HITS will likely provide an impetus to digitization through market-based incentives—a cheaper service that provides better picture quality driving adoption—as opposed to policy-mandated digitization, or Conditional Access System. Over a period of time and if it attracts a large number of consumers, HITS might also have a cooling effect on carriage fees, as the wide digital bandwidth of the service will allow greater channel capacity.

The policy guidelines issued today lays down a framework for HITS operators, the equivalent of Multi-System Operators in the cable ecosystem. The service will be allowed in both C-band and Ku band. ‘C’ band is used by traditional cable, while Ku band is used by DTH. Ku band has the disadvantage that it’s not suited for a tropical country like India with high rainfall—signal attenuation aften results in poor service during rains for DTH customers. 

Total direct and indirect foreign investment upto 74% will be allowed in HITS companies. However, prior approval of the Foreign Investment Promotion Board will be required if foreign direct investment in the company exceeds 49%.

Existing permission holders—two so far, including Essel Group—will have to migrate to the new policy regime within three months.

1) India is underadvertised. The country’s ad spends to GDP ratio is 0.55, while the global average is 0.86 and in the US, it’s 1.18 (Source: FICCI-KPMG media report 2009). WPP Group’s country manager Ranjan Kapur attributed such low ad spends to the domination of the services sector in India’s GDP. “About 53% of the GDP is now from the services sector, which is notorious for not needing advertising,” Kapur said, adding, “the good news is that manufacturing is growing”.

2) The biggest challenge before the industry is to monetize the content it produces. In television, only a small fraction of pay TV revenues come back to content creators and broadcasters due to underdeclaration by cable operators and other leakages. “There are inequities in splitting these revenues,” Kapur said. Star India CEO Uday Shankar emphasised the point that we can see better content on television only if there can be a better way of monetizing it. Shankar also said that in India the TV and print revolutions are still ahead of us.

Pearson (NYSE: PSO) Plc’s deputy chairman in India, Khozem Merchant, spoke about the success his firm has had in monetizing its content on FT.com, Financial Times’ online edition. “In the age of Twitter and crowdsourcing, people want a credible, authoritative news source,” he said. “Invest in quality content, make it exclusive” was his prescription for monetizing content online.

3) Business Standard editor Sanjaya Baru argued that media in India has gone through a quantitative growth but the qualitative growth is yet to happen. He said he expects a phase of consolidation now and argued that this must be allowed to happen “before we are allowed to be swept off our feet” by deep-pocketed foreign companies that now see India as a lucrative media market. Baru said he was not a protectionist but that made little difference to other panelists who thought a consolidation need not be a “nationalist consolidation”.

4) Fossil media Vs new media: The media industry in India is “at a special spot today that will not last forever,” said Dave Senay, CEO of Fleishman-Hillard Inc. Due to its demographic underpinnings, “the traditional media bubble will continue for sometime,” Senay said. Digital allows companies to market down to a unit of one. India should use this time “to learn from the mistakes of others to prepare the digital platforms of the future,” he said.

When panel chair and The Indian Express editor-in-chief, Shekhar Gupta asked Business Standard‘s Sanjaya Baru is they could be called fossil media, the latter protested. “Print is not fossil in India. It is going to grow. I’m an optimist for print,” Baru said. 

“We want to allow FM players to be able to broadcast some news, weather and sports updates and other relevant information. News will have to be sourced from Akashavani,” the minister said. The ministry is also proposing a revenue share between music royalty owners and FM stations, she added. Currently, some royalty owners insist on a flat fee irrespective of the size of the station. “We want a system where a small station can also afford the music by paying a percentage of its revenues,” the minister said. 

At the Summit, which saw a spirited discussion on the future of the media and entertainment sector and the desired policy paradigm, Soni said the country needed a more robust ratings system. “Ratings have a direct impact on programming. It goads on production houses to create more competitive content, and there’s a lot of concern about how some lines are being crossed as a result. We get a lot of complaints about some of the programming on our channels and we need a system where the tastes of the whole country, including the rural areas, are being captured,” the minister said. She repeatedly asserted that the government was not looking at regulating content and said she was against any system of licensing or greater control by the state.

