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Foreign and domestic broadcasters are less than enthusiastic about a new bill to regulate their industry

By Alfred Romann

Faced with the possibility of complex and expensive restructuring, media houses have been lobbying to stop a proposed Broadcast Bill before it even gets off the ground.

The Broadcast Bill has created a considerable amount of controversy. Journalists have said that it will curtail freedom of expression in the country through provisions that give the government the ability to virtually take over newscasts in cases of war and emergency.

Broadcasters say the new law could seriously dampen competition in the market.

As it stands, the Broadcast Bill would put in place a number of barriers to widespread ownership by a single organization. Broadcasters or their associated companies would not be allowed to own more than 20% in any other broadcasters, multipe system operators (MSOs) or cable operators. Nor would they be allowed to secure management control or control of editorial policies.

At the same time broadcasters would not be allowed to have more than a 15% share of the total number of television channels in the country.

More significantly, the proposed bill sets up a high barrier to entry, mandating high levels of local content that channels and networks must produce as well as setting minimums for social messages and programming. Channels can, alternatively, choose to pay the government in lieu of their public service obligations. In adition, cable operators will be required to carry two parliamentary channels, two government-funded Doordarshan terrestrial channels and one regional language channel.

“The bill appears to be a retrograde step,” said the India Broadcasting Federation (IBF) in a report last year in response to the bill.

Much of the furore has died down in the months since the bill was first introduced but it may surface again as the Broadcast Bill goes before parliament during the budget session.

The Minister for Information and Broadcasting Priya Ranjan Dasmunshi has so far resisted the opposition, arguing that the bill is important because “no vibrant democracy can allow the accumulation of interest in print, radio and television broadcast systems. We have to ensure diversity of the news and views.”

For broadcasters, the concerns are not so much related to freedom of the press as they are to the business-related issues of ownership, market share and economies of scale.

This is the third time the government has set out to introduce a broadcast bill. Unsuccessful attempts in 1997 and 2001 were spurred by a 1995 Supreme Court judgment in the case of the Government of India & Ors vs Cricket Association of Bengal & Ors that said “the airwaves or frequencies are a public property.

Their use has to be controlled and regulated by a public authority in the interests of the public and to prevent the invasion of their rights.”

But, according to Himavat Chaudhuri, general counsel and head of legal, regulatory and government affairs at Star TV, the current bill is poorly written and could create more problems than it solves.

Legal matters

“If it goes as drafted it will have an impact,” said Dina Dattani, a lawyer with Nishith Desai Associates in Mumbai, but local media houses have already put their lobbying machines into high gear. “A lot of media companies here have become really aggressive.”Dina Dattani, Nishith Dessai Associates

For starters, the wording of the bill implies that if it is adopted, broadcasters and media houses would have to get new licences, possibly before the expiration dates of their current licences.

More significantly, or controversially, the proposed bill says that content must abide by a still-unwritten content code. Currently, broadcasters are regulated by programme and advertising codes, as well as some provisions in the Indian Penal Code. More than that, the Supreme Court of India has set specific standards to regulate content.

But, a regulatory shakeup is planned, with the creation of a broadcasting regulatory authority that will regulate the industry with six full-time members appointed by the government.

This authority will have broad powers to, among other things, develop a content code and determine and prevent accumulations of interest.

The US India Business Council estimates that more than 120 million homes in India now have a television. Half of these are serviced by either cable or satellite, even if the vast majority of these are undeclared to the broadcasters themselves.

Fragmented regulations

Content providers have to share rights for broadcasts with government-owned Doordarshan channels and operators cannot cut off cable customers in the event of nonpayment or signal piracy without written notice.

The proposed Broadcast Bill is an attempt to consolidate fragmented broadcasting regulations into a single overarching law.

According to the India Broadcasting Federation (IBF), however, the government should carry out more consultations, which have yet to be undertaken. The lack of a consultation process creates an “inherent risk of adopting an arbitrary approach that may restrict growth of the broadcasting industry, and thereby adversely affect the consumer”.

Electronic media in India are in their infancy. It was only in the 90s that the broadcasting industry emerged from state control and evolved into a competition-driven industry that includes programmes from around the world, live sports and a plethora of real-time news channels. This change has been driven by government support and considerable private investment.

Diversified landscape

The increased investment has facilitated a general diversification of the media. Although in India this diversification has often applied only to the top echelons of consumers who can afford it, it is growing.

