Professional Documents
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FDI in Media Industry in India
FDI in Media Industry in India
ownership interests continues with consequences for the future. Cross media
ownership, as some media house owners may say, may be in the initial phases o f
its impact in India but the trends owing their manifestations to the origin and
practicality o f the term are already much more pronounced on the ground in the
Here are some o f the current trends obtaining in the media industry in
India:
in media, the Indian Government has thrown open all the splits o f media;
with varying equity caps. For example, it is 26% for news publications and 100 %
for non-news publications, 100 % (with certain conditions) for television, 100 %
for film production, 100 % for advertising, 20% for radio etc. (Table 14).
As a result, by June 03, 2008, the I& B Ministry cleared 17 titles in news
and current affairs category, 115 scientific and technical titles and 180 Indian
editions o f foreign specialty publications for FDI. By the same day, 05 titles in
news and current affairs category, 09 scientific and technical titles and 18 Indian
Ministry for the same. Some o f the key local groups in whose brands the FDI has
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been made include Hindustan Times, India Today, Times Group, CNN-IBN, Jagran
Over the past few years digital media has emerged as an important platform
o f communication. Digital marketers are recognising this trend and are now
advertising, which was Rs.4,350 crore in 2014, is projected to touch Rs.6,250 crore
(FICCI-KPMG:2015).
Currently, the mobile phone subscriber base is almost nine times the installed
base for PCs in India. By the end o f 2014, the country had around 116 million
20\9(livemint.com: 2015).
With eyeballs shifting from print and television to online media, the
second screen phenomenon has become a reality that cannot be ignored. This
app developers and online streaming companies to engage users through relevant
mobile-led strategies.
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Google and Facebook account for close to half o f the online advertising
revenue in Asia, and the dominance can be attributed to their massive user base.
reach a whopping Rs. 16, 200 crore by 2019. Thus leaving behind conventional ad
spending platforms like print (8.00%), television (15.50%), radio (18.10%) and
next five years (Kumari: 2008).\n addition there is a 100 per cent FDI
revenue o f Rs. 41, 400 crore for 2014-15 is expected to touch a figure o f
Rs. 47, 400 crore for 2015-16 at an annual growth rate o f 14.2 %. Industry
2015).
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and Rediffusion -Dy<fe/?-having a share o f 50 percent o f the industry outlay
(Kohli: 2005).
present top 7-8 such agencies in the country account for more than three-
gone for tie ups and acquisitions with foreign partners leading to a
monopolistic trend in this Rs. 1200 crore industry segment. This industry
2006;dipp.nic.in/English/policies/FDI_Circular_2015.pdf:2015).
indirectly. Market liberalization has made media more o f a corporate entity than a
community voice. New definitions and new values dictate the news media o f
30 years ago, 55-77% of the total revenue of the newspapers came from
readers; today it is the advertisers who sustain the media. From a supplementary
at present, the share o f advertising has gone through an upswing all these years. In
92
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case o f television channels it has been upto 70-80%. This is to the extent o f
media houses, advertising comprises 60% o f the total revenues o f the group
the content being churned out by the present day media outlets.
media in the country as against the English language press. In the Southern states,
Telugu, Kannada and Malyalam dailies have exhibited considerable growth and
During 2014-15, while English press grew below 5%, regional newspapers
bureaus or district editions as has been successfully done by the Telugu daily
local editions in regional languages. For instance. The Times of India has entered
deep down South in Kerala and Tamil Nad while The Hindu has launched its
Punjab which has helped the newspaper in good penetration across states o f
Punjab, Haryan, Himachal Pradesh and J&K (Consultative Paper, TRAI: 2013).
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Similarly, there are about 7-8 states in the country where monopoly o f a
single media house is on the rise. It means that more than 50 percent o f the
viewership, readership and circulation in these states belong to the same group.
Likewise in states like Kerala, Gujarat and Rajasthan two dailies have been
dominating the media scene, with a significant share in both circulation and
They own newspapers, magazines, radio, television, cable etc. (Table 12).
Table 12
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No independent media watchdog group
At present there are no active media watch dog groups in India which
could be on constant vigil and actively engaged in analysis and research on media
issues based on objective analysis and reliable methodology. That is why we often
hear about rows over TRP ratings or circulation figures which often are alleged to
With the choicest TRP ratings or circulation figures on its side, any media
outlet can get away with any slot. It becomes a matter o f gate keeping only (Rao:
2006).
reference to look into the issues o f cross media, content, subscription and live
sports feed etc., the body is yet to come into force and in what form nobody
Even the TRAI and ASCI, Hyderabad’s various reports have stressed the
need for setting up o f a regulatory body in the country to look into these issues.
