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Govt moots hiking FDI in MSOs going fully digital to 74 pc

29-July-2011
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Govt moots hiking FDI in MSOs going fully digital to 74 pc

Speaking at PwC’s ‘Point of View’ session on the Indian entertainment and media industry, held in Mumbai on July 29, 2011, Raghu Menon, Secretary, Ministry of Information and Broadcasting, revealed a slew of Government proposals to fuel growth in this industry. He was a keynote speaker at the session. Another keynote speaker was Uday Shankar, CEO, STAR India Pvt Ltd.

Timmy S Kandhari, Leader – Entertainment & Media Practice, PwC India, and Marcel Fenez, Global Leader, E&M, PWC, made presentations on the India and global outlook, respectively, for the E&M industry.

Menon presented the Government’s perspective on the E&M industry and talked about several proposals that were being sent to the Cabinet for approval. “The primary objective of our policies is to fuel growth of this sector, to help it acquire a competitive advantage. We aim to digitalise all cable services in metro cities by March 2012, and in the rest of India in phases by March 2014,” Menon said.

Among the proposals sent by the I&B Ministry to the Cabinet were:
• Increase FDI limit from 49 per cent to 74 per cent for MSOs going fully digital
• Treat new digital networks as infrastructure and give them tax holiday from March 2012 to March 2019
• Set time-frame of 2017 for public broadcasters AIR and DD to go digital
• Reduce basic customs duty on all digital equipment, including set top boxes, to zero
• Regulate registration of cable operators to bring in more transparency, amend uplinking guidelines
• Set up mechanisms of content control through an independent regulator

For content, the following points were noted:
• Introduce stricter eligibility norms for satellite TV channels to get licence
• Increase network conditions
• Only companies with prior experience to be considered. It will help improve quality of content
• It was noted that overdependence of channels on ads was the reason for chase for ratings, which was impact on content
• With digitisation, subscription revenue will improve, hence content will get better too

Meanwhile, radio was not forgotten in the I&B Ministry’s proposals. Following the recent Cabinet nod to Phase III FM expansion, the buzz is back in the radio industry. Following are some proposals mooted to help the industry grow:
• Local news will be allowed in private FM stations in addition to AIR news
• Operators can also have more than one operator in a city
• Operators will get pan-India license, which will help them spread cost across stations
• However, in D class cities only three channels will be allowed
• Lock-in period for shareholders reduced to three years from the current five years

The Government also kept in mind the growth of mobile TV in the country and will be working on bringing out a policy for mobile TV. It was noted that there was a bottleneck in availability of spectrum due to competing demands of other services.

Keynote speaker Uday Shankar spoke of the health of business in E&M and creating a successful model of broadcast revenue gathering. He dwelt on the problem of carriage fees faced by MSOs and the lack of interesting content. “For instance, why hasn’t a single radio channel come up with differentiated content in all these years? This is nothing but a lazy business practice,” he noted.

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