ITV

Category: Regulators

  • MIB notifies amendments in the Cable Television Networks Rules, 1995

    MIB notifies amendments in the Cable Television Networks Rules, 1995

    Mumbai: The Ministry of Information and Broadcasting has notified amendments in the Cable Television Networks Rules, 1994 thereby providing the operational mechanism for implementation of the decriminalised provisions of the Cable Television Networks (Regulation) Act, 1995.

    The Ministry issued a notification appointing 3 October 2023 as the date from which provisions of the Jan Vishwas (Amendment of Provisions) Act, 2023 and entries in the schedule thereto with respect to the Cable Television Networks (Regulation) Act, 1995 has come into force.

    Section 16 of the Cable Television Networks (Regulation) Act, 1995 dealt with the punishment for contraventions under any of its provisions. This section had provision for imprisonment which might extend upto 2 years, in case of first instance and 5 years for every subsequent offence.

    With an aim to make the Cable Television Networks (Regulation) Act, 1995 more business-friendly and to boost the investor confidence in the sector, punishments specified under Section 16 were re-examined and were decriminalised through the Jan Vishwas (Amendment of Provision) Act, 2023. The imprisonment provisions have been now replaced with monetary penalty and other non-monetary measures like Advisory, Warning and Censure. These measures will be enforced through the “designated officer” defined in the rules notified today. Moreover, Section 16 now introduces an appeal mechanism against the order made by the designated officer.  Sections 17 and 18 were omitted for being redundant.

    Some of the benefits of decriminalisation of provisions under the Cable Television Networks (Regulation) Act, 1995 are:

    ●   The amendments are likely to encourage compliance with the Act without resorting to harsh punishments and are sensitive to minor or unintended contraventions. The inclusion of advisory, censure, and warnings in the range of penalties suggests focus is on educating and encouraging compliance rather than solely punishing contraventions.

    ●   The amended provision allows for the use of a range of penalties, which provides flexibility in addressing different types of contraventions. It allows for a more proportional response to the nature, specificity and severity of the contravention.

    ●   The amendment in the rules defines a “designated officer” for imposing penalties. This streamlines the enforcement process and makes it simple in addition to unburdening the criminal justice system.

    ●   The amended provision explicitly addresses subsequent contraventions and in addition to the provision for higher penalties, includes the provisions for suspension or cancellation of registration. This promotes consistency and discourages habitual or repeated contraventions.

    ●   The inclusion of an appeal mechanism provides individuals or entities the opportunity to challenge penalties or decisions. This ensures a fair and transparent process and safeguards against potential abuse of power.

    ●   The definition of common terms in cable industry like “platform services” and “local cable operator” have been defined in the rules for the first time to bring about uniformity in their usages.

    Currently, there are over 1400 Multi-system Operators registered with the Ministry of Information and Broadcasting. Decriminalisation of the contraventions of provisions of the Cable Television Networks (Regulation) Act, 1995 and replacement with civil penalties shall boost stakeholders’ confidence and promote the ease of doing business.

  • MNC media juggernaut arrives

    MNC media juggernaut arrives

    Mumbai: The National Company Law Tribunal’s (NCLT) approval for the Zee Entertainment -Sony merger without conditions offers further respite for Z valuation, which has been muted for the past two years (the stock has not given any absolute returns). The company will now move to Registrar of Companies to file for the merged entity once the final NCLT order is released; in the interim, we await the outcome of the SEBI and SAT cases against the Goenka family, the promoter, which may not have any adverse impact on the merger, as Punit Goenka has already stepped down from the Board; in a worst case scenario, the Board and shareholders will appoint a new CEO in case SAT order is against Punit Goenka. Post the regulatory approvals, Z will be delisted, and the merged company will be relisted as Sony-Zee wherein 100 shares of Z will enable shareholders to get 85 shares of the merged entity (~2-3 months process). We do not expect any change in the deal contours despite the long delay, as NCLT has approved the scheme. Further, Sony will get a majority shareholding of 50.8 per cent in the merged entity whereas the Goenka family’s stake will move up to 3.99 per cent, which includes the non-compete fee. We do not expect any impact from creditors filing a case against the NCLAT order.

