December 3, 2015
Foreign media groups stymied by Indian regulations
James Crabtree in Mumbai
Financial times

Attempts by Rupert Murdoch's Star India and other global media groups to capitalise on recent moves opening up India’s broadcasting sector to foreign investors are being stymied by regulatory barriers, according to senior industry figures.

India last month said foreign companies could now own 100 per cent of cable and direct-to-home satellite operators, up from 74 per cent previously, potentially bringing substantial new funds into the country’s $7bn television sector.

The liberalisation was designed in part to attract investment from major global media groups, such as Time Warner, Comcast or Liberty Global. Mr Murdoch’s Star India, an arm of 21st Century Fox, already holds a 20 per cent stake in Tata Sky, a satellite joint venture with India’s Tata group.

But separate regulations designed to limit cross-media ownership are in effect stopping diversified media companies — for instance those with both satellite and content production divisions — from taking advantage of the liberalisation.

“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,” says Uday Shankar, chief executive of Star India.

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],” Mr Shankar says. “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 Rs975bn ($15bn) by 2020, up from Rs475bn last year, according to KPMG.

Indian Prime Minister Narendra Modi met senior executives from big media groups such as Time Warner and Discovery Communications on a visit to New York in September, at a private meeting brokered by James and Rupert Murdoch.

India is already one of the world’s largest broadcasting markets measured by viewership, with 154m TV homes and a total audience of 675m, according to research group BARC.

The cable and satellite sectors are fragmented, however. 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.

Both cable and satellite TV operators need to find fresh capital as they look to invest in expensive new broadband infrastructure and fend off competition from telecoms groups with ambitions to offer entertainment to smartphone users.

“This market will consolidate, and badly needs investment,” says Vivek Couto, founder of Media Partners Asia. “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.”