The unreal proliferation of channels in the country—over 500 at last count—came up for discussion at the Summit. While the simple math that the annual television revenues of $2 billion cannot support so many channels was pointed out, Soni said on the sidelines that there was concern over the profile of people who were launching these channels. “People are hired and then they lose their jobs overnight. They feel cheated and they come to me. What do I do?” she said, adding that the ministry is considering a more rigorous vetting process before granting licenses to TV channels. “It’s not a licensing process. We just want to ask more questions. Who is the CEO? Does he have any credentials in the media business?” she added.

“Though the Act of 1867 has been amended on earlier occasions also, there is a need to drastically amend it, and I admit it should have been done some time ago, as its provisions currently are inadequate,” PTI quoted the minister as saying. The changes are apparently meant to prevent publications of a ‘frivolous’ and ‘non-serious’ nature from coming up.

Currently, the changes are being vetted by the law ministry, the minister said. This suggests that the process is at a fairly advanced stage. The new act will be known as the Press and Registration of Publications Act 2009. Parts dealing with the registration of books are not being changed.

Provisions for FDI, facsimile editions of foreign publications as well as Indian editions of foreign publications will be made in the new Act. A seperate definition for magazines and related provisions for them, will be made under the new Act. In the current form, the Act does not differentiate between a newspaper and a magazine.

Soni also said the ministry is being urged to increase the foreign investment cap in print media to 49% but there is a section within the industry that is opposed to it.

The country’s intelligence agencies have been asking the government to ban or regulate VoIP services such as Skype as conversations over these networks cannot be monitored and this is perceived to be a security threat. The story says the government has decided to ban the service in India, but hasn’t decided on a date for it.

The situation is reminiscent of a long standoff last year between the government and Research In Motion, Inc., the Canadian maker of the Blackberry smartphones. The government http://www.rediff.com///money/2008/may/30black.htm” title=“had demanded access”>had demanded access to the encryption key to be able to intercept emails sent between two Blackberry phones.

“The business was causing some discomfort within the company and the board, and hence it was discontinued,” our source said.

The firm will continue to do barter deals, a practice that has become common among media companies, under which ad inventory is traded for products and services such as real estate, cars, airline tickets, etc.

Several media companies, including HT Media Ltd, Jagran Prakashan Ltd and Bennett, Coleman & Co. Ltd did ads-for-equities deals in the market boom days and holds significant equity portfolios in public and privately held companies. The practice has been a lightning rod for criticism due to the inherent conflict of interest when a media outlet is covering a company in which the publisher/broadcaster has a financial interest in. Media firms have usually defended the practice, saying there is a chinese wall between the editorial and business sides and positive editorial coverage is not promised when such deals are struck. 

The offending story—Two ITBP Jawans Injured In China Border Firing—ran on the front page of India’s most read English newspaper on 15 September. The report, by Nirmalya Banerjee in Kolkata and Prabin Kalita in Guwahati, said this was the “first incident where bullets have been fired since the landmark 1996 Sino-India agreement in which both sides pledged not to open fire, no matter what the provocation…,” and attributed the information to “a highly placed intelligence source”. “ITBP officials at its headquarters in New Delhi declined to confirm the incident,” the story said.

A ministry of external affairs spokesperson termed the report “factually incorrect” the same day. TOI carried a clarification the next day on page 17, as part of a package of related stories.

The TOI story was among a stream of reports and analyses in newspapers and television channels over the past month or so, about “Chinese incursions” into Indian territory. “If you’ve tuned into one of the more hawkish Indian television channels or are reading the views of the many experts on India and China, it might seem like the two countries are at each other’s throats,” the BBC noted. 

During the past week, the Prime Minister, the national security adviser as well as the highest-ranking general of the Indian Army have made statements to the effect that the reports are exaggerated and there is no unusual activity on the Indo-China border.

