Caught between hostile govts, testing times for Sun TV group

It is now dark clouds over Sun TV group that owns a clutch of popular television channels, radio stations, direct-to-home television and the cash cow multi-system operator (MSO). Faced with hostile governments both at the Centre and in Tamil Nadu, its base, the group is now facing the threat of getting its licences cancelled apart from properties worth around Rs 750 crore being attached by the Enforcement Directorate (ED).

The root cause for all the problems currently faced by the group is the reported involvement of then telecom minister in the UPA government Dayanidhi Maran in the Maxis-Aircel deal. Dayanidhi is the brother of Sun Network’s principal promoter Kalanithi Maran. The ED said it has attached properties worth Rs 742.58 crore belonging to Kalanithi, his wife Kaveri and Dayanidhi, in the Aircel-Maxis case.

The CBI had alleged that Dayanidhi, during his tenure as Union minister, had forced Chennai-based telecom promoter C Sivasankaran to sell his stakes in Aircel and two subsidiary firms to Malaysian firm Maxis Group in 2006. Sivasankaran had alleged that Dayanidhi favoured Maxis in the takeover of his firm. He also alleged that the company made investments through Astro Network in a firm purportedly owned by the Maran brothers.

After this, in another setback to Sun TV, 33 channels of the group were ordered to go off air this month. The order came after a security clearance was refused by the Ministry of Home Affairs (MHA) to the channels. The security clearance was denied on the basis of an ongoing probe against Maran by the CBI and the ED. Sources say that the Information and Broadcasting (I&B) Ministry wrote a note in favour of Maran to give a clearance but the MHA rejected it.

Last August, the I&B ministry had cancelled the MSO licence given to Kal Cables, a part of Sun Network. The company was one among the 17 MSOs across the country which faced the problem. According to the ministry, the licence to Kal Cables was cancelled as the home ministry denied security clearance to the company. The company was first given licence to operate in Chennai in 2012 and a provisional licence to operate in other parts of Tamil Nadu the next year.

The Centre had ordered Kal Cables to run a scroll informing the subscribers that its services would be cut in 15 days. However, the Madras High Court, September last year, set aside that decision. The court also questioned the government’s rationale in acting against one MSO while the same was not applied against other players. 

However, recently, the court issued notice to Kal Cables on an appeal filed by the Centre challenging last year’s single judge’s order. The Court has posted the matter to July 1. “Our bosses (Maran brothers) know how to tackle the issue. We will win the case and be back in the limelight soon,” a senior official from Kals Cable seeking anonymity, said.

Pay track rent
The other trouble that Kal Cables had faced was from the Chennai Corporation that has already started removing the cables for non-payment of pay track rent by the cable operators. A corporation official said the rent, which was a mere Rs 9,500 per km per year, was increased to Rs 32,450 per km per year recently. He alleged that the previous DMK regime had given privilege to the Marans by not taking any action against them despite their non payment of track rent, which resulted in a huge loss to the municipal body.

Dayanidhi and Kalanidhi are the grand-nephews of DMK chief M Karunanidhi. Under the backing of the DMK when it was in power, the Sun TV empire expanded. Its cable TV distribution business – SCV – was able to establish its dominance over the entire state. By serving as a platform provider and the state’s biggest cable operator, Sun was able to place its own TV channels in prime band.

The Sun Network was listed on the stock market in 2006 and was straight away valued surprisingly at over Rs 9,000 crore, equal to the valuation several other companies. That was also the time when the Sun Network’s conquest of the rest of the country began. A group company, South Asia FM, acquired nine FM licences in Uttar Pradesh, Gujarat, Maharashtra, Madhya Pradesh and Rajasthan. The radio network that grew out of this was another to be denied security clearance by the home ministry.

Tamizhaga Cable TV Operators Association member P Shakilan said that the Tamil Nadu government has been urging the NDA government at the Centre to expedite the issue of Digital Addressable System (DAS) licence to Tamil Nadu Arasu Cable TV Corporation (TACTV) at the earliest. The TACTV, which was revived by Chief Minister J Jayalalitha soon after she came to power in 2011, launched its cable TV services in all 31 districts of the state, barring Chennai under conditional access system then. The TACTV provides 100 channels to subscribers at Rs 70 a month, with over 24,000 local cable TV operators having a subscriber base of 65 lakh.

Jayalalitha wrote a letter to Prime Minister Narendra Modi requesting him to issue the licence at the earliest, noting that she strongly suspected “that the non-issuance of the DAS licence to TACTV by the previous UPA government was only to facilitate particular private business interests, as other licences were issued at the same time.” Though she had written similar letters to the UPA government headed by Manmohan Singh, there was no proper reply in this regard.