Rupert Murdoch's Star India will have to offload 51 per cent of its equity to an Indian partner by September 28 if it has to uplink its news channel from the country.
This became clear with the government on Thursday issuing the revised guidelines on the eligibility criteria for uplinking news and current affairs channels, at the end of a two-month wrangle over Star's application for uplinking its 24-hour news channel from India.
The revised guidelines stipulate "additional safeguards", including a mandatory 51 per cent equity with an Indian partner, barring Indian Public Financial Institutions. The insistence on a dominant Indian partner is on the lines of the guidelines for foreign direct investment in the print sector.
Though guidelines in both sectors have a 26 per cent cap on foreign equity, the revised norms for uplinking go "beyond" those of the print media.
The decision to revise the guidelines was taken at a high-level meeting presided over by the prime minister last week, following concerns about Star's application regarding proxy editorial control by foreigners, source of funding and nature of Media Content and Communications Services, floated by Star to run Star News, with an equity base of just Rs 100,000.
Aimed at ensuring that while dealing with foreign equity companies the applicant company must be in complete control of operation, the changed uplinking norms specify that it must have complete operational independence over its resources and assets and adequate financial strength for running a channel.
Also all appointments of key personnel, executive and editorial have to be met by the applicant company without reference to the foreign company.
The norms stipulate that the representation on the Board of Directors of the Company shall as far as possible be proportionate to the shareholding.
The CEO of the applicant company, known by any designation and/or head of the channel shall be a resident Indian.
At least three-fourth of the directors on the board and all key executives and editorial staff have to be resident Indians.
The majority Indian shareholder can be an individual and in case of a company or group of companies, the stake of the shareholder, Indian, Hindu Undivided Family or relative as defined in the Company's Act either singly or in combination must hold 51 per cent.
The Group of Ministers, set up to examine the uplinking norms, had decided that Star would be given a month's time to comply with the changes.
A copy of the revised norms has already been sent to Star, government sources said.
While its application was pending with the government, Star was given several weekly extensions for temporary uplinking after the June 26 deadline to meet the guidelines stipulating 26 per cent cap on foreign equity expired.
The government move also aims at avoiding shell companies as those figuring in Star's application and ensuring compliance with the "letter and spirit" of the guidelines.
It has decided to make amendments to the FDI in print guidelines as well by including in them the additional safeguards mentioned in the uplinking norms.
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