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Ominous breaking news: Govt withholds STAR News uplink nod

New Delhi, July 23: The government has withheld its consent on STAR News’ application for permission to feed its news bulletins live (uplink).

STAR News’ permit to continue uplinking expires Wednesday midnight. The Union information and broadcasting ministry, which has granted weekly permits to uplink, will reconsider the matter tomorrow.

The withholding — not rejection — of permission does not mean that STAR News goes on the blink immediately.

STAR News has got extensions on its permit to uplink four times. A fortnight ago, a Mumbai court issued a stay on Videsh Sanchar Nigam Limited (VSNL) from disconnecting the live feed connection for STAR. Till the government asks VSNL to appeal for a vacation of the stay order and the court accedes to such a request, STAR News can continue to uplink.

However, the withholding of permission sets a precedentthat can have fearsome consequences for media companies. STAR News’ weekly uplinking permits were being granted on the understanding that its shell company, Media Content and Communication Services (MCCS), will be given a long-term permit after the government is satisfied that it is acting in accordance with guidelines.

Withholding the permit means that the government can resort to measures that effectively exercise control over content, a scenario that any media outfit will dread.

The ministry has concluded after examining a sheaf of documents submitted by STAR that MCCS is “bound hand and foot and gagged”.

“This was not the purpose of the policy change. We do not find their answers at all satisfactory on some issues,” a ministry source said. Guidelines on foreign holding in uplinking companies lay down that foreign direct investment has to be less than 26 per cent. While STAR has stuck to the rules on equity, the government suspects that it is not in compliance with “the spirit” of the rules.

Several queries were sent to STAR in two instalments to explain MCCS’ shareholding and business interests.

“We cannot say that we have the full detailed answer to the question ‘who owns MCCS’. It is rather difficult to understand their financial arrangements,” a ministry source said.

Among the points on which the government has not yet got satisfactory answers are: how does MCCS propose to run a capital-intensive news channel on a small paid-up equity base of Rs 1 lakh, the nature of MCCS relationship with companies such as Rent Works Limited and Touch Telecontent to which business is being outsourced.

An official said inquiries from the Department of Company Affairs (DCA) were likely to follow.

STAR’s business development manager, who is also the STAR’s nominee on the board of directors of MCCS, Kaushal Dalal, who was in the ministry giving clarifications to the government, said: “We have been consistently seeking two-week permits (to uplink) pending clearance of our application. We want to get the long-term permission to uplink. It is my understanding that the court order restains VSNL from switching off our signals. The government may revert to us later tonight or tomorrow.”

While the ministry official said the stay order may be heard in court tomorrow, Dalal said that was unlikely.

It is not clear why the government has withheld permission today.

It granted a weekly extension last week, too, by when it was known that a court stay order was effective on VSNL.

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