    Moat remains for the merged company

    Z-Sony commands an ad market share of 24 per cent as on CY22, below the other large peer, Star-Disney, which is at 33 per cent; formation of a large entity on the broadcasting side would lead to cost and revenue synergy, which would offset the negative impact of lower growth rates (India TV ad revenue CAGR has been flat over FY20-23).

    Valuation: reiterate Buy with a higher TP of Rs 340

    We expect better execution in terms of strategic initiatives, due to global expertise and better CG (corporate governance) initiatives , which should propel higher cashflow. We do not expect Z-Sony valuation moving to 32- 33x fwd. P/E (peak valuation multiple in FY18). This is because India’s media landscape has changed with 1) TV broadcasting growth rates converging, and 2) digital business offering limited opportunity for monetization & scale due to disruption; however, we expect the negative impact to be offset by: 1) the merged company, and 2) an MNC-backed firm, which would lead to P/E at a 40 per cent discount vs peak (32x one-year forward). We introduce FY26E for the merged entity and value the core broadcasting business at 20x (from 17x) one-year forward P/E (potential exit of Disney from linear TV may enable Z-Sony to gain market share). We rollover to 24 Sept (since synergies will take some time to kick in) SOTPbased TP of Rs 340 from Rs 300 (after factoring in higher sports losses), with a cash infusion from Sony, synergy and valuing the OTT business 4x one yr. fwd. EV/Sales; our PAT estimate incorporates potential OTT losses.

    The credit of this article goes to Elara Capital SVP Karan Taurani.

  • Delhi high court refuses to restrain Parle from using the trademark ‘For The Bold’

    Delhi high court refuses to restrain Parle from using the trademark ‘For The Bold’

    Mumbai: The Delhi high court on 18 September 2023 refused to restrain Parle from using the trademark ‘For the Bold’ on its products in a suit filed by PepsiCo. PepsiCo had sought to restrain Parle from using PepsiCo’s registered trade mark ‘For the Bold’ on its products. In response, Parle challenged the validity of PepsiCo’s trademark ‘For the Bold’ and sought framing of the issue of invalidity of PepsiCo’s trade mark.

    The Delhi high court while allowing the aforesaid plea of Parle raising the issue of invalidity, rejected the prayer of PepsiCo to restrain Parle from using the trademark ‘For the Bold’ on its products. However, it has directed Parle to not use the tagline ‘For The Bold’ as the predominant part of its advertising campaign and not to alter the label on its “B Fizz” bottle without prior approval of the court.

    Ankur Sangal, Pragya Mishra and Shashwat Rakshit from Khaitan & Co appeared for Parle.

  • TRAI further extends comments on ‘Regulatory Mechanism for Over-The-Top (OTT) Communication Services, and Selective Banning of OTT Services’

    TRAI further extends comments on ‘Regulatory Mechanism for Over-The-Top (OTT) Communication Services, and Selective Banning of OTT Services’

    Mumbai:The Telecom Regulatory Authority of India (TRAI) has further extended comments on ‘Regulatory Mechanism for Over The-Top (OTT) Communication Services, and Selective Banning of OTT Services’. The last date for receiving written comments on the issues raised in the Consultation Paper invited from stakeholders was fixed as 4 August 2023 and for counter comments by 18 August 2023.

    On the request of stakeholders for extension of time for submission of comments, the last date for submission of written comments and counter comments was extended up to 18 August 2023 and 1 September 2023, and thereafter up to 1 September 2023 and 15 September 2023 respectively.

    Keeping in view the request of an industry association for extension of time for submission of counter comments, it has been decided to extend the last date for submission of counter comments up to 29 September. 

  • Axis Finance moves to NCLAT – more noise, no impact

    Axis Finance moves to NCLAT – more noise, no impact

    Mumbai: Axis Finance has approached the National Company Law Appellate Tribunal (NCLAT), Delhi against the National Company Law Tribunal (NCLT) order approving the merger of Zee and Sony. The NCLAT has served notice to Zee in response to Axis Finance’s plea.

