Net worth for owning news channels to go up 10 times

Written by Ashish Sinha | New Delhi | Updated: Oct 4 2011, 17:49pm hrs
The government plans to raise the entry barrier for companies wanting to own TV channels news and non-news.

Under the revised guidelines that come up for the Cabinets approval later this week, the net worth and other financial requirements will go up 10 times for procuring a news channel licence and nearly fourfold for a non-news channel licence.

The I&B ministry has put on hold the grant of any new TV licence till the new norms are put in place.

The move has impacted the business plans of over three dozen media companies that have already applied for licences to operate over 60 new TV channels based on the earlier norms.

As of July end, the I&B ministry had approved 727 TV channel licences, of which 360 are news channels. There are around 80 new channels awaiting government nod.

Under the I&B ministrys proposed norms, firms looking to launch news channels will have to maintain a net worth of R15 crore for the first channel and R5 crore for every additional channel. For non-news channel, the applicants will have to maintain a net worth of R5 crore for the first channel and R2.5 crore for each additional one.

Also, new licences will be granted to only those media firms that furnish performance bank guarantees, which will be R2 crore for a news channel licence and R1 crore for a non-news channel. The government will encash the guarantee in case a media firm fails to operationalise the channel within a year of getting the licence.

Currently, the net worth criteria is R1.5 crore for the first channel and R1 crore for each additional channel. The ministry did not agree with broadcast regulator Trai's suggestion of a substantial hike in the net worth requirement R100 crore for news and R25 crore for non-news channels.

Net worth means the excess of the book value of assets (other than fictitious assets) of an enterprise over its liabilities. It would be calculated as sum of the paid-up equity and free reserves minus accumulated losses, if any, in the company.