FIIs may get stakes in news channels

FDI may be allowed in radio companies.

The government will soon permit investments by foreign institutional investors (FII) in Indian news channels.

Besides, private FM radio stations are also likely to be opened to foreign direct investment (FDI). Senior government officials said policy directives to this effect could come in Budget 2005.

The FII investment limit in news channels may be capped within the existing FDI limit of 26 per cent, government officials said.

"When FIIs are allowed, it will be within the current FDI limit. There is no possibility of allowing investment over and above the current limit," the officials said.

The move by the government to allow FII investment in news channels comes in the wake of various news channels pointing out that after listing channels were finding it difficult to meet the norms as FIIs bought their stock in the market.

Besides, it was also pointed out that FII investments were required for a successful listing of a company.

However, the government is yet to decide whether the FII investment should be allowed only in listed news channel companies or funds should be allowed to invest in unlisted companies also.

Government officials also said various news channels had been petitioning the government to increase the FDI limit in news channels and also permit FII investments over and above the current FDI cap. Some channels also want the government to allow more FDI in the holding company while the operating company can stay within the sector's FDI cap.

In FM radio, the broadcast regulator, the Telecom Regulatory Authority of India (Trai), had recommended a review of the FDI regime.

Sources in the information and broadcasting ministry said the recommendations of the regulator were being considered positively.

Besides, private FM radio companies have also been lobbying with the government to open up the sector to foreign investment. The present norms allow FIIs to invest up to 20 per cent in FM radio companies.

The Amit Mitra Committee, set up the government to recommend the opening up of FM radio, has also favoured FDI in the private radio companies.

Raising the bar

• The FII investment limit in news channels may be capped within the existing FDI limit of 26 per cent
• It is yet to be decided whether the FII investment should be allowed in unlisted companies also
• Some channel operating companies want the government to allow more FDI in their holding companies