    We believe the above issue of Axis Finance approaching the National Company Law Appellate Tribunal (NCLAT) will not have any impact on the merger between Zee and Sony because the claims being pursued by Axis Finance, which amount to Rs 1,000 mn, are not directed at Zee but rather at its parent company, Essel Group. As mentioned in the NCLT merger order (Zee/Sony), Axis Finance has previously approached various legal bodies, including the Debt Recovery Tribunal (DRT) and high courts, for above claims; however, judgements on the same have not been in their favour (Axis Finance). Therefore, we believe these claims lack merit and will not impact the merger. Also, appeals with NCLAT may continue for months even after the merged company is formed, just like in the case of PVR-Inox merger (Consumer Unity & Trust Society appealed in NCLAT against the merger and the case got dismissed in August 2023 – six months after the merged company of PVRINOX was formed).

    As for the current status of the merger, the merged company is progressing with the Registrar of Companies (ROC) filing process, post receipt of the NCLT merger order. They are also engaged in discussions regarding Closing Precedents (CP) (the merged company may want to include July/August financials as well), which may result in a delay of two to three weeks in the merger timeline. We believe the record date is usually given one week prior to delisting. Considering the marginal delay in CP, the record date for the merger could be towards the last week of October 2023. Subsequently, relisting is expected to take place in the first or second week of December 2023 vs our earlier expectation of the second week of November 2023. Additionally, the company will need to submit details of the merged co. Board of Directors to the Ministry of Information & Broadcasting (MIB), before the record date is finalised.

    Further, the SEBI/SAT issue (with promoters) too may not impact the merger timelines as the NCLT merger approval is without any condition.

    We have a BUY recommendation on Zee with a 24 Sept TP of Rs 340 – we maintain our positive stance on the company; PFA our latest company update post the NCLT merger approval.

    The credit of this article goes to Elara Capital SVP Karan Taurani.

     

  • TRAI releases consultation paper on ‘Digital Inclusion in the Era of Emerging Technologies’

    TRAI releases consultation paper on ‘Digital Inclusion in the Era of Emerging Technologies’

    Mumbai: The Telecom Regulatory Authority of India (TRAI) has released a consultation Paper on “Digital Inclusion in the Era of Emerging Technologies” on 14 September 2023. The consultation paper has aimed to explore and address the challenges and opportunities presented by the rapid advancement of emerging technologies, with a focus on ensuring inclusivity for all segments of society and industries particularly Micro Small and Medium Enterprises (MSMEs).

    In the consultation paper, TRAI has emphasised the need for a robust policy framework and collaborative efforts among stakeholders to ensure participation of individuals in digital economic activities. The authority has also analysed various gaps in digital inclusion present in the country such as the mobile internet usage gap, rural urban internet penetration disparities, gender gaps in internet access, etc. as well as gaps identified from some global indices. Proactively prioritising inclusion can create an ecosystem that benefits every individual, fostering a more equitable and accessible digital economy.

    TRAI has also identified various challenges being faced by the Micro, Small and Medium Enterprises (MSME) sector in the country from the adoption of new and emerging digital technology solutions. As the MSME sector contributes significantly towards the nation’s economy, it is imperative that the MSMEs are empowered to contribute more towards the digital economy through new emerging technology solutions, especially the micro-enterprises as the majority of the MSMEs are micro-enterprises.

    The consultation paper, for seeking inputs from the stakeholders, has been placed on TRAI’s website (www.trai.gov.in). Written comments on the issues for consultation are invited from the stakeholders by 16 October 2023 and counter comments by 31 October 2023.

     

  • TRAI releases recommendations on FM radio broadcasting

    TRAI releases recommendations on FM radio broadcasting

    Mumbai: The Telecom Regulatory Authority India (TRAI) has released recommendations on FM radio broadcasting in order to discuss various issues related to FM Radio broadcasting.

    In order to discuss various issues related to FM Radio broadcasting, TRAI held a meeting with representatives of AROI on 5 August 2022. Representatives of AROI, inter-alia, raised the following issues for consideration of the authority:

    (i) Permitting private FM Radio channels to broadcast independent news bulletins

    (ii) Availability of FM Radio receivers in mobile handsets

    After considering all comments or counter-comments received from stakeholders during the consultation process and further analysis of the issues, the Authority has finalised its recommendations. The salient features of the recommendations are given below:

    (1) The annual licence fee of a FM radio channel should be de-linked from NOTEF.

    (ii) The license fee should be calculated as four percent of the Gross Revenue (GR) of the FM radio channel during the respective financial year. GST should be excluded from Gross Revenue (GR).

