Delhi: The Union cabinet has cleared an ordinance mandating that private broadcasters who own the rights to sports events will have to share feeds for these with state-owned broadcaster Prasar Bharati.
The ordinance, cleared on 1 February 2006, comes in the wake of a spat between Nimbus Television and Prasar Bharati over the telecast of the recently concluded cricket series between India and the West Indies. Nimbus owned the broadcast rights to the event. The government plans to table a bill in Parliament to make the ordinance, which applies to all matches India plays, into a law.
It will hurt broadcasters, but not one company was ready to put its displeasure on record. “We welcome the move if it results in equitable sharing of revenue between the parties,” said a Nimbus spokesperson. She was referring to the 75:25 revenue sharing the ordinance prescribes on advertising revenue earned by the state-owned broadcaster, with the rights-owner getting the major share.
The problem is that advertising rates for Prasar Bharati’s channels are much lower than those for other channels. Private broadcasters have bid large sums of money to win exclusive rights to cricket events. For instance, last year, Nimbus paid $612 million (about Rs2,700 crore) for the rights to cover all matches held by the Board of Control for Cricket in India for five years. Similarly, ESPN-Star paid $1.1 billion for rights to matches organized by the International Cricket Council. The ordinance means ESPN-Star will share feed for any match involving India, organized by ICC, with Prasar Bharati.
ESPN-Star CEO R.C. Venkateish says the ordinance perfectly balances “public and private interest”, but it is likely that sharing telecast feeds with Prasar Bharati will lower the company’s advertising rates.
Other cabinet decisions
At the same meeting, the cabinet also decided it would reduce subsidies on urea by convincing manufacturers to shift to using coal or gas, instead of the more expensive naphtha in their plants. This will reduce their losses, and consequently require the government to pay out less as subsidies to make up for the same. The government expects to save Rs3,300 crore a year from this.
Other decisions taken by the cabinet include transferring the Reserve Bank of India’s stake of 59.7% in the State Bank of India, as well as its stakes in National Bank for Agriculture and Rural Development and National Housing Bank to the government in a cashless transaction and clearing a joint venture between National Thermal Power Corporation and the ministry of railways to set up a 1,000 MW power plant.
Pragya Singh and Ashish Sharma and Mehul Srivastava contributed to this story.