Or, will the recent hike in FDI limit for news channels have no significant impact?
The Indian government recently announced the relaxation of foreign investment norms in 15 sectors. With this arrived the news that 100 per cent FDI has now been allowed in DTH and Cable Networks (MSOs and LCOs), while foreign investment in the uplinking of news and current affairs TV channels has been raised to 49 per cent from the existing 26 per cent. The policy also mandates that the largest Indian shareholder needs to have at least 51 per cent of the total equity. So, will this development interest foreign investors? And, what other possibilities does this unlock? Industry experts share their views:
Vikram Chandra, CEO, NDTV Group
As far as editorial control is concerned, it is, of course, best left to the editors, and should be delinked to that extent with the ownership of the channels. The ownership should ideally be left to long-term stable hands, who will not want day-to-day and minute-by-minute numbers.
Paritosh Joshi, CEO, India TV
That being said, I also have another point of view. When we think news, we tend to think of big marquee names, but the emerging pattern right now is that the television business is going more and more local. So, we are seeing a sort of splintering from national to regional, regional to provincial, and state to sub-regions within the state.
Add to that the prospects of digital cable, which has the ability to hyper-localise. There is also a whole range of brink businesses that are keen to diversify from print, and get into radio for instance, and also keen on getting into television. Corresponding to this, there are also investors who might be interested in specific areas beyond Hindi and English. For instance, a Bhojpuri-speaking Surinamese media owner in Holland might say, "This is my time to go to Bihar". But, all this takes time, as a policy announcement starts to kick in only when a potential investor somewhere outside actually studies this. And, that is a bridge built either by an investment banker or a consultant who will pour into the small-type, and meet different prospects. So, 49 per cent doesn't mean unlocking riches immediately, it'll be a slow-burner, and will have an impact in the long run.
Jehil Thakkar, head of Media and Entertainment Practice, KPMG India
Abneesh Roy, associate director, Edelweiss Securities
Also, profitability is a big concern. It is a fragmented market. There is very little differentiation between the top three or four players, who are very close to each other in terms of market share, so, it's not a very high margin or high growth sector. In fact, even post this news, I don't see many deals happening in the near future, as investors look for returns, but in the long run, things could be different. India is one of the largest markets in the world, with an untapped news media portfolio. So, they might want to wait for the sector to get digitised after which there could be growth in ARPU levels. As for the stocks, they will settle at their fair value, and unless any actual investment happens from foreign players, they will not see that much up-move.