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No foreign rush seen as India opens up print doors

Cash-hungry media groups have hailed the government's move to open its doors to foreign investment in the print media but analysts said it could be a while before anyone clinches any deals.

"Any foreign investor would like to evaluate the market dynamics first and implication of the decision before they plan to invest. I doubt there will be a rush of deals soon," said Mumbai-based Khandwala Securities analyst Nilay Dani.

Media shares retraced some of their gains after soaring on Tuesday when the government scrapped a half-century ban on foreign investment in the print media, overriding protests from press barons who analysts said did not want more competition.

"Most stocks fell on profit-booking as none of the companies announced any plans to induce foreign partners as was widely expected," said a dealer. "Also, the market realised it will be a while before actual investments start flowing in."

Foreigners can now take up to 26 per cent stakes in news publications and up to 74 per cent in non-news media but editorial control will stay in Indian hands.

Analysts said they expected investment to flow first into the English-language media, giving it access to better technology and management, and later into vernacular publications.

Karvy Stockbroking analyst Amol Dhariya said the newspaper and magazine market had massive potential in the country of more than one billion people where total annual advertising revenue was estimated at 40 billion rupees.

"I don't see investments flowing in immediately but there's huge foreign interest in the English-language newspapers and magazines," said Dhariya. "There might be some acquisitions in the vernacular media sector but it will take some time."

India has 40,000 publications, of which 40 per cent are in Hindi. Some 15 per cent are in English and reach about five per cent of the population. The rest are in other languages.

Shares in publishing and broadcasting group Mid-day Multimedia Ltd, which shed 2.56 per cent to Rs 30.45 after vaulting the maximum permissible 20 per cent on Tuesday, said it had no immediate plans to bring in a foreign partner.

"We're not talking to anyone though down the road options are open," said Somesh Kapai, head of business development at the company, which publishes the popular Mumbai tabloid Mid-Day. "I don't think foreigners will come rushing to invest."

Other companies whose shares were in play declined to comment on their plans.

Hopes for tie-up

The one newspaper which might attract foreign equity soon was New Delhi-based financial daily Business Standard, which said it hoped British media firm Pearson Plc, the publisher of the Financial Times with which it has had a long association, now would take a stake in the paper.

"We hope our existing relationship with the Financial Times will be strengthened now to an equity investment," T N Ninan, editor and publisher of the Business Standard, said.

Some international media groups such as Dow Jones and Co were taking a wait-and-see stance. Dow Jones had sought government approval for a wholly owned Indian unit earlier.

"We have no immediate plans. Now the government has taken this decision we'll have to look and see what happens," said Suman Dubey, chief representative in India of Dow Jones and Co.

Chandan Mitra, editor of the cash-strapped Pioneer newspaper, said there was big interest among foreign investors who saw it is a growth sector. "We were in talks with a few foreign companies before this decision and we hope to resume discussions with them in a few weeks," he said.

Some Indian editors hailed the decision in a statement saying it would give the print media a "more level-playing field" because it had been losing out "in growth and reach" to the television industry which has no curbs on foreign ownership.

But Vinod Mehta, editor of the popular weekly news magazine, Outlook, said there was huge opposition to the decision from big print media groups as well as political parties which have denounced the decision as being against "national interests".

"Foreign media groups would prefer to wait and watch because the situation is confused ... They'd like to know how permanent the decision is because the next government might just reverse it."

Shares in most print firms are ruling low now after rallying sharply on Tuesday. Educational publisher Navneet Publications, fell 5.46 per cent to Rs 184.25 after jumping 11.7 per cent the previous day while magazine publisher Tata Info slid 7.53 per cent to Rs 117.25 after soaring 18 per cent Tuesday.

But regional daily publisher Sandesh gained 3.2 per cent to Rs 126.10, adding to Tuesday's 10 per cent rise.

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