New Delhi, Aug. 20: The government has rejected STAR’s application to uplink for its news channel and has set the tone for changes that can see an Indian entity pick up a stake in the Murdoch media conglomerate’s business in India.
A group of ministers has found that there is “an almost conclusive circumvention of the guidelines” in STAR’s business model for its news channel, STAR News.
The group, comprising law minister Arun Jaitley, finance minister Jaswant Singh and information and broadcasting minister Ravi Shankar Prasad, favours the extension of the policy for foreign direct investment in print media to the television sector as well.
In effect, the group wants the guidelines reworked to make a 51 per cent holding by an Indian entity mandatory in television companies seeking licence to uplink.
Such an amendment of the rules for television companies will force STAR to restructure its news business.
The ministers have decided to announce a reworked or amended policy after consulting Prime Minister Atal Bihari Vajpayee and deputy Prime Minister Lal Krishna Advani.
The current policy under which STAR made the application for an uplink licence caps foreign direct holding at 26 per cent. STAR floated Media Content and Communication Services (MCCS) which applied for the licence and drew up a business model that envisaged relationships with Touch Telecontent and Rent Works.
The group of ministers took stock of the inquisition of STAR by the information and broadcasting ministry and the report of an inter-ministerial group of secretaries and found that STAR was bypassing the rules “by a series of interesting financial relationships with backend companies”, a high-level source said.
The assessment was that MCCS “is a front company with no editorial control, no power of appointment and no power to raise equity and finances”.
Apart from the ministers, the group of ministers’ meeting was attended by secretaries and officials of the three ministries and from the department of company affairs.
The reworking of the policy will be done without STAR News having to suspend or disrupt its operations in any way.
“We do not want to shut anyone out but the terms and conditions of the law need to be followed. If compliance requires revisiting the law, that will be done,” the source said. STAR, or any other company, would be given time to conform to the amended guidelines.
The changes being considered include measures to “lift the corporate veil” and ensure that the company seeking the long-term uplink licence is actually running a television news channel.
The source said the reworked policy and government decision would be announced “very shortly”.