Jaya’s Cable Vision

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Tamil Nadu election results are often compared to a game of snakes and ladders, but a tad more vindictive. The loser usually not just falls down the ladder to hit rock bottom, but is chased further by the victor. After having vanquished the DMK at the hustings, now at the greater receiving end of AIADMK supremo J Jayalaithaa’s wrath are the Marans—Kalanithi and Dayanidhi, grand nephews of five-time chief minister M Karunanidhi. The Sun Network Group headed by Kalanithi has almost a monopoly hold over the state’s approximate Rs 1,200-1,400 crore cable distribution business through its Sumangali Cable Vision (SCV). And that grip is mainly attributed to its association with the DMK. The AIADMK made its intent clear in its election manifesto itself: “Cable television will be taken over by the government. No monopoly.” So, little surprise when on June 3 Governor SS Barnala announced the Jayalalithaa government’s proposal to “nationalise” private cable TV operations (multi-systems operators or MSOs) while protecting the last mile operator.

This isn’t the first time Jayalalithaa has made a bid to nationalise cable operations in Tamil Nadu. In her earlier tenure as Chief Minister (2001-06), she had tried to take over MSOs through an Ordinance. But Governor Barnala didn’t give his assent. Political dynamics were different then: the DMK was a critical ally of the UPA government and there were no apparent rifts between the Karunanidhi family and the Marans (more on that later).

There’s a simple reason why the State may want to control cable TV: there’s nothing to beat TV when it comes to mass communication.

It’s still not certain how the state government plans to go about the nationalisation process. All the AIADMK party functionaries and senior bureaucrats Outlook Business spoke with were tight-lipped on the subject. But two possibilities stand out: the state-owned Arasu Cable TV Corporation will be revived first (as announced by the Governor) and run as another MSO, competing with SCV and others (not that there are many). A Trai recommendation of November 2008 clearly states that state governments should remain in the enforcement domain as per the Cable Television Networks (Regulation) Act of 1995, and should not get into the cable distribution area as a competitor service provider. But this has not yet been adopted as a policy by the Information and Broadcasting Ministry.

The second, and more likely, possibility is of the AIADMK government bringing in legislation—as earlier—to take over the MSOs and, perhaps, amalgamate them with Arasu. Can the state take over the operations of private players? Apparently, yes. “The state government can ‘nationalise’ MSOs by passing a law to that effect,” says leading Supreme Court advocate Prashant Bhushan. “Since the right to property has been abolished as a fundamental right, it can be done.” But while it could be legally tenable to take over the MSOs through a law, Supreme Court advocate Aman Sinha says it still will have to stand judicial scrutiny in terms of freedom of a person to trade or conduct business. “Everything will depend on what the provisions of any proposed Bill are,” says Sinha.

At The Receiving End: Dayanidhi Maran and Kalanithi Maran

Jaya Support Group

Interestingly, motives aside, Jayalalithaa’s cable nationalisation move seems to be gaining widespread support. “The move is absolutely necessary to save the last mile cable operator in Tamil Nadu,” says Roop Sharma, President of Cable Operators Federation of India (Cofi). “We welcome the move,” says P Shakilan, president of Tamizhaga Cable TV Operators. SCV has a dominant position in Chennai, Madurai, Coimbatore, Trichy, Thanjavur, Thirunelveli, and most MSOs in other districts are supposedly DMK supporters. There have been allegations all along against SCV of unfair play to stifle competitors, both big and small. From cutting cables of rival operators to not providing the Sun bouquet of channels, the list of complaints has been long.

"The state can ‘nationalise’ multi-system operators by passing a law to that effect."—Prashant Bhushan, Supreme Court advocate

“The cable network of Sun TV has been monopolising and threatening people. Whoever is found not complying with SCV’s demands is either threatened or bought,” says political observer Cho Ramaswamy. The MSO’s near-monopoly and proximity to those in power had also made it difficult for other MSOs to establish themselves in the state. Cofi’s Sharma says that on complaints from Tamil Nadu’s cable operators, she had gone many times in the past four years to complain even to the police against SCV’s strongarm tactics. “But hardly any action was taken as the state machinery was with the Marans,” she adds. Sun TV officials declined to comment when Outlook Business contacted them on telephone for this story.