Murdoch in India
Rupert Murdoch, the global rule buster and media predator, has already set
his foot in India. That is at least what the statistics tell us about. Murdoch and his
Star TV are in India now for more than a decade or so. In this period it has risen
to the second position (set to become N o.l media house o f India) in terms o f
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revenues and reach, after the Bennett Coleman & Company Ltd. At present 70
percent o f NewsCorp’s Asian revenue comes from Star India alone where it is the
top most broadcaster in the country followed by ZEE Telefilms and a distant
It was this threat that led the local media moghuls including the owners o f
The Times o f India, India Today, Zee etc. to come together on one platform which
was named Indian Media Group (IMG). IMG tried successfully with the
Government o f India and got the FDI rules revised to minimise the foreign control
o f the Indian media and prevent Murdoch from further spreading his influence
(Sridhar: 2003).
Interestingly, Star TV India has dropped TV from its name and is rechristened as
And despite the caps imposed by the Government, Murdoch already has
some key allies in India. It includes Aveek Sarkar o f Anand Bazaar Patrika for
ABP News, Tata Sons for DTH, Rahejas for cable distribution, Mittals for Radio
mannerism and social etiquettes. Many media professionals consider this new
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change a welcome thing to follow. But quite others view it as a consumer demand
from the audience while another set o f public opinion takes it as a sort o f cultural
aggression.
newspapers now. Almost all big newspapers are in colour, sleek size and pages
are designed much more aesthetically than ever before (Survey conducted by the
Television has now become the source o f instant and primary information
by way o f its round the clock availability. Frequent news breaks, live- ins and
voice- overs have led television channels to surpass newspapers as the primary
source o f news, particularly political, stock market and sports news. It has led to
an ‘appetizer effect’ among consumers where they search for more o f the same or
same o f the more from various cross media outlets (Raman: 2008).
companies. Advertising revenue projections for 2015 are Rs. 17,460 crore up
from Rs. 15,490 crore in 2014. During the last year, the television industry showed
Digitization o f the cable sector, although not yet complete, has achieved
critical mass. Changes in channel pricing like the introduction o f a la carte also
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made a difference to the structure o f the industry. The entertainment television
industry also expanded last year with the launch o f new channels such as Zindagi,
It is here that cross media ownership can have a deciding and critical role
in controlling the information flow to the consumers. For example a story carried
by a website or news channel when reported ditto by a newspaper from the same
group has a much more superimposing effect on the minds o f the consumers than
O f all these trends however, FDI into country’s media industry is an issue
in currency with a lot o f activity taking place on the media landscape. FDI is also
the second biggest thing to happen in the country’s media history after the
Let us now analyse the scope and extent o f Foreign Investment in media In
detail.
strongly and one o f the key sectors that benefited from this fast economic growth
is the Entertainment & Media (E&M) industry. This is because the industry is a
cyclic one that grows faster when the economy is expanding. It also grows faster
than the nominal GDP during all phases o f economic activity due to Its Income
elasticity wherein when incomes rise, more resources get spent on leisure and
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Further, consumption spending itself is increasing due to rising disposable
incomes on account o f sustained growth in income levels, and this also builds the
1,15,900 crore for 2015-16 as against Rs. 35, 300 crore in 2007 is expected to
register a Compounded Annual Growth Rate (CAGR) o f 13.9 per cent to touch Rs
1,96, 400 crore by 2019 wherein digital advertising has emerged to have the
highest growth rate o f 44.5 per cent during the last year while all other sub-sectors
Curiously, the FDI inflow in the media sector from April 2000 to Feb
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FDI. how and what
The debate over foreign investment in media in India is as old as the
country’s independent existence. The subject was discussed in the First Press
Commission under the title o f "foreign nationals as owners" and the report viewed
In 1955 the Union Cabinet endorsed this view and decided against any
foreign investment in the press. The Second Press Commission also discussed the
subject in the context o f "foreign money in the Indian press" and recommended
should have any foreign ownership either in the form o f shares or in the form o f
However, things have changed considerably since then. The country has
Government has opened up many sectors including core sectors like oil
exploration, nuclear energy, deep-sea mining etc. for foreign investment and the
room.asp:2008).
Media in India has grown up considerably in the last about two decades o f
The Indian Media industry has significantly benefited from the liberal
foreign direct investment (FDI) regime and most segments o f the E&M industry
today allow foreign investment. Now the FDI is even permitted in the two core
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sectors o f the industry as well, print media and radio. Films, advertising,
television and other segments are already open to foreign investment to the extent
o f 100 percent FDl through the automatic route (FICCI-KPMG Report: 2014,
2015).
In the print media segment, 100 percent FDI is now allowed for non-news
publications and 26 percent FDI is allowed for news and current affairs
in India. This policy is helping foreign journals save on the cost o f distribution
The FM radio sector too is now open for foreign investment with 26
percent FDI being allowed. There are over 250 FM (frequency modulation) radio
stations in the country (and the number is likely to cross 1,200 in five years) As a
result, the radio sector is expanding rapidly with forecast growth rate o f 18.10
percent per annum to capture an expected market o f Rs. 3900 crore by 2019
(FICCI-KPGM: 2015).
