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Rupe back in loop

Politicos nix pay TV regs feared by Murdochs

NEW DELHI — Father-and-son media moguls Rupert and James Murdoch must have been surprised, but pleased, by last week’s news from India, where they have been fighting government changes to the pay TV business.

In a shocking reversal, the country’s upper house of Parliament refused to pass the lower house’s decision 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.

This would have paved the way for government regulation of the pay TV industry, putting in place uniform prices by amending the Cable TV Act.

Politicos expected the bill to become law after the government pushed it through the lower house on May 15.

But, in a surprise turnaround, opposition Congress party MPs nixed the measure just four days later.

Now the government is considering bypassing Parliament and issuing a federal order to get the law on the books.

Half of the 40 million cable and satellite homes are expected to switch to CAS if it eventually becomes reality.

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 would 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 says. “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 adds. “The total pay market is worth around $163 million, but due to underdeclaration, broadcasters were getting only $12 million. The difference cannot be ignored.”

However, it’s not all good news for the Murdochs. The government rejected an application from Star’s Space Television to start a direct-to-home satellite 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.)