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DTH stake shift to need govt nod

07-July-2005
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DTH stake shift to need govt nod

To prevent companies from changing ownership structure.

Direct-to-home (DTH) broadcasters may have to get government permission for changing their equity structure and joint venture agreements.

This move by the government is aimed at tightening the norms pertaining to the sector and prevent companies from changing ownership structures and transfer key functions to minority foreign partners, according to an official. The information and broadcasting ministry is expected to notify these guidelines soon.

The government may also insist that DTH firms have conditions in the joint venture agreements and articles of association, ensuring that the effective control of the company is with the Indian partner.

As per the proposed norms, a DTH service provider will not be allowed to enter into exclusive distribution agreements with any broadcaster. This is to ensure that channels available on any one DTH platform is available on all DTH platforms.

Besides, DTH companies will also not be allowed to resort to anti-competitive practices.

“The non discriminatory guidelines of the regulator will be implemented and these conditions are part of them,” said an information and broadcasting ministry official.

According to sources in the ministry, such a move has been necessitated by recent development such as Subhash Chandra’s DishTV and other broadcasters being at loggerheads over providing content to competing platforms.

The government is also likely to hold DTH broadcasters responsible for pornographic and restricted content on their platforms. DTH content is currently not regulated.

“We will have to look at the content issue very closely. Besides, in view of the new downlinking policy, we will have to look at the content on DTH platforms as well,” said an official.

As per the present norms, the total foreign investment, including those by FDIs, NRIs, OCBs and FIIs, in a DTH company shall not exceed 49 per cent. The share of foreign direct investment has been limited to 20 per cent. The present DTH norms were drafted in 2000.

The present norms make a broadcasting company or a cable company eligible to owning more than 20 per cent of the total equity of a DTH company. This may also be reviewed.

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