India votes in conditional access

Decision paves way for government regulation

NEW DELHI — Despite repeated protests from Rupert Murdoch and son James, India’s Parliament voted Thursday to force cable and satellite operators to use the conditional access system (CAS), a home set-top box allowing consumers to pay only for the channels they watch.

Decision paves the way for government regulation of the pay TV industry, putting in place uniform prices when the amendment to the Cable TV Act goes into effect within six months.

Half of the 40 million cable and satellite homes are expected to switch to CAS. It works out to a three-tier burden for consumers: the $100 cost of a set-top box, a basic charge for over-the-air channels and a charge for pay TV channels. At present, the latter cost varies with location.

Both Murdochs lobbied hard against the change during visits to India in March and April.

James Murdoch, chairman of Hong Kong-based Star TV Network, crossed swords with India’s Minister for Information & Broadcasting Sushma Swaraj over the issue in a keynote address he gave March 15 at an industry function.

Rupert Murdoch, whose News Corp. backs Star, fears CAS will allow cable operators to falsify the number of cable homes, causing broadcasters to lose profits and forcing them to raise the cost of pay channels. Star earns $100 million in cable subscriptions from India, but Murdoch maintains that will drop when consumers are forced to buy CAS boxes.

Other pay TV programmers including Zee TV (the first to enter the market in 1992), Sony, Discovery, Turner and ESPN also will be affected by the new cable policy.

Zee sees transparency

Zee TV CEO and director Dev Naganand does not share the Murdochs’ fears, however. “CAS will bring about transparency in the system,” he said. “At present, people are exploiting loopholes. Underdeclarations have been a long-pending issue that needs to be addressed.

“With cable operators assured of a minimum guaranteed fee, there would be less reason to underdeclare connectivity,” he added. “The total pay market is worth around $163 million, but due to underdeclaration, broadcasters were getting only $12 million. The difference cannot be ignored.”

Separately, the government rejected an application from Star’s Space Television to start a direct-to-home service in India.

Space TV had objected to sharing 10% of its revenue with the government and also asked for certain import taxes to be lowered.

The Murdochs have tried to get the DTH policy reviewed, but the government appears adamant on the policy, which includes a 49% cap on foreign investment.

(Bobbie Whiteman in Hollywood contributed to this report.)