Murdoch's comeuppance

BS OPINION

If private players try to make a mockery of the rules, the rules will get tightened. That is the message in the government's new guidelines for foreign investment in TV news channels.

Rupert Murdoch's Star tried to be too clever by half, with a corporate structure that would observe the earlier investment rules in letter, but not in spirit, and it has now got its comeuppance.

The new rules are designed to ensure that Mr Murdoch has to part with far more control than he would have had to under the ones announced early this year. And since the Star arrangement with New Delhi TV broke on the issue of editorial control, Mr Murdoch can ask himself what he has achieved so far.

He can still recover lost ground. There is no shortage of credible Indian media players who are willing to tie up with Star; and they could easily work out a board-run structure that honours the new guidelines in both letter and spirit, though it might be argued that Mr Murdoch will always have a greater say than warranted by his 26 per cent shareholding, with the tacit if not explicit consent of his investment partners.

The irony is that Mr Murdoch could have played ball months ago and avoided the tighter stipulations that he now has to observe, on choice of personnel, level of capitalisation, and such.

There is the problem that the government is trying to over-regulate the media business, in a way that it does not seek to do in any other industry. This is in part the result of Mr Murdoch's actions, and in part because of the work of a strong protectionist lobby in the industry.

It is therefore ironic, but welcome, that one of the strongest and most vocal opponents of FDI in the print media, Hindustan Times, has now decided to sell 20 per cent of its stake to a foreign investor. It is clear that this transaction will be entirely to the benefit of the Hindustan Times, so the logic of allowing FDI stands vindicated.

Such non-controversial transactions seem set to multiply, judging by news reports, and others have already been worked out recently without controversy (TV 18 for instance has restructured its equity relationship with CNBC Asia to fall in line with the rules announced early this year).

As such cases multiply, the government will hopefully be less jumpy about FDI in the media. Print rules, for instance, are to be tightened as a result of the Star episode.