Mumbai/New Delhi: In a bid to discourage non-serious companies from entering the overcrowded Indian broadcasting sector, the Union Cabinet on Friday tightened the eligibility criteria for companies applying for television channel licences in the news and non-news genres.
In its meeting on Friday, the Cabinet approved the proposal of the ministry of information and broadcasting to amend the policy guidelines for uplinking and downlinking TV channels. The net worth criteria for uplinking of non-news and current affairs channels and downlinking of foreign channels has been revised from Rs1.5 crore to Rs5 crore for the first channel. With every additional channel, the net worth of the company has to increase by Rs2.5 crore.
The eligibility norms have become more stringent for news and current affairs channels. The revised guidelines have raised the net worth requirement of a company applying for its first news channel licence to Rs20 crore from Rs3 crore. For every additional channel, the company must raise its net worth by an additional Rs5 crore. Net worth is defined as total assets minus all the liabilities and determines the overall financial health of the company.
Additionally, the firms will have to start operations within a year of getting their licences, which was not the case earlier. Non-news channels will have to sign a performance bank guarantee of Rs1 crore, while news channels will have to sign up for Rs2 crore. The ministry reserves the power to cancel the licence in case the channels are not launched within the deadline.
The revised norms are applicable to new licence seekers and not the existing channels. According to a information and broadcasting ministry official, the new net worth structure will be applicable to existing channels only if their 10-year licence has expired, or if they are looking to add new channels to their bouquet. The official declined to be identified as he is not authorized to speak to the media.
The broadcasting companies will also pay Rs15 lakh a channel per year if they downlink a channel in India that has been uplinked from overseas. For downlinking a channel uplinked from India, the fees is lower at Rs5 lakh a channel per year.
The ministry of information and broadcasting has two sets of policy guidelines. One for channels uplinked from overseas and distributed here for public viewing; this is the policy for downlinking of television channels notified in November 2005. Private TV channels uplinked from and shown in India are governed by the guidelines for uplinking from India.
The broadcast industry’s reaction to the Cabinet decision was mixed. Rajat Sharma, chairman of Independent News Service Pvt. Ltd that runs Hindi news channel India TV, said that the ministry’s concern to prevent “dodgy news companies” from entering the business was wise. “In the long term, it is far more expensive to run a news channel than an entertainment channel,” said Sharma. Non-serious companies (particularly real estate firms) appear for a short term, poach journalists from legitimate news channels and spoil the market, he said.
A media analyst who declined to be named said stricter eligibility norms could mean better quality of content on television. “There’s a lot of clutter on television. Existing companies will think twice about randomly launching channels, and non-serious broadcasters will be under tremendous pressure,” he said.
However, others feel that the higher net worth requirement may be a deterrent to existing channels’ expansion plans. Sunil Lulla, chief executive of Times Global Broadcasting Co. Ltd that runs English news channels ET Now and Times Now, said that news channels, faced with steep carriage fees, increasing cost of coverage and tough fight for advertising revenues, may find the new norms challenging.
Jehil Thakkar, executive director, media and entertainment, at KPMG, said such policies could force some of the existing companies intending to start new channels to exit business.
Yet others feels the norms are still not stringent enough to weed out weak firms. Jawahar Goel, chief executive of Dish TV India Ltd and former president of the Indian Broadcasting Foundation, said it was not really a restrictive policy. “The guidelines on net worth are fairly insignificant. It’s a good move, but not enough.”
Paritosh Joshi, chief executive of STAR CJ Network India Pvt. Ltd, said there’s been a mushrooming of channels in the Hindi news genre. “To a large extent, the mushrooming is unsavoury. Globally, OfCom (Federal Office of Communication) has a fit and proper test where individual shareholders are scrutinized. Here what the ministry is saying is far easier in terms of restrictions.”
Joshi said these norms will also affect existing channels because their tenure is temporary and licences will need to be renewed.
According to the broadcasting ministry, 745 channels were given permission till the end of August this year.
The size of the television industry was estimated to be Rs29,700 crore in 2010 and is expected to reach Rs34,100 crore by 2011, according to the Ficci-KPMG Indian Media and Entertainment Industry Report 2011 published earlier this year. That will increase to Rs63,000 crore by 2015, the report said.