation of uplinking from outside the country of satellite broadcasting services being received in India immediately before the commencement of the Act. This may be allowed till such time as is reasonably required for shifting or creating necessary uplinking facilities in India on payment of such additional licence fee as deemed fit.

The ABC sources said that despite the varied interests of its members, the sub-committee has managed to reach a consensus on some of the contentious issues.

The ABC sectoral committees members are: The Discovery Channel, Turner Broadcasting, News TV India Ltd (STAR TV), Sony Pictures, United International Holdings, GE International Operations Co Inc (owning CNBC and NBC), MGM Gold, Encore International Inc, MTV, ESPN India, Motion Picture Association of America, satellite operators Pan Am Sat, Innerasia Consulting Group, Space Systems/Loral and Motion Pictures Association.

The ABC panel members are of the opinion that the Indian bill relies heavily on the UK legislation which was introduced in 1990.

The UK has tabled a recent legislation in 1996 that seeks to address several limitations in the earlier bill.

For example, it has been pointed out that the revised UK legislation seeks to remove restrictions on cross-media ownership, but protects public interest through clauses that trigger action if audience/market shares exceed a defined national limit. The Indian bill proposes to limit cross-media holding for a print medium player to 20 per cent.