It’s unclear what charges, if at all, the government will press against the reporters. According to PTI, the Indo-Tibetan Border Police (ITBP), has filed a complaint with the Delhi Police against the reporters. A spokesperson at the home ministry was unavailable for comment as were other government officials, due to a public holiday.

“We do not give comments on news items as a practice and I have nothing to say on this issue,” wrote Amit Rai, director, legal, at Bennett, Coleman & Co. Ltd, publisher of The Times of India, responding to an email asking for comment about the story that appeared in The Hindu. A spokesperson for BCCL did not respond to an email requesting comment.

If the matter does go to court, it might reach a stage where a court could ask the reporters to reveal their sources. “If there is a criminal charge against you, you have to defend yourself. You can refuse to reveal your sources, but then you should be prepared to go to jail,” said Prashant Bhushan, a well-known public interest lawyer in the Supreme Court of India.

Bhushan said it was high time the media was held accountable for irresponsible reporting that buys into plants by motivated sections of the society and affects national security or disrupts communal harmony. “A lot of what has been passing for journalism in this country amounts to criminal offense,” Bhushan said. “If an intelligence agency has planted this story, let the source be revealed,” he added.

B.G. Verghese, a former editor and a member of the press council, said that it would be foolish for the state to press charges. He added that while a lot of reporting on the border situation has been equally foolish and irresponsible, there were other ways to deal with the situation. “This is a political problem. It’s not wise to seek a legal solution to a political problem.” He suggested that peer pressure works well to restrain media and the government could also complain to professional associations such as the Editors’ Guild or the Press Council of India.

“My suggestion is that a reporter can be asked to reveal to a judge, privately in his chambers and not in the courtroom, what the source is. If the judge is convinced that it is a reliable source and the reporter indeed got the story from there, he or she can then decide to let the matter rest,” Verghese said.

The defendants in the case are Star Plus and producer Sidhartha Basu of Big Synergy. 

Opposition MPs have demanded a discussion on the show in the Rajya Sabha, the upper house of Indian Parliament. 

She would not like to impose a content regulator on the industry, but welcomed the delegates to tell the ministry if they would like an independent quasi-government regulator or they would rather evolve self censorship mechanisms and agencies. Industry delegates have committed to evolve a consensus and keep the ministry informed on their preferences regarding the matter.

Industry delegates were pleased by the minister’s transparent approach to the problem, our source said, adding that she seemed to be under no political pressure to regulate content.

Content regulation has become a hot topic of discussion after some MPs demanded a discussion on reality shows saying they were crossing the boundaries of acceptable standards. The government has agreed to a discussion on a future date. Subsequent to the discussion, the I&B ministry had issued a show cause notice to Star Plus channel over their show Sach Ka Saamna.

This is no laughing matter even if you are a foreign national. The country will seek Interpol assistance in deporting foreign offenders, according to the IANS story.

Here are some reactions (1, 2, 3) from Pakistan’s media.

The project—Crime and Criminal Tracking Network and Systems—will help make criminal and conviction records available to law enforcement agencies anywhere in the country and will also help prevent criminals from fleeing the country. The project will also facilitate better planning to counter crime by linking the National Crime Records Bureau with state bureaus, TOI says. The project is expected to be completed by 2010-11.

The government had approved the project last month. A press statement then lays out further details of the project.

contentSutra first reported that Menon’s appointment was in the pipeline.

In Menon, I&B ministry gets an official who has a great deal of experience and familiarity with issues in the media and entertainment domain. Menon had earlier served as joint secretary for five years and then as additional secretary for a year at I&B ministry. Menon’s last appointment was as CMD of National Aviation Company of India Ltd (Air India).

1) Fringe Benefit Tax abolished: This was a key demand from many players in contentSutra’s Wishlist For The New I&B Minister. Many key overheads for media houses, such as travel, come under Fringe Benefit Tax. The proposed introduction of a Goods and Services Taxes (GST) regime is seen as a positive for all media companies. 

