rediff.com: Cash-strapped media back foreign investment: Reuters

Cash-strapped smaller Indian newspapers lauded the government on Wednesdsay for allowing foreigners to buy into the print media but market leaders said no political consensus had been sought on the move.

India overrided opposition from many powerful media barons on Tuesday and ended a half-century-old ban on foreign investment in its print media, pushing Indian media company shares up sharply on investor hopes of better technology and managerial expertise from foreign investors -- as well as extra cash.

Foreigners will be allowed to take up to 26 per cent stakes in news and current affairs publications and up to 74 per cent in technical and other non-news media.

Financial daily Business Standard said the reason the ban was not lifted sooner was due to opposition from a few big publishing groups who sought "to corner the Indian market for themselves under the garb of seeking to protect the nation state".

The daily, which has much smaller readership and revenues than the market leader, Economic Times, carries articles from the Financial Times owned by Britain's Pearson Plc.

The Business Standard said on Tuesday it now expected Pearson to inject equity capital into the paper under an existing deal.

The influential Times of India, which strongly opposed opening up Indian print media to foreign investment, said in a front-page report that the move lacked political consensus.

"The Cabinet decision was taken in the face of opposition from almost the entire political spectrum with many parties raising security concerns," it said.

There are some 40,000 newspapers and periodicals published in India of which 40 per cent are Hindi-language. Some 15 per cent are in English and reach about five per cent of India's more than one billion population. The rest are in other Indian languages.

Hit by declining revenues as advertisers switch to TV, many smaller print media groups are suffering from high interest rates and a lack of cash to upgrade to new technology.

Global media mogul Rupert Murdoch's News Corp is already active in Indian media through its Star TV.

Shares of Midday Multimedia, publisher of an afternoon daily, have risen 33 per cent in two trading days since the announcement, with turnover on Wednesday at all-time high of 1.12 million shares by noon.

Shares of Sandesh Ltd, which publishes a Gujarati daily, have jumped 20.6 per cent to Rs 132.14 since the announcement was made, also on heavy volume.

Shares of Navneet Publications, publisher of educational books, rose 19.2 per cent in two days to 204.50.

But Macmillan Industries, fell 0.7 per cent. Its shares had jumped 8.4 per cent on Tuesday before the company said it did not see its London-based stakeholder H M Publishers Ltd raising its holding.

The undisputed market leader in southern India, The Hindu newspaper, said Human Resources Development Minister, Murli Manohar Joshi, told Cabinet opponents of the move there was no point forbidding foreign equity in newspapers when foreign television channels were beaming programmes into India.

The argument was echoed by the cash-strapped Pioneer daily, which has a small circulation.

"Television viewers and Internet users have access to international commentary on current affairs that is often unflattering to India or unmindful of its interests," it said in an editorial. "This has not turned them into brainless subjects of alien powers."

"The issue is not foreign media so much as allowing Indian print media to access global capital."

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