New DTH regime: TRAI for tighter cross-holding norms

Our Bureau New Delhi | Updated on July 23, 2014

TRAI has suggested that Adjusted Gross Revenue should be calculated excluding service tax, entertainment tax and sales Tax or VAT paid to the Government from the gross revenues.

Regulator for allowing presence on DTH or cable; longer licence period

Entities such as Subhash Chandra’s Essel Group and Kalanithi Maran’s Sun Group will not be able to have a presence in both direct-to-home and cable sectors if the Government accepts the Telecom Regulatory Authority of India’s proposals on new DTH licensing regime.

In its recommendations released on Wednesday, the TRAI has suggested that vertically integrated broadcasters (entities which run TV channels as well as distribution platforms) be subjected to additional regulation and be permitted to control only one distribution platform.

At same time, the TRAI has also recommended a longer licence period and reduction in licence fee for the players.

This is expected to create greater stability in the capital-intensive industry.

The regulator has suggested that the DTH licence be issued for 20 years instead of current 10 years.

It has, however, retained the one-time entry fee at ₹10 crore.

It also wants the licence fee reduced to 8 per cent of the adjusted gross revenues (excluding service tax, entertainment tax, sales tax/VAT) from the current system of charging 10 per cent of gross revenues. These recommendations have come after the Ministry of Information & Broadcasting sought TRAI’s views on certain terms and conditions in DTH licence regime.

The Ministry will now take a final call on these suggestions. Smita Jha, Leader-Entertainment and Media Practice at PwC, said extension of the licence period to 20 years is beneficial as the DTH industry has been recognised as an infrastructure-intensive sector.

However, she added, TRAI must look at the issues of cross-holding and control in a more holistic manner.

According to Ashish Pherwani, Partner EY, reduction in licence fee and providing longer period licences will help the DTH industry recover capital investments and subscriber-acquisition costs.

Report on media ownership soon

Rahul Khullar, Chairman TRAI, said on Wednesday that the recommendations on issues related to media ownership will be ready by August. Recently, corporates have been getting into the media space, with some of the big houses buying TV news channels. This has generated a debate on corporate influence on news coverage.

The Government had asked TRAI to examine the issue. In February 2013, the TRAI had issued a consultation paper on subject. The regulator has sought public comments on the need, nature and level of restrictions and safeguards with respect to vertical integration in the broadcasting and distribution sectors and cross-holdings across various media sectors.

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Published on July 23, 2014
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