    (iii) The Government may take appropriate measures to provide relief to the FM radio operators to address challenges posed due to Covid-19 pandemic.

    (iv) Private FM Radio operators should be allowed to broadcast news and current affairs programs, limited to 10 minutes in each clock hour.

    (v) The program code of conduct as applicable to All India Radio for news content may also be applied to Private FM Radio channels.

    (vi) Functions or features pertaining to FM radio should remain enabled and activated on all mobile handsets having the necessary hardware. Built-in FM radio receivers in mobile handset must not be subjected to any form of disablement or deactivation.

    (vii) A Standing Committee, headed by a senior officer of Joint Secretary or above level, to oversee and monitor the compliance by mobile phone manufacturers (or importers) may be established by MeitY. The committee should include key stakeholders such as MIB, AROI, MAlT, and ICEA.

    (viii) An online grievance redressal portal should be provided for submitting information or complaints in case of any noncompliance as regards enablement of FM radio functionality in such mobile handsets that have the necessary functionality for FM receivers.

     

  • TRAI extends consultation paper on ‘Review of Regulatory Framework for Broadcasting and Cable services’

    TRAI extends consultation paper on ‘Review of Regulatory Framework for Broadcasting and Cable services’

    Mumbai: Telecom Regulatory Authority of India (TRAI) has released a consultation paper on “Review of Regulatory Framework for Broadcasting and Cable services” on 8 August 2023. The last date of receiving comments from the stakeholders on the issues raised in the consultation paper was fixed as 5 September 2023 and counter-comments as 19 September 2023.

    Keeping in view the requests received from the stakeholders for extension of time for submission of comments on the above-mentioned consultation paper, it has been decided to extend the last date for submission of comments and counter-comments up to 19 September 2023 and 3 October 2023 respectively. 

  • TRAI releases recommendations on ‘License Fee and Policy Matters of DTH Services’

    TRAI releases recommendations on ‘License Fee and Policy Matters of DTH Services’

    Mumbai: The Telecom Regulatory Authority of India (TRAI) has issued the recommendations on “License Fee and Policy Matters of DTH Services”. The Ministry of Information and Broadcasting (MIB), vide letter No. 2/33/2021-BP&L dated 2 January 2022, sought recommendations of TRAI under Section (11)(1)(a) of the TRAI Act, 1997.

    The reference alluded to the amendments carried out by the Department of Telecommunications (DoT) in Unified License (UL) Agreement. Vide the amendments dated 25.10.2021 and 06.10.2021, DoT has rationalised the definition of Adjusted Gross Revenue (AGR) and Bank Guarantee (BG) quantum respectively under structural reforms.

    DTH operation in India is governed by the policy guidelines for obtaining license for providing DTH broadcasting services in India. These guidelines prescribe a License Fee (LF). LF is a non-tax fee levied on a service provider against the privilege of being permitted to carry out a licensed activity. As per the provisions of the guidelines, the DTH operators are required to pay a LF, which is eight per cent of Adjusted Gross Revenue (AGR) on a quarterly basis to MIB.

    Bank Guarantee (BG) is a type of financial instrument to ensure that a service provider pay their dues on time and is obligated to fulfil the terms and conditions of the license agreement. The extant DTH guidelines prescribe a BG for an amount of Rs five crore for the first two quarters, and thereafter, for an amount equivalent to LF for two quarters and other dues not otherwise securitised.

    Based on the reference, a consultation paper on “License Fee and Policy Matters of DTH Services” was issued by TRAI on 13 January 2023. Written comments and counter-comments on the Consultation Paper were invited from the stakeholders by 27 February 2023 and 13 March 2023 respectively. The Authority received seven comments and one counter-comment from various stakeholders. All these comments and counter-comment are available on TRAT website www.trai.gov.in. An Open House Discussion was also convened on the issues raised in the Consultation Paper on 20 April 2023 through video conferencing.

