The Hindu Business Line : TRAI recommendations on foreign investment

Telecom Regulatory Authority of India’s (TRAI) recommendations on foreign investment in the broadcasting and carriage services sectors, if implemented, would be a major positive for stocks in the broadcasting sector.

The proposals to hike the FDI limit in cable and DTH may benefit players such as WWIL and Dish TV in this space.

The higher FDI limit of 49 per cent in news broadcasting (up from 26 per cent currently) could attract greater interest from foreign players such as Turner Networks, NBC Universal and Fox. These players have been very active investors in the Indian non-news broadcasting and media space. Turner Networks and NBC Universal have teamed up with Miditech and NDTV for a venture into the entertainment space.

News broadcasters in the country have been entering into content-sharing agreements with foreign news broadcasters (TV 18 with CNBC, UTVi with ABC). The relationship may now extend beyond content-sharing into equity stakes.

As of March 31, 2008, the FII interest in key news broadcasting players, barring Television Eighteen, has been insignificant. FDI has been nil. The increasing fragmentation in the news business and the minority 26 per cent stake allowed so far may have deterred foreign players from making strategic investments in this space.

more headroom

With a 49 per cent limit offering more headroom, such companies may like to explore a higher share of the growing media pie. Television 18, Global Broadcast News, NDTV and UTV might be best placed to benefit from these recommendations, if implemented.

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