Friday, 16 August 2013

FDI in Broadcasting

The Information and Broadcasting Ministry has sought TRAI's views on the Mayaram panel's recommendations on FDI in Broadcasting. Divergent views had emerged among various industry stakeholders after the Ministry consulted them.
The I&B Ministry's decision to turn to TRAI for its opinion is also being interpreted by many as a ploy to buy more time, as there are divergent views within the industry.

Accordingly, a consultation paper containing a draft proposal has been issued by TRAI seeking comments/views of the stakeholders. Written comments on the consultation paper have been invited by 12th August 2013.
This is the third time TRAI has issued a consultation paper on FDI in Broadcasting in the last six years and one recommendation on the subject was given by TRAI without consulting the industry in June 2011.  
Currently, the sectoral cap for FDI in FM radio, uplinking news and current affairs TV channels and in print media is 26 per cent and the Commerce Ministry has proposed to raise it to 49 per cent through the automatic route. 
Following Home Ministry's strong objections, a high-level meeting chaired by Prime Minister Manmohan Singh on July 16 did not clear the Commerce Ministry's proposal for increasing FDI in broadcasting and print media to 49 per cent through automatic route. 
Earlier in 2012, foreign investment limits in broadcasting sector were revised based on TRAI recommendations. 
But do we require more FDI in Broadcasting sector? 
With the Rupee touching the lowest at 61.10 to a Dollar, Indian economy is in dire straits. Our current deficit (CAD) touched a record 4.8% of GDP in 2012-13. We need to have more exports than imports, to reducing the current deficit. We need more FDI than FII because FII can be withdrawn anytime. So government is going all out to liberalise the flow of FDI into India but there are no takers.
However, experts in the field opine that the fundamental problem in the Indian economy is the loss of global confidence in our medium-term future. This calls for reforms and hard decisions  which may push growth down, but will force a readjustment in the economy that will serve as seed capital for future growth.
Rendering the economy in some way to halt a further downfall is need of the hour. 
FDI is preferred mostly in the Infrastructure business so that it helps the economy in some way creating capital for the nation and employment opportunities. A foreign company bringing FDI from its own investment company in a foreign country, in a non infrastructure business will hardly do any good. On the other hand such a company will invest in India in its own business to increase profits from Indian population and take away the revenue to their own country or invest in another giving no benefit to India. This is exactly the situation in broadcasting sector in India. 
All the last mile infrastructure which needs heavy investment is owned by thousands of small cable operators who have no permanent relationship with a broadcaster or an MSO who desire to have FDI. Their infrastructure  is already built and otherwise also a digital headend has become very cheap over the years, it is the network cost that is heavy in buildup as well as operation.
Only way an MSO can invest is either in importing huge quantity of STBs or buying out the small networks consolidating his position. Since last mile network is the livelihood of a small operator, all unethical means will be used to capture his business.
Broadcaster may use these investments to pay high carriage fees to put their channel in the right slot or increase channels in other genres or regional languages becoming more powerful  in content or may use it to takeover smaller broadcasters to create further monopolies harming the interest of small players in the market destroying plurality and diversity. These large broadcasters have already become very powerful capable of controlling the mindset of millions of people. Such activities on the part of large media companies have the most adverse effect on the economy by not giving a chance to small players to grow and join in nation building. Unemployment will further drain the government treasury through subsidies. 
Unchecked increase in FDI and misuse of these investments by some large media houses in acquiring last mile cable operators and smaller TV channels (mostly regional channels) will jeopardise the livelihood of lakhs of people. In order to create large monopolies in the media market these media groups are demanding more FDI to help them achieve their dubious aims.  
Before taking any decision in this matter the Government must get a feedback on how the FDI has been utilised in the industry till now and who all need it most. Findings may be very revealing and eye opening giving away the rampant misuse of media power.
Important Facts about FDI in Broadcasting
1.Only those stake holders demand more FDI who already enjoy large horizontal and vertical monopolies for which the government is already concerned and has asked TRAI to examine the issues in depth and recommend steps to curb the monopolies and cross media holdings in Media.
2.There are only two or three large media groups who wish to induct FDI in their DTH, MSOs or broadcasting companies to increase their monopolies in the media sector.
3.    Because of cartelisation these companies do not let any small operator or broadcaster to grow, and compete with them. 
4.Their MSO companies ask for FDI so that they can buy-out last mile operators depriving thousands of self employed persons of their livelihood.
6.FDI brought through these companies does not help the economy as most of the time investments come from their own subsidiaries or sister concerns abroad.
7. Such FDI is never invested in infrastructure in India but goes out to purchase equipment and services from abroad, helping other foreign countries or their own group companies. Example of buying 25 million poor quality STBs for digital networks worth Rs 4000 crores from China and other countries in the last one year is there before us.
Phase III and IV of mandatory digitisation involving 75 million households may not be completed by the deadline of December 2014 as weakening of rupee and lack of indigenous manufacture of STBs may make it hard for the companies to import such a large number of equipment in such a short time.  
Issue of FDI in the broadcasting sector is a very serious matter that involves monopolies in media sector, money laundering, diversion of funds to other business and killing of competition. 
Security Concerns - The Home Ministry has strongly opposed any move to increase the FDI cap in the broadcasting and print media, saying allowing more foreign investment in the sensitive sectors may compromise country's security. Apprehending undue influence by big global players, the Home Ministry said opening up of current affairs TV channels, newspapers and periodicals dealing with news and current affairs may lead to meddling in India's domestic affairs and politics, official sources said. 
Strongly favouring control of media houses by Indians, the Ministry said increase of FDI in broadcasting and print media may also allow foreign players to launch propaganda campaign during any national crisis as well as when interests of any particular country is harmed through any government decision. 
The Ministry noted that big foreign media players with vested interests may try to fuel fire during internal or external disturbances and also can encourage political instability in the country through their publications or broadcasting outlets. 
Another fear expressed by the Home Ministry last year in increasing the FDI limits in Media was difficulty in verifying the shareholders' credentials who are investing in India. It also showed concern to prevent global media barons like Rupert Murdoch, who have a track record of exceeding their brief and influencing policies from entering the business. Perhaps the Ministry is unaware that Rupert Murdoch has already spread his empire in the country beyond government control.
Before allowing more FDI in broadcasting, the government must ensure that nothing of the above happens.


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