At the end of last year there were 342 channels across the country and the Ministry of Information expects this number to jump to 465 by 2009 and to top 600 by the end of the 11th Five Year Plan in 2012. India’s media landscape now includes traditional newspapers, magazines and television channels but also the internet, mobile television and internet-based television. The Broadcast Bill does not consider any of these.

Ultimately, says the IBF, any bill that does not take into account the broader media environment would be virtually outdated the second it is passed.

“A more constructive approach would require both industry and the government to jointly identify issues that limit our ability to grow, then evolve a consensus around solutions and only then articulate such solutions in law.”

Information technology, the group says, has become the largest contributor to India’s GDP virtually without any government interference. The broadcast industry, left to its own devices, could do something similar.

Clear skies: With a general election on the horizon broadcasters may still have the upper hand.

The industry wants to minimize restrictions on growth and economies of scale; examine the role of public broadcasting; create a level playing field on which the government funded Doordarshan channels operate independently; and ensure that any new regulatory body is fully independent.

Public broadcasters often cater to markets deemed too small or unprofitable for their corporate brethren. Channels that broadcast in languages spoken by a small portion of the population, of which there are more than 20 in India, are one example. Another is highly regional channels or radio stations.

In many countries, funding for these channels comes through voluntary donations (like PBS in the United States) or licence fees (like some BBC channels in the UK) or taxes (like the Canadian Broadcasting Corporation). Public broadcasters are less entertainment vehicles than they are sources of public information. They aim to provide geographic universality, look after the interests of minority groups, protect national identities and provide impartial programming. They should not compete on the basis of ratings but rather seek programming that meets their mandate.

As such, say industry lobbyists, public broadcasters should be included in any regulation and guaranteed their independent status.

In India, the closest thing to public channels are the Doordarshan, which, unlike public broadcasters in other countries, jump back and forth over the line between government-funded institution and private enterprise. In essence, they may be competing freely in the marketplace while benefiting from regulations that give them considerable advantages.

Doordarshan operate in a grey area. They are designated public broadcasters by the Prasar Bharati Act but compete commercially for advertising space.

More than that, the Doordarshan are funded with public money.

Among the many perks Doordarshan enjoy are “mustcarry obligations”, a considerable satellite footprint and mandatory sharing of sports programming.

Sporting chance

It is the latter that has made broadcasters, both foreign and domestic, particularly worried. Doordarshans get virtually automatic access to the rights to sports events without having to pay the hefty fees that private bidders cough up.

The popularity of cricket would normally be a boon for companies that secure the rights but the new bill mandates that live broadcasts of national and international sporting events have to be shared with the Doordarshan channels.

The India Broadcasting Federation believes this goes against recent judicial decisions and is arbitrary and anti-competitive. More than that, it may cut the free flow of funds to sports leagues.

Ironically, the Doordarshan channels generate revenue from sporting events by selling advertising space in broadcasts they don’t pay for.

Something similar happens with the mandatory requirement for public service broadcasting, which private broadcasters believe is not reasonable.

“Must-carry” regulations ensure that programming that would not otherwise be commercially viable makes it to the viewers. But according to the India Broadcasting Federation, the Prasar Bharati – the Broadcasting Corporation of India – may not be the best body to determine which channels independent operators must carry. Rather, says the IBF, an independent body should be set up.

Independence time

The Broadcast Bill will give the Broadcast Regulatory Authority of India (BRAI) the mandate to regulate the industry.

Under the proposed structure, the government will appoint its members. This has not been well received by the industry, which says members should be independent. As far as the industry is concerned, one effective model would be the one used for the Press Council, which includes significant representation from members of the media. In fact, the Press Council could take over the functions of the BRAI, said the IBF in its report.

This was one of the provisions that last year sparked some of the most heated debate and has led to fears of abuse by poorly trained, government-appointed officials who do not understand the realities of the industry.

Whatever shape the BRAI ends up taking, the industry will continue to push for more flexibility.

From its perspective, more channels can lead to more operations and more operations to more economies of scale which can give each operator a stronger foundation to compete.

Unlikely prospect

Rohan Shah, Economic Laws PracticeThe proposed bill has certainly generated a lot of debate but few observers expect it to pass any time soon at least in its current state. An election is on the horizon and accusations of censorship are not what any government hoping to get elected likes to see.

After all, said Rohan Shah, a partner with Mumbai law firm Economic Laws Practice, “the timing is not good … It will pass, but I sense it will pass in a more diluted manner.”

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