    The salient features of the recommendations are as follows: –

    a. Gross Revenue (GR) shall comprise revenue accruing to the licenced entity by way of all operations/ activities and inclusive of all other revenue! income on account of interest, dividend, rent, profit on sale of fixed assets, miscellaneous income etc. without any set-off for related items of expense. The recommendations also provided certain explanations with the definition.

    b. Applicable Gross Revenue (ApGR) for arriving at the revenue calculations for license fee should be equal to the total GR of the licensee as reduced by the following items:

    i. Revenue from activities under a license/permission issued by DoT;

    ii. Reimbursement, if any, from the Government;

    iii. List of other income to be excluded from GR to arrive at AGR:

          a. Income from Dividend;

          b. Income from Interest;

          c. Income from sale of fixed assets and securities;

          d. Gains from Foreign Exchange rates fluctuations;

          e. Income from property rent;

          f. Insurance claims;

          g. Bad Debts recovered;

          h. Excess Provisions written back

    *subjects to conditions given in Annexure-IJI of these recommendations

    c. Adjusted Gross Revenue (AGR) is calculated by excluding GST paid to the Government from the ApGR, if ApGR had been included as a component of GST.

    d. MIB should revise the Form-D (the Statement of Revenue and Licence Fee for DTH Licensees) and adopt the format of Form-D as prescribed in the recommendations. The process for the submission of Form-D should be Page 2 of 4 made end-to-end online with the facility to upload all the related documents in digital mode via a single window system.

    e. MIB should develop a robust mechanism for the deduction verification process through a single window portal. The Licensee is required to produce to the Licensor, all such books of accounts and documents required for reconciliation which have a bearing on the verification of revenue for the purpose of calculating License Fee.

    f. DTH Licensee should pay an annual license fee equivalent to three per cent of AGR.

    g. License Fee for DTH Licensees should be brought down to zero in the next three years. DTH Licensees should not be charged any License Fee after the end of the financial year 2026-2027.

    h. The Licensee should submit an Initial Bank Guarantee from any Scheduled Bank to the MIB for an amount of Rs five crore for the first two quarters.

    i. Thereafter, the Licensee should submit a Bank Guarantee (covering Financial and Performance Bank Guarantee) from any Scheduled Bank to the MIB for an amount equivalent to the Initial Bank Guarantee (i.e., Rs five crore) or 20 per cent of the estimated sum payable, equivalent to License Fee for two quarters and other dues not otherwise securitized, whichever is higher.

    j. Once the license fee becomes zero, the Licensee should submit a Bank Guarantee (Performance Bank Guarantee) for a fixed amount equivalent to the initial Bank Guarantee (i.e Rs five crore) from any Scheduled Bank to the MIB, which should be valid for a minimum of one year and renewed every year to ensure it remains valid for the entire currency of the license agreement.

    k. The Licensor should be at the liberty to encash the Bank Guarantee in full or part in the event of violation of any of the license conditions.

    l. Electronic Bank Guarantee should be encouraged and permitted for ease of doing business.

    m. These recommendations including the definition of Gross Revenue (GR), Applicable Gross Revenue (ApGR), Adjusted Gross Revenue (AGR) and the percentage of AGR to calculate the License Fee for the DTH Liçnse may be made applicable ‘prospectively’.

    In the highly competitive television distribution market, urgent measures are required for the DTH sector. The quick implementation of these recommendations will help the sector and enable all-round growth. 

  • MoS IT Rajeev Chandrasekhar assures swift action: Data Protection Board to be notified of new rules soon

    MoS IT Rajeev Chandrasekhar assures swift action: Data Protection Board to be notified of new rules soon

    Mumbai: Minister of state for electronics and IT Rajeev Chandrasekhar has assured that the government will shortly notify the Data Protection Board (DPB), along with appointment and recruitment rules for its chairperson and members, according to media reports.

    The Digital Personal Data Protection (DPDP) Bill 2023, became law earlier this month and the ministry of electronics and IT (MeitY) is working on operationalising it. Modalities for the appeal process at the Telecommunications Disputes Settlement and Appellate Tribunal (TDSAT) are also being formulated, according to the minister.

    The DPDP Act has a consent framework under which companies and businesses (data fiduciaries) can process the personal data of any user only with explicit consent. The law permits the government to specify geographies where data cannot be processed, while allowing for its free flow to other jurisdictions.

    The Act has also suggested a penalty of up to Rs 250 crore per data breach instance, and a maximum penalty of Rs 500 crore for all such violations, along with mandating stiff norms for the protection of children online. It also has a provision to block platforms that repeatedly fall foul of the law.