2) Excise duty of 5% on Set Top Boxes (STBs) reintroduced: The government had exempted STBs from duty last year to encourage digitization. Most of the STBs used by the DTH and digital cable industry are imported from China and Korea.

3) Increased DAVP rates to stay: During the height of economic slowdown and ahead of general elections, the government had increased discounted ad rates paid by various government agencies by 10%, in addition to discontinuing a 15% agency commission. These waivers will stay for another six months.

Reactions:

Anjan Mitra, Executive Director-India, Cable and Satellite Broadcasting Association of Asia (CASBAA):

“Any additional tax imposed on (import of) set-top boxes (STBs) is like taking a step back. Imposition of an additional 5% duty on STBs will hit the spread and process of digitalization in India, which had been flagged by TRAI, MIB and the PMO as a priority area. With boxes becoming likely to become costlier, the consumer ultimately will have to shell out more.”

Salil Kumar, COO, Dish TV India Ltd:

“The additional burden of 5% tax on STB will hinder the growth and will discourage the DTH industry from expanding business; this tax hike will be passed on the customers. Although we do welcome the removal of FBT (NYSE: BT) and introduction of GST (Goods & services tax), which will provide some relief to DTH industry from multiple taxes from Centre & the states.”

Anand Shah, analyst, Angel Broking:

“THE Budget is overall positive for the Media industry, particularly Print Media and marginally negative for Distribution companies. The six month extension of stimuli package for Print Media (10% hike in DAVP rates and waiver of 15% agency commission) is positive for Print Media companies. However, a 5% hike in customs duty on Set Top Boxes comes as a marginal negative for Distribution companies (Dish TV, WWIL). Finally, a complete exemption from FBT, currently at 20%, and confirmation of implementation of GST by April 2010 will be of a great boost for both Print and Broadcasting sector, apart from the Film Industry.” 

Amit Kumar, analyst, Kotak Securities:

“Negative for TV distribution. The basic customs duty rate on digital STBs was set at 5%. We note that nearly the entire consumption of STBs in India is imported. This would be negative for companies such as DITV (LSE: ITV), WWIL, HVL given (1) pass through of higher STB cost to consumers will result in lower volumes and (2) absorption of incremental STB cost will impact already stretched financials.”

The Controller of Certifying Authorities (CCA), a government agency under the Department of Information Technology, is the agency that is entrusted under the IT Act to block websites. N. Vijayaditya, of the CCA, confirmed the development. “There were several complaints against the site. We have taken action under the relevant sections of the IT Act and blocked the site,” he said. When asked if the agency will give a chance to the owners of the site to defend themselves, he said nobody has come forward so far with such a request. He said he could not say if the agency will pursue legal action against the operators of the website.

There has been mounting concern over upcoming amendments to the IT Act that gives the government absolute powers to block any website without a hearing or assigning any reasons. In a recent column in The Hindu, media critic Sevanti Ninan laid down several concerns arising from the absolutist rules that will soon have the power of law. “What about a right to be heard before the blocking? There is none,” she wrote.

Launched in March 2008, Savitabhabhi.com is an adult cartoon strip featuring a married Indian woman’s sexual adventures. Bhabhi is Hindi for sister-in-law. It quickly acquired a cult following with its funny plot lines and the uniqueness of having an Indian setting in a porn strip. The strip received much press last year, from Indian (Mint, Tehelka) and international (The Telegraph, The Independent) media outlets. According to Alexa.com, Savitabhabhi is the 82nd-most-visited Indian website, attracting more visitors than Bseindia.com, the website of the Bombay Stock Exchange. In February, when Mint interviewed the anonymous creator of the strip, the site ranked 45th in India.

