NEW DELHI: Television Eighteen India has informed the Bombay Stock Exchange that it will comply with the government order issued in mid-March restricting foreign equity investments in news and current affairs channels to 26 per cent or below. It sent a notice to the BSE stating the same early this morning.
The company is holding a press conference this afternoon giving details of how CNBC Asia Pacific's controlling 51 per cent stake is being restructured in the Mauritius registered CNBC India, which runs the business news channel.
The move comes much before the stipulated deadline given by the ministry.
Earlier, it looked as if Television Eighteen Ltd, the 49 per cent Indian joint venture partner in the Mauritius-registered CNBC India that runs the business news channel, would have a a difficult task on its hands to salvage the situation. The reason being that it appeared difficult to visualise the Singapore-based CNBC Asia Pacific (which holds the controlling 51 per cent stake in this JV) accepting such a drastic whittling down of its holding in the franchise.
In mid March, the Indian cabinet put a 26 per cent foreign direct investment (FDI) cap on television news companies desirous of uplinking from India. This is at par with the FDI cap prevalent in the print medium relating to news and current affairs.
The 26 per cent FDI cap, unlike that in other sectors like DTH and the print medium, is inclusive of investments in a television news company by foreign financial institutions, overseas corporate bodies and non-resident Indians.
Existing news channels (like CNBC India and Zee News) that are currently on air but do not satisfy these conditions have a year in which to restructure themselves as per the new policy.
The government has also made it clear that though 100 per cent FDI is allowed in entertainment channels, if there is any amount - small or big - of news and current affairs programming, the same terms and conditions as apply to news channels would be in force in this case as well.
It needs noting that of the seven feeds that CNBC has in the region, four (Asia, Australia, Singapore and Hong Kong) are wholly owned subsidiaries, while in South Korea it is present through a licencing deal.
A JV arrangement similar to that of CNBC India exists vis-a-vis Nikkei CNBC in Japan. Nikkei CNBC is 51 per cent owned by Nikkei and 49 per cent by CNBC Japan, which is CNBC Asia's Japanese affiliate.
Media observers had said earlier that even if CNBC were to agree to offloading 25 per cent of its stake (which looks highly unlikely) there is the "small" matter of TV18 having to raise the resources to buy out that share.
But then India is such a big market - and promises to get bigger over the years - that CNBC Asia actually agreed to reduce its shareholding in CNBC India. After all, closing down the business channel - at a time when CNBC India has managed to establish its brand equity - would not be the right response to the Indian government's policy decision, something that is the prerogative of any country.
Still, at that time, TV-18 insiders indicated that the Indian company is "best suited" to become the majority partner in the JV as getting in another company may complicate matters further.