Will TRAI media ownership proposal materialise?

The Telecom Regulatory Authority of India (TRAI) on Wednesday came out with recommendations on the need for cross media and ownership restrictions.

Cross media refers to any company a specific medium such as print venturing into a new medium like broadcast.

The Information & Broadcasting (I&B) Ministry had earlier sought recommendations from the TRAI on the issue.

“Media ownership is a subject of intense debate and government review in both developed and developing countries around the world. Many developed democracies have restrictions on common and cross media ownership,” TRAI said in a statement. “Many of these countries have recently reviewed the media ownership rules and have taken a decision to continue with the restrictions,” it added.

TRAI recommendations at a glance:

Cross-media control/ ownership (Horizontal integration):

A: Necessary safeguards should be put in place to ensure that plurality and diversity of views are maintained. A detailed market study and analysis should be carried out by the I&B Ministry for identifying/determining the safeguards.

Vertical ownership:

A:The broadcaster should not have any control in the distribution and vice versa.

B:Any entity having more than 20% equity participation in a broadcasting company cannot have more than 20% equity in a distributor and vice versa.

Concentration of control/ownership across media

A: After working out the required safeguards for horizontal and vertical integration, the merger and acquisition guidelines for the sector may be issued to prevent media concentration and creation of significant market power.

Cross control/ownership across telecom and media companies

A: No restriction should be imposed on cross control/ownership across telecom and media segments separately, at this point of time. The issue could be reviewed after two years.

With elections a few months away, the I&B Ministry may not take any major decision on the recommendations.

Except for the clause, which disallows any entity having more than 20% in a broadcast company to hold more than 20% in a distribution company, the TRAI has not suggested any major restrictions.

TRAI officials have also said it would be inappropriate to suggest new guidelines for mergers and acquisitions now, given the economic environment and that fact that many media companies in media are in a nascent stage. Any regulatory intervention at this stage may prove to be negative for the sector, officials said.

Vikash Mantri, Media Analyst at ICICI Securities, said the Essel Group and the Sun Group will be impacted from the TRAI recommendations if they come into effect. Both players are into broadcast and the distribution space.

(With inputs from CNBC-TV18's Siddharth Zarabi)