The site’s popularity did not come without its perils. The portrayal of a married Indian woman as wildly promiscuous raised the hackles of many in a largely conservative nation. One of them, Bangalore-based N. Vijayashankar, who describes himself as a “techno-legal information security consultant”, waged a sustained campaign against Savitabhabhi, complaining to the government’s Computer Emergency Response Team (CERT-IN) as well as the Director General of Police in Karnataka in October last year. “Cartoons are a more participative medium. Videos don’t do as much damage. When a child is watching a cartoon, he imagines himself as the character. This has a deeply corrupting influence on our youngsters. This, apart from the fact that an Indian name was being used in such an obscene cartoon, is what led me to make the complaint,” Vijayashankar said. “A child will see a Savitabhabhi among his relatives.” When asked if there was any scientific basis to his thesis that pornographic cartoons did more damage to young people than pornographic videos, he said that was his own psychological interpretation. (Vijayashankar has no training in psychology.)

The law could come to Savitabhabhi’s rescue, according to Pawan Duggal, cyber law expert and an advocate at the Supreme Court of India. “Under Section 67 of the IT Act of 2000, publishing or transmitting obscene electronic information is punishable with up to five years’ imprisonment and Rs1 lakh in fine. The creators of Savitabhabhi can challenge the ban, arguing that it is an expression of their thoughts and what is expressed is not lascivious. When there is so many explicit pornographic content easily available, why should they be singled out?

“It is a cultural cum legal issue. The courts will have to decide whether Savitabhabhi is a lascivious site or not. Kamasutra and the sculptures of Khajuraho are far more explicit but not considered obscene. So they do have an argument,” Duggal said.

The creators of Savitabhabhi are known only by their screen names. In an email interview with contentSutra, the main brain behind the site, who goes by the handle Deshmukh, said they were exploring legal options. “We are talking to our lawyers and trying to figure out our options. The initial reaction is since the site does not pose any threat to India’s national security and is not illegal, it must be against some international treaty to block it. However, we are still working on the legal angle.” Deshmukh said the creators of Savitabhabhi were based in the European Union and had not received any communication about their site getting banned. The domain is registered in the US, Deshmukh said. The site used to get more than a million visitors every week before the ban, he added.

“Wow, India has now joined the elite club of China, Iran, North Korea and suchlike in the area of Internet censorship,” said graphic novelist Sarnath Banerjee. Efforts to reverse the ban have already sprung up on the Internet. A website, Savesavita.com, attempts to channelize support and action against censorship.

As we reported earlier, the title ‘Financial Times’ is owned in India by The Times of India publisher Bennett, Coleman & Co. Ltd. Early last year, shortly after it emerged that Financial Times was in talks with the Network18 Group to launch a daily in India, a BCCL subsidiary, Times Publishing House Ltd, registered several titles, such as Asian Financial Times, Financial Times Asia, Daily Financial Times, Emerging Financial Times, Financial Times of Asia. FT, FT Asia, FT Network, FT South Asia, FT World, FT Worlwide, WFT, World Financial Times and Worldwide Financial Times, according to the information on the RNI website. Financial Times India has approached the Intellectual Property Appellate Board, a government body that settles disputes over trade marks, to obtain rights to its globally recognized title. The case is next scheduled for a July hearing.

FT has also received clearances from the Foreign Investment Promotion Board to make the necessary investments. Final clearances from the Ministry of Information and Broadcasting may be the only remaining procedure required before the paper can hit the stands.

FT’s global competitor, The Wall Street Journal, launched a facsimile version of its Asian edition last month.

Related

• Updated: Financial Times To Launch Facsimile Edition In India
• Financial Times Receives FIPB Approval For Facsimile Edition
• Financial Times and Bennett, Coleman Lock Horns Yet Again Over Trademark

In a move that will bring smiles to the digital cable and DTH industry, the ministry has recommended to the finance ministry that import of digital set top boxes be exempted from duties for five years, to help the nascent industry to grow swiftly. DTH players are saddled with losses due to expensive customer acquisition—set top boxes are subsidized by the service providers. Currently, STBs, imported from China, Korea and Taiwan, attract a special additional duty of 4% and a countervailing duty of 8%, according to this Business Standard story. The proposal is part of an exercise where individual ministries give recommendations pertaining to their sectors to the finance ministry ahead of the budget.

