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Govt defers Star's proposal to up stake in Tata Sky
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#1
NEW DELHI: The Government has deferred a proposal by Star India Holdings, the Indian subsidiary of Rupert Murdoch’s media empire, to increase its stake in the joint venture direct-to-home (DTH) company Tata Sky.

Star India had applied for clearance from the Foreign Investment Promotion Board (FIPB) to buy a 49 per cent stake in Tata Group’s investment firm TS Investments.

Indiantelevision.com had earlier reported that TS Investments would, in turn, buy a 20 per cent stake in Tata Sky for Rs 3.24 billion. This would have effectively given Star India an additional 9.8 per cent stake in Tata Sky, increasing News Corp’s total holding in the DTH company to 29.8 per cent from its present 20 per cent.

At present, there is a cap of 20 per cent FDI in the DTH sector, while the ceiling on foreign holding is 49 per cent. However, the government made amendments to the FDI policy last year that stated that investment through companies owned and controlled by Indians would not count in the calculation of foreign investment.

Meanwhile, the Finance Ministry on the recommendations of the FIPB cleared a proposal by Zee Entertainment Enterprises Ltd (Zeel) for "transfer of shares by way of share swap and transfer of shares from NR to NR in broadcasting centre." This would not involve any FDI/NRI inflow.

A proposal by Walt Disney Company India was also cleared to undertake additional activity of printing and publication of a speciality magazine, though the FDI inflow has not been indicated.

Network18 Media & Investment Ltd received ex-post facto approval for issue and allotment of PCCPS (partly convertible cumulative preference shares) on partly paid basis and issuance of warrants amounting to FDI/NRI inflows of Rs 239.4 million.

The government, however, deferred broadband service provider Tikona Digital Network's proposal to enhance its FDI to 74 per cent by issuance of compulsory convertible debentures (CCDs) and equity shares to existing and new foreign investors.

Source: Indiantelevision.com

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#2
New Delhi: Star India’s move to increase its overall stake in DTH firm Tata Sky by leveraging the new foreign investment guidelines announced last year has hit Foreign Investment Promotion Board (FIPB) hurdle. The FIPB has deferred the matter at the behest of the information and broadcasting (I&B) ministry, the nodal ministry for the broadcasting sector, sources say.

Last month, Star India had sent a proposal to the FIPB to form a joint venture entity with the Tata group firm in which Star will have 49% stake. Sources say the proposed entity of Star and Tata firm may then pick up 20% stake in direct-to-home (DTH) firm Tata Sky. This in effect will give Star an additional 9.8% stake in Tata Sky. The Star group already holds 20% stake in Tata Sky, the maximum permissible foreign direct investment in the DTH sector.

Once the proposed entity takes shape, Star will be able to significantly scale up its stake in Tata Sky, which like every other private DTH operators, requires funding for expansion.

Senior officials of the I&B ministry want more time to study the Star group’s proposal for any possible change in ownership and control of the proposed entity in favour of Star India that otherwise will be a minority shareholder holding 49% stake while a Tata group firm (TS Investments) will be the majority owner in the proposed entity.

“It is an interesting proposal. We will be studying it closely,” said a senior official in the FIPB. When contacted, a senior official in the I&B ministry said, “We will be studying the proposal with respect to any change in control and ownership of the entity in favour of a minority shareholder.”

According to sources, the present proposal from Star India highlights the press note 2 and 4 of 2009 as the basis of forming a joint venture entity which will be used to fund the group’s future investments. According to press note 2 and 4 (2009 series) any investments made by Indian-owned and controlled firms in other entities will not be counted as foreign investments.

Currently, the Tata group owns 70% in Tata Sky while 20% is with Star group and the remaining is being held by Singapore-based Temasek Holdings.

According to reports, post-FIPB nod, Star India will buy a 49% stake in Tata Group’s investment firm TS Investments which in turn will then buy a 20% stake in Tata Sky for Rs 324 crore.

[Image: fe_logo.jpg]

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Raising funds from foreign investment will be good for expansion but the FIBP hurdle needs to be tackled.
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