Foreign media groups stymied by Indian regulations

Wednesday 09th December 2015 06:01 EST

New Delhi: Rupert Murdoch's Star India and other global media groups' plans to capitalise on the opening of India's broadcasting sector to foreign investors are being foiled by regulatory barriers. India had said last month that foreign companies could and own 100 per cent of cable and direct-to-home satellite operators, up from 72 per cent previously, potentially bringing substantial new funds into the country's $7 billion television sector.

The move was made to attract investment from major global media groups like Time Warner, Comcast or Liberty Global. Murdoch's Star India, already holds a 20 per cent stake in Tata Sky, a satellite joint venture with India's Tata group. However, separate regulations designed to limit cross-media ownership are in effect stopping diversified media companies. Chief executive of Star India, Uday Shankar said, “The government say they want to open it all up, but because of these other rules no big players can come and do anything, not us or any of the other American companies.”

India’s regulations stop diversified media groups owning more than 20 per cent of satellite businesses. These limit Star’s ability to take a higher stake in its Tata venture. They could also restrict a company such as Time Warner, which owns Turner International India, a TV programme distribution arm. The rules could also affect US-based cable groups Comcast and Liberty Global, both of whom analysts say have examined entering the Indian market. “We would be very open to being the majority shareholder [in Tata Sky],” Shankar said. “These regulations and limitations are basically booby traps which stop anyone doing what the government says it wants to happen, which is getting more investment into the sector.” Concern over these regulatory restrictions comes amid rising foreign interest in India’s television sector, which is expected to be worth Rs 975bn by 2020, up from Rs 475bn last year, according to KPMG.

According to research group BARC, India is already one of the world's largest broadcasting markets measured by viewers, with 154 million TV homes and a total audience of 675 million. However, the cable and satellite sectors are fragmented. In satellite, Tata Sky competes against local groups like Dish TV, backed by media conglomerate Zee, and Airtel Digital TV, backed by telecoms group Bharti Airtel. “This market will consolidate, and badly needs investment,” says Vivek Couto, founder of Media Partners Asia, a Hong Kong-based consultancy. “These big global players like Comcast and Liberty would like to do more in India, but this issue of regulatory barriers is a major problem.”

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