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Ministry seeks clarifications on Space TV management structure

06-December-2004
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Ministry seeks clarifications on Space TV management structure

The Information and Broadcasting (I&B) Ministry has shot off a letter on the Star-Tata Group's direct-to-home (DTH) application for Space TV, seeking clarifications on the proposed management of the venture.

The application for the DTH licence indicates that the Chief Executive Officer of the venture would be from the Star stable while the Chief Financial Officer would belong to the Tata Group.

According to sources, the Ministry has sought clarifications on this and an explanation on whether such an arrangement would be a violation of the DTH norms.

"We have asked them whether such an arrangement is mandatory and would it be consistent with the concept of having an Indian management control as conceptualised in the DTH guidelines. In this case the Tata Group is the majority shareholder," they said.

Space TV was formed through a joint venture between the Star Group and the Tata Sons wherein the latter has an 80 per cent stake while the former held 20 per cent.

The guidelines for DTH have clearly stated that investments made by any company involved in broadcasting or cable business would be capped at 20 per cent while the foreign investment in sector would be capped at 49 per cent. In fact, Space TV has been proposing to induct some institutional investors.

Besides this, the Ministry has also sought details on the proposed investment of Rs 1,600 crore. "We want details of the proposed investment, the debt-equity ratio and other details. The investments for this are being made through a Dubai-based company, owned by Rupert Murdoch's NewsCorp, National Digital Distribution Services," they added.

Currently the Star Group CEO, Ms Michelle Gutherie, is in the Capital to attend the ongoing India Economic Summit and is expected to iron out the problems related to the DTH venture.

Space TV had earlier proposed to commence operations by Diwali this year, but has not been able to do so.

Meanwhile, the I&B Minister, Mr Jaipal Reddy, responding to a Parliamentary question has said that the Space TV application is under examination and that there is no plan to involve outside experts to examine the applications for granting letter of intent.

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