India Hands Doordarshan Exclusive DTH License


New Delhi, India -- India's government shut the door on
foreign firms aiming to launch direct-to-home TV here late last month, when it awarded
state broadcaster Doordarshan the exclusive license to operate a DTH service.

The decision was taken to give Doordarshan a head start
over other pay TV investors, including News Corp.'s Star TV, which has been waiting almost
three years to start an Indian DTH service. Earlier this year, Star TV signed a memo of
understanding with Hughes-Ispat, the local unit of Hughes Electronics Co., to develop an
Indian DTH platform. The two had agreed to invest $200 million in the service.

As a result of the government's decision, Star TV sacked 40
employees it had hired to work on its direct-broadcast-satellite platform. Urmilla Gupta,
executive director of DTH at Star TV, said she was disappointed with "the
government's inability to formulate a clear set if policies on this vital issue."

India's Zee Network and France's Canal Plus S.A. had also
aimed to launch an Indian DTH platform.

"Terrestrial broadcasting is skewed in favor of the
government. To make Doordarshan the sole licensee is to go against [the government's]
policy of liberalization to which it claims it is committed," said Zee vice president
of corporate communications P.C. Lahiri.

Minister of Information and Broadcasting Pramod Mahajan
said the move was taken to give Doordarshan a boost in competing with aggressive and
successful pay TV programming from the likes of Star TV and Zee.

"[Doordarshan has] seventeen satellite channels.
These, too, must enter this competitive mode in order to keep afloat. Otherwise we will
not longer remain in the picture," he said.

Doordarshan has one year to launch its DTH platform, and
its exclusive license will last five years.

Rajeeva Ratna Shah, acting CEO of Prasar Bharati Corp., the
government agency that oversees Doordarshan, said, "We plan to start an encrypted
platform allowing 60 other foreign and Indian networks to come aboard."

He declined to explain how the company would fund such a
mammoth project. "We are exploring all options and do not rule out getting a foreign
partner to collaborate with us," he said.

In January, Mahajan vowed to lift the ban on DTH services
by March, a decision welcomed by companies aiming to launch such platforms.

But enthusiasm began to wane when the government was unable
to make any progress. The conservative Bharatiya Janta Party, which is currently in power,
criticized Mahajan.

Star TV's Gupta said the government's action raised a
number of questions.

"We are still awaiting details on whether it will be a
joint venture or a stand-alone project," she said. "We also need to know what
kind of long-term investments they are planning."

The government's plan for a quick ramp-up of the service
were set back after the country's election commission said a DTH project should be
considered a major policy decision and must not be undertaken until after national
elections in October.