Television Matters
What are the recent changes to the TV licensing/regulation norms?
The information and broadcasting ministry has two sets of policy guidelines for permission/regulation of private satellite TV channels in India, namely the downlinking and uplinking guidelines. On October 7, the Union Cabinet revised these guidelines by upwardly revising the net worth criteria for both news and non-news channels. For obtaining a news channel licence, the net worth requirement for the applicant is now set at R20 crore, up from R3 crore earlier. For a non-news TV licence, the net worth will be R5 crore, up from R1.5 crore. Also, all TV channels would be required to operationalise their TV channels within a time frame of one year from the date of permission, for which non-news channels will have to sign a Performance Bank Guarantee (PBG) of R1 crore whereas ?news and current affairs? channels will have to give a PBG for R2 crore. In the event of non-operationalisation of the permitted channel within a period of one year, the PBG will be forfeited and permission cancelled.
How does one calculate net worth for TV channels?
Net worth means the excess of the book value of assets (other than fictitious assets) of an enterprise over its liabilities. It would be calculated as sum of the paid-up equity and free reserves minus accumulated losses, if any, in the applicant company seeking TV channel licences.
What are the new aspects of these revised norms?
There are three new things in the new uplinking/downlinking norms. First, one of the persons occupying the top management position (chairperson/MD/CEO/COO/CFO/CTO) in the applicant company should have a minimum of three years of prior experience in a media company. This is a must for both news and non-news channels. Second, renewal of the permissions of TV channels will be considered for a period of 10 years at a time, subject to the condition that the channel should not have been found guilty of violating the terms and conditions of permission including violations of the Programme and Advertisement Code on five occasions or more. And third, any proposals of merger, demerger and amalgamation will be allowed under the provisions of the Companies Act but only after obtaining permission from the I&B ministry.
Why are broadcasters unhappy with the new norms?
Media companies?both existing players and those looking to enter the business?are upset on two points mentioned in the new uplinking/downlinking policy. Existing companies, which are already operating multiple channels that will be due for renewal (every 10th year) going forward, are unhappy with the new clause that talks about five or more violations of the Programme and Advertisement Code, making them non-eligible for renewal. Most of the leading entertainment or news channels have been found in violation of this Code at some point of time in the past 10 years. These include channels from media groups such as Star, Sony, Zee, MTV, Sun and others. Under the new rules, the I&B ministry can technically refuse the renewal for another 10-year period. According to the News Broadcasters Association, there is no requirement of such a rule as its interpretations are limited to the confines of the I&B ministry and its officials, who can use the clause to hassle any TV channel. Broadcasters want a rollback of this particular clause.
For aspiring media company owners, the problem is the hiked up net worth requirement, especially for news channel licences. Maintaining a net worth of R20 crore becomes challenging for smaller, state-centric players who want to operate a news channel within a district or a large town, or only within a smaller portion of their respective states.
Why did the government make these changes?
The government now wants only ?serious? players to own and run TV channels, especially in the news and current affairs segment. It has received numerous complaints from various stakeholders about how news channel operators, especially smaller/regional players, often violate the programme code and other norms. Due to analogue cable distribution, most of these violations by regional channels go unnoticed at the central level. Monitoring such a large number of TV channels has become a nightmare for the authorities. The I&B ministry came to the conclusion that the above is happening due to easy entry norms prevailing in the sector.
Since the policy guidelines for downlinking and uplinking of TV channels were first notified in November and December of 2005, there has been a manifold jump in the number of companies obtaining TV channel licences. As on August 31, 2011, the I&B ministry has granted permission to 745 private satellite TV channels, of which 366 TV channels are in the news and current affairs genre while 379 are in the non-news genre.
However, over 150 such channels are non-operational despite a valid licence while over three-dozen licensees started but closed shop due to financial or other reasons. The management control of several of the licensees was in the hands of people having no experience in journalism or TV operations, leading to violations of several laid-down norms.
Why target only news channels?
News and current affairs on TV have a deep impact on public opinion in the shortest possible time, the government feels. Also, news broadcasters have to be responsible, mature and experienced enough so as to work in public interest and not for their own vested interest. According to the government?s own estimate, since news channels operate in the free-to-air category (i.e. subscribers get the news channels for free without paying any monthly costs like entertainment or movie channels), the only source of income is ad revenue. According to industry estimates, the ad revenue pie from news channels is around R1,700-2,000 crore annually while there are 366 TV news channels in India. Also, the ad revenue pie of news channels is heavily skewed in favour of the national broadcasters followed by large regional players, leaving virtually nothing to over 100 news channels.
The question asked by the government is: despite financial losses, how are a large number of news channels operating? The answer is simple: a number of players are running news channels neither as a business nor for disseminating information, education or entertainment. And this is the reason the entry barriers for owning news channel licences have been strengthened.