However, all this goes with its own set o f guidelines. A brief summary o f
equity caps for FDI in the Indian media industry is given below:
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Table 14
Summary o f FDI equity caps in various sectors o f Indian media industry
Sector Extent of FDI, caps etc
Advertising FDI is permitted up to 100% through the automatic route
Films FDI in all film-related activities such as film financing,
production, distribution, exhibition, marketing etc. is permitted
up to 100% for all companies under the automatic route
TV software 100% FDI permitted subject to:
production • All future laws on broadcasting and no claim of privilege or
protection by virtue of approval accorded
• Not undertaking any broadcasting from Indian soil without
Government approval
Cable FDI limit up to 49% inclusive of both FDI and portfolio
networks investment. Companies with a minimum 51% paid up share
capital held by Indian citizens are eligible for providing cable
TV services under the Cable Television Network Rules, 1994
Direct-to-home Maximum 49% foreign equity allowed including FDI/NRI/FII.
Within the foreign equity, FDI component should not exceed
20%
FM radio Total foreign investment including FDI by OCB/NRI/PIO etc.,
portfolio investments by FIIs (within limits prescribed by RBI)
and borrowings, if these carry conversion options, is permitted to
the extent of not more than 26% of the paid up equity in the
entity holding a permission for a radio channel subject to the
following conditions:
• One Indian individual or company owns more than 50% of the
paid-up equity excluding the equity held by banks and other
lending institutions
• The majority shareholder exercises management control over
the applicant company
• Has only resident Indians as directors on the board-
• All key executive officers of the applicant entity are resident
Indians
Print FDI up to 100% is permitted in publishing/printing scientific and
technical magazines, periodicals and journals. In the news and
current affairs category, such as newspapers, FDI has been
allowed up to 26% subject to certain conditions including:
• The largest shareholder must hold at least 51% equity
• Three-fourths of directors and all executive and editorial staff
have to be resident Indians
(Sources: FICCI reports on E&M industry: 2006, 2014, 2015;
2006).
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As a consequence o f the facility o f foreign investment in the media
industry, it has witnessed increasing fund flows in most o f its segments, including
Financial Times and Daily Mail respectively. Vernacular media too got its share
Walt Disney, ESPN-Star Sports, Star, Discovery, BBC etc.) established foreign
such as Hathway and Hindujas. Similarly, in the television content space, the
Infact, till June 03, 2008, the Information & Broadcasting Ministry cleared
17 titles in news and current affairs category for FDl including proposals from
«
brands like Mid-Day Multimedia Ltd, Business India Publications Ltd, Deccan
Chronicle Holdings Ltd, Dhara Prakashan Pvt. Ltd, Writers & Publishers Ltd and
DT Media & Entertainment Pvt. Ltd. In the non-news media segment, scientific,
foreign specialty publications-which can have FDI to the tune o f 100 per cent-the
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I & B Ministry cleared one hundred fifteen and one hundred eighty proposals
Film/are getting FDI for its products like Filmfare Classics, Filmfare Star
Beauty and Filmfare Star Homes from Worldwide Media Ltd., Infomedia India
Ltd and IDG Media Pvt. Ltd. having diluted their stake in Cricinfo Magazine and
Indian Channel World are a few cases (Report, Business Standard: June 22,
2006).
^ Over the last fifteen years, the Entertainment and Media industry has
attracted FDI inflow to the tune o f Rs 19,197.30 crore from April 2000 to Feb
2015 (dipp.nic.in/English/Publications/FDI_Statistics:2015).
Some o f the larger FDI investments have been in HT Media Ltd, which
sold off 24.64 per cent stakes for Rs 193.99 crores, and Jagaran Prakashan that
offloaded 26 per cent equity for Rs 3.21 crores. Business Standard too sold 13.85
The growth o f Indian Media & Entertainment industry has been phenomenal
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Table 15
Select illustrations o f strategic foreign investments in the
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India and
entry into
Hindi
television
content
market
New Vernon Jagran TV Television Equity stake Expansion
Bharat, production and
Mauritius & strengthening
based broadcasting o f operations
Reuters, UK Times Global Television Equity stake Expansion
Broadcasting production and
& strengthening
broadcasting o f operations
(Source: FICCI-PwC Report: 2006)
who want easing o f the equity caps or waiving o ff any other limits for foreign
New Delhi, thinks the 26 % equity on FDI in news media is very little and argues
when the Government allowed cent per cent FDI in Atomic Energy, what was the
logic o f putting a ceiling in media which, arguably, won’t encourage the big
investors to put in money in India under the current limits. On the argument that
lower equity helps Indian entities or audience insolate from influences or dictates
o f outside media owners and control lies with Indian owners even in outlets where
investment has been made, Padgaonkar cites the example o f STAR television
which, in an effort to become the highest revenue earning television company, has
almost Indianised its domestic content with Saas-Bahu, Kasuti and other serials
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.'■^L\ I O v \ . • ' v
with its content. After all a media company is in business to make profit that it
cannot do by alienating or offending the local audience and the host country’s
believes that the purpose o f allowing FDI in media would be defeated through its
own executors if the equity caps are not further relaxed to allow many big
If the FDI norms are relaxed more and more such publishing concerns o f
India. Many brands like The Times, Living Media etc., as we will see in the
following chapter, have gone in for new ventures with the help o f FDI to write
and consolidate their success stories. Other media giants also, taking full
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