From the BS story: “Among other proposals, the I&B ministry has suggested categorisation of broadcasting as an infrastructure service so that the benefits and incentives applicable for the infrastructure sector could be extended here. The ministry has also proposed parity in applicability of service tax between broadcasting and print sectors, a reduction in the fringe benefit tax for media personnel from 20 per cent to 5 per cent, and removal of anomaly on duty levied on imported films and tapes, a senior official said.”

High levels of taxation in the DTH sector, removal of Fringe Benefit Tax for media personnel, modernizing the Press Act and a parity in tax levels between the print and broadcasting sector were all highlighted in contentSutra’s feature Wish List For The New I&B Minister: The CEO’s Agenda.

Multiplex chain PVR Ltd intends to invest Rs250 crore in the next 18 months to expand its exhibition, production and bowling businesses, reports The Economic Times. The company has put on hold expansion of its food court business. PVR will invest Rs150 crore in the exhibition business and will add 57 screens across 10 properties this fiscal. 

Photo Credit: AP

Promising to take up all issues related to the media industry in a transparent manner, Union Minister for Information and Broadcasting Ambika Soni today said she would pursue the matter after consultations with stakeholders concerned.   

“I will speak to all the stakeholders concerned on various aspects of the media industry. Anything related to the media will be made known to you in a transparent manner.   

“Journalists are the important cog of the media machinery and whatever demands have been pending related to them would be addressed,” Soni told reporters after formally assuming charge of the I&B ministry here. 

With Sircar’s appointment, there are now new hands in several key decision making establishments that govern the media and entertainment sector. Trai (Telecom Regulatory Authority of India) has a new boss in J.S. Sarma, while I&B ministry has a new minister of the cabinet rank, two junior ministers and a new secretary.

“The controversial draft rules released this month empower a designated Central government officer to block public access to any information on the Net for wide-ranging reasons of security and national interest,” the story said, adding that under these regulations, offenders do not even get a hearing to defend themselves, despite the offense attracting a steep punishment of imprisonment upto seven years.

The new rules are being drafted under the Information Technology Amendment Act 2008, which has already received parliamentary and presidential assent and will come into effect once the various rules are finalized, the story says. 

The government made abortive attempts to gag news channels after their coverage of the Mumbai terror attacks.

Related

• Online News Publications May Need To Register With Indian Government, Else Be Blocked

Sensex, the benchmark index of the Bombay Stock Exchange, rose 2110.79 points, or 17.34%, to close at 14,284.21 when trading was halted, and on the National Stock Exchange, Nifty rose 651.5 points, or 17.74%, to close at 4323.15. The chart shows how some key media stocks performed. Sun TV Network, TV18, Adlabs Films, Deccan Chronicle and Wire and Wireless India were among major gainers.

“It’s clearly a strong and uncluttered positive verdict from the market, of a kind that we haven’t seen in a long time. What we have got is possibly the strongest actionable government. The euphoria that we saw today will subside incrementally, but the trend will remain positive,” said Nikhil Vora, managing director, IDFC-SSKI Securities. “FDI (foreign direct investment) relaxation is more of an issue in sectors such as retail and aviation, and not so much in media. I don’t think news media is going to see any relaxation soon, and in sectors such as DTH, markets have already taken it into account. Today we had just 47 seconds of trading, so it’s pointless to discuss any specifics before a few market sessions,” Vora added.

Smita Jha, associate director with consultant PricewaterhouseCoopers, said the industry will benefit if the new government utilizes the mandate to move swiftly on policymaking. “There are several pending policy decisions in the media sector and the delay in decision making is significantly hurting certain sectors. The delay in deciding on CAS, for instance, is hurting the television industry very badly. Is FDI cap being raised to 74% to bring it at par with telecom? Is the government going to restrict cross media ownership, or not? Uncertaintly and the lack of clarity on policy are holding up investment decisions both by domestic entrepreneurs as well as foreign investors. With the stronger mandate, the new government has an opportunity to move swiftly on all these fronts. Otherwise, we also risk losing the momentum on gaining the confidence of foreign investors,” Jha said.