James Murdoch,Chairman and CEO (Europe and Asia) at News Corp, speaking at the FICCI Frames conference in Mumbai a short while ago made a pitch to the Indian government we’ve heard often before, especially from Rupert Murdoch – liberalise and digitize. He called for the digitization of Indian media infrastructure, and liberalization or order to “bring Indian story tellers and journalists to the world”, and at the same time, criticized the lack of digitization saying that it allows vested interests to hold consumers captive, and lack of funding makes Indian media uncompetitive globally. In a gist, Murdoch called for policies to “favor those who compete to serve over those who seek to protect”
Remember that News Media has a 26% Foreign Direct Investment limit, DTH is limited to 49%, and telecom related distribution services have a 74% limit, and that, from a digitization perspective, News Corp owned STAR has a stake in Tata Sky.
Liberalization of the News Business
Murdoch made a pitch for liberalization in the news sector by focusing on (what he called) the lack of global competitiveness of Indian news businesses. “I don’t know of any such industry which is protected at home, but cometitive abroad,” he said, completely ignoring the hyper competitive nature of the Indian news business. But we do agree with one assessment: “India is among the world’s more engaged citizenaries,” he said, “but i’m constantly surprised by the local focus of news. India’s tv viewers often have to rely on foreigners for their news. It’s a source of great frustration in news business, because hey wish they had more money to send teams abroad. Even when a big story hapens, few global outlets call upon Indian journalists for an Indian perspective. For Indian media to compete globally abroad, we will have to be competing globally at home.”
On The Cable Captives
Murdoch said that digitization of infrastructure is key to growth, and gives the industry the incentive to create; of 250 million , but 30 million are digital (i.e. have Digital Television). “It’s true that the market is growing fast”, but added DTH liberalization was cautious. He pointed out that innovations are coming from DTH and those in the digital space – HD and, in future, 3D, and the ability to watch regional broadcasting out of market.” He said that no innovations have come from cable, and criticized the cable sector for not caring for customers, holding them captive and denying them access to content.
Digitization: Government Enforced vs Market Driven
“10 years ago, the government was enforcing digitalization through CAS, and today, the marketing is hsowing how it’s done. We need greater investmentand latitude. we need vertical integration of content companies and satellite distributors. The analog infrastructure is proving a drag, and the scarcity of bandwidth drives operators to make money from channel placement, instead of increasing infrastructural capacity. This has huge opportunity costs.” He said that transparent, market based and addressable digitization will unleash new opportunities, and allow businesses to adopt multiple business models. “The prevailing system forces channels to adopt a uniform advertising dependent model,” he said. Murdoch suggested that the addressable digital market in India has come almost entirely through the DTH sector, and over the last 10 years, the addresible digital customer base in cable is less than 1%. Murdoch called for the need to relax ownership regulations.