Communicate With Vote Bank

Industry observers point to a simple reason why the State may want to control cable TV. There’s nothing to beat TV when it comes to mass communication. “While only a literate person can read a newspaper, entire families watch TV whether literate or not,” agrees Sharma. And in Tamil Nadu, the DMK has been able to access the media and entertainment space in Tamil Nadu very easily through the SCV and the Sun Group. Which also explains why the party always negotiated for the Information Technology and Telecom portfolio in the UPA government. Indeed, Dayanadhi’s appointment as Telecom Minister (2004-07) was seen as a strong case of conflict of interests, notwithstanding his claims of holding no stake in his elder brother’s media empire. After all, the policies he made could impact the Sun Group.

Those grey areas are showing up now. It’s emerged in the ongoing 2G scam probe by CBI that Dayanidhi allegedly coerced serial investor S Sivasankaran to sell his stake in Aircel to Malaysia-based Maxis. Aircel had been awarded more than a dozen telecom licences. Maxis later invested about Rs 600 crore in Sun TV. And according to the Justice Shivaraj Patil panel, which looked into procedures followed for allocation of licences and spectrum between 2001 and 2009, in 2004 Maran’s office delayed licences to Dishnet Wireless (now Aircel) by raising queries that were “vague” and “irrelevant”. Dayanidhi, though, has denied any suggestion of quid pro quo. He was removed from the telecom ministry in 2007 after a fallout with the DMK first family. He’s now the Union Textiles Minister, a position from which Jayalalithaa has been demanding his ouster; with this latest disclosure, she may just get her wish.

More about Maran

It’s no secret that the octogenarian Karunanidhi was grooming his second son Stalin as his heir, with his elder son Azhagiri—considered a strongman in the Madurai region—in no mood to step aside. In 2007, Tamil daily Dinakaran, which is owned by the Marans, published a survey that portrayed Stalin as a far more popular choice as the patriarch’s heir while Azhagiri and Karunanidhi’s daughter Kanimozhi were shown in poor light.

The proposal may not have a big impact on Sun Network. It has grown beyond cable distribution. But this time around, the Marans lack political backing.

Karunanidhi saw the article as a deliberate mischief by the Marans. “The Kalaignar suspected that the Marans were trying to take over the DMK’s political legacy after him,” says a party insider. Karunanidhi immediately had Dayanidhi dropped from the Union Cabinet and the telecom portfolio passed onto A Raja. What happened next is still haunting the DMK in the form of the 2G scam fallout. Be that as it may be, this was the first time Sun and Sumangali saw their domination being threatened.

The first salvo was fired in September 2007, when DMK launched its own TV channel Kalaignar TV. Then, Azhagiri launched his own MSO Royal Cable Vision (RCV) in June 2008 and local cable operators in Thanjavur and Thirunelveli were sternly directed to shift loyalties immediately. A month later, the Chief Minister launched Arasu Cable TV Corp, a state-run multi-systems operator with IAS officer Brijeshwar Singh as CEO.

But Arasu couldn’t make the cut when Sun Group refused to distribute content through it; so did Star and Sony. Not getting access to the most popular television channels was unacceptable, and local cable operators started backing out of deals they had made with Arasu. The state-owned company moved TDSAT on the matter—and won—but it didn’t really recover. Mainly because the familyfeud ended towards the end of 2008 when Karunanidhi and his estranged nephews patched up.

Arasu was really superfluous to requirements now, but throwing a spanner in the works was the MSO’s new chief C Umasankar. The 1990 batch IAS officer took over in November 2008 when Singh went to become NHAI chief. And Umasankar wanted to strengthen Arasu, perhaps contrary to the wishes of the power that be. “They wanted to kill Arasu,” says Umasankar, alleging that SCV’s henchmen destroyed Arasu’s optic fibre cables at more than 20 locations in December 2008. Around the same time, Umasankar drafted a “nationalisation proposal” that made a case for the government taking over SCV; he was shunted out of Arasu and appointed the commissioner of small savings. The state government suspended him, pending enquiry into charges that he had falsified a caste certificate to join the IAS.


What happens now? Some industry sources believe Sun Network’s fortunes may not be affected much by Jayalalithaa’s proposal. The group has grown much beyond cable distribution and has extended its reach well beyond Tamil Nadu. But the problems are much deeper. This time around, the Marans lack proper political backing. The DMK’s position has weakened as a UPA ally and as a party—not just due to the election loss but also due to the 2G scam fallout that has seen Kanimozhi and former telecom minister A Raja sent to prison. Now, the Aircel case muck may stick on Dayanidhi. Worse, the cold wars within the DMK’s first family aren’t exactly helping. The last thing they need now is to be entangled (or choked) by Jayalalithaa’s cable move.

sorce: http://business.outlookindia.com/article.aspx?277268
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