View from Delhi: Media firms looking for foreign partners

The media industry, print as well as electronic, is getting ready to follow in the footsteps of auto and telecom industries, which were thrown open to foreign investors some years ago and have prospered mightily. It's a two-way game.

Indian media companies are looking for foreign partners and vice-versa, and both are in a hurry to make deals and score over their rivals.

Foreign media groups can now invest up to 26 per cent equity in India's print media as well as in TV news channels, and as much as 74 per cent in non-news media. But there is a rider. There can be only a single majority Indian partner, who will then run the show, not the foreign partner.

Stakes

Initially, groups like Rupert Murdoch's Star TV tried to wriggle around the rules by selling stakes to its friends and associates. Nothing doing, said the government, and the attempt fell through.

Star TV's Indian partner will now be the ABP (Anand Bazar Patrika) group from Calcutta which owns several newspapers and magazines in the city, but this will be its first foray in TV. The group has picked up a 74 per cent stake in Star News for Rs740 million.

Several other similar deals have also been approved. Standard Chartered, a bank, has picked up 14 per cent equity in NDTV for Rs530 million. And London-based Financial Times is buying 14 per cent stake in Business Standard, also a financial daily, for Rs140 million.

Edition

Another daily, Hindustan Times, is starting a Bombay edition for which it needs a lot of cash. The paper is owned by the Birla family. It is said to have offered a 20 per cent stake in a new company to Australia-based AMP-Henderson for Rs1.25 billion.

There are many other irons in the fire. Bennett Coleman, which owns India's largest English daily, Times of India, is hiving off its magazines into a new company for which it is looking for a partner with deep pockets.

A small specialist magazine group, Cyberlndia, is trying for a franchise arrangement to bring out an Indian edition of Businessweek, a US business weekly.

The India Today group, which publishes magazines and owns a TV channel, Aaj Tak, is interested in bringing out an Indian edition of Time news magazine, which it distributes in India. It has just purchased the Indian edition of Readers Digest from Tatas.

Future

Most of the deals involve English language newspapers, though it is the non-English press that is growing much faster and has left English language press far behind. Only 5 to 6 per cent of Indians are comfortable with English. The great majority of Indians prefer Indian language newspapers which carry a much bigger political clout.

The future, however, belongs to television, which generates annual revenues of about Rs125 billion almost twice that of print media — Rs65 billion. There are 30,000 cable operators in the country, most of them small time businessmen who charge between Rs100 and Rs500 a month, of which the broadcaster gets only about a tenth.

To get round this, the TV companies tried to get the government to introduce a 'Conditional Access System' or CAS with set-top boxes to monitor viewing. But the boxes are too expensive and TV viewers have refused to cooperate.

If you can get a hundred channels for Rs250 a month, why pay 20 times as much for a fancy box may not work at all and will be useless when DTH (Direct to Home) is introduced.

The writer is an India-based senior economic advisor