SEBI is getting ready for several changes in top management
While corporate India is quietly...
Since the Supreme Court has vacated the stay on 2% royalty payments to music companies, major FM broadcasters—and the music industry—are hoping for the best, before the rollout of Phase III of radio spectrum auctions
While FM broadcasters appear jubilant about the Supreme Court lifting the stay on the Copyright Board's music royalty order and ordered the Madras High Court to dispose of the matter in 60 days, the music industry hopes for a favourable decision.
On Tuesday, the Supreme Court vacated the stay on the Copyright Board's order that radio channels would have to pay 2% royalty, and directed the Madras High Court- where the suit had originally been registered-to conclude the suit within the next two months. The Board had fixed the new royalty structure to standardise rates across the board, which was challenged by some music industry labels.
The order has been deemed a relief by the radio channels, who think a speedy settlement of the matter will help them. In a press statement, the Association of Radio Operators of India (AROI) said, "The rates aimed to correct a long standing demand of radio operators in India who were paying royalty at rates that were almost 10 times the prevalent rates in other countries on the subject. The earlier rates were effectively making the private radio industry in India financially unviable and analysts had begun to script obituaries for the industry on the whole. We are satisfied with the court directive and hope that the industry will now move on to the next stage-Phase III- and the Government will expedite announcement of the auctions."
With Phase III of radio spectrum auction being on the cards, the radio industry no doubt wants the problem sorted out. Hence, they are very enthusiastic about the outcome. So are the music industry representatives, who feel that without adequate royalty support, the industry is going to suffer.
"We haven't lost the battle", said Indian Music Industry's secretary Savio
D'Souza, "there are 60 days to the judgement. Of course we hope that the court will understand our point of view." The industry, as Mr D'Souza said, is already losing a lot of money due to piracy and bad business. While they have to buy music from the filmmakers and artists at huge costs, the radio royalties-which form a significant part of their revenue-will decrease with the new regime. Earlier, a broadcaster had to pay a certain amount of money per hour to the industry labels.
However, otherwise, both sides are happy that the matter will be resolved soon. A representative of Reliance Broadcast Network Limited said, "We are not commenting on the ongoing case, but definitely we are happy that the stay has been lifted and the issue is going to be resolved." said Apurv Nagpal, MD, Saregama India Limited.
"We're delighted that the court has mandated that the matter be closed within two months. We have no issues with the stay being vacated for this period as two months do not matter in the long run."
Phase III, some experts argue, is crucial both for the industry and the broadcasters because with some 800 new radio stations in new locations, it will give a boost to both the music industry and the FM space, which has seen a boom in recent years. The Madras High Court's decision will be crucial in determining the future relationship between the music industry and the broadcasters.
The British company extended the deadline at its level and did not take a fresh mandate from shareholders, an indication that its previous stance was only to pressure the government into taking a decision on the transaction expeditiously
New Delhi: A day after the government referred its $9.6 billion deal to a panel of ministers, UK's Cairn Energy Plc today said it has extended the deadline for completion of the sale of a majority stake in its Indian unit to Vedanta Resources by over a month to 20th May, reports PTI.
Cairn Energy's sale of a 40% to 51% stake in Cairn India and the subsequent open offer by Vedanta group for acquisition of an additional 20% interest were previously to be completed by 15th April.
The Edinburgh-based firm has since announcing the deal with Vedanta in August last year maintained that the 15th April deadline is sacrosanct and it will not go back to its shareholders for extension of the same.
But today, the company extended the deadline at its level and did not take a fresh mandate from shareholders, an indication that its previous stance was only to pressure the government into taking a decision on the transaction expeditiously.
The Cabinet Committee on Economic Affairs (CCEA) had yesterday referred the Cairn-Vedanta deal to a Group of Ministers (GoM) headed by finance minister Pranab Mukherjee as there were sharp differences over the conditions to be set for such nod.
The extension at the company level indicates that the deal provides for much more time than what Cairn and Vedanta have been harping upon and the GoM, which has to give its recommendation to the Cabinet for a decision, will not have to rush into things.
Cairn Energy in a statement said Vedanta has received market regulator Securities and Exchange Board of India's (SEBI) clearance to commence an open offer for up to 20% of Cairn India shares.
The open offer will be made by Vedanta's subsidiary Sesa Goa and will open for acceptances between 11th and 30th April.
"Cairn and Vedanta have extended the long stop date in the sale agreement, by which all conditions must be completed or waived (where permitted) to 20th May in order to accommodate the completion of the open offer," the statement said.
More importantly, Cairn said SEBI has made changes in its deal with Vedanta and has struck down the call and put option.
As per the August announcement, Cairn Energy was to sell a minimum of 40% out of its 62.25% stake in Cairn India to Vedanta. Vedanta then was to make an open offer for an additional 20% and any shortfall in the open offer was to have been made up by Cairn selling more shares with an upper ceiling of 51%.
But SEBI has now disallowed this, which in effect means Cairn Energy will only sell a 40% stake at Rs405 per share to garner $6.7 billion.
Cairn Energy said the company "looks forward to the successful completion of the transaction after obtaining all the necessary government of India approvals and consents."
"SEBI has also notified Vedanta that the put and call options exercisable by Cairn and Vedanta respectively and the pre-emption right exercisable by Vedanta in connection with the transaction must be removed from the sale agreement as they do not comply with certain Indian securities regulations.
As a result of this stipulation by SEBI and to allow the open offer to proceed, Cairn and Vedanta have agreed that the put and call options shall not be enforceable or exerciseable.
Vedanta has also agreed that its pre-emption right shall not be enforceable or exerciseable," the statement said.
After the transaction, Cairn Energy is expected to have a residual interest of between 10.6% and 21.6% of the fully-diluted share capital of Cairn India.