The proposed policy on satellite radio may now be kept on hold.
The information and broadcasting (I&B) ministry has prepared a draft Cabinet note for the satellite radio policy, but now a policy is unlikely because WorldSpace radio has decided to shut its India operation. US-based WorldSpace, which is the only entity operating satellite radio in India, has announced that its service will be terminated in the country on December 31.
WorldSpace, which started its service in India in the year 2000, has been operating without any policy framework so far.
While there was no limit on FDI in satellite radio due to lack of any regulation, the new policy was expected to cap FDI at 74%.
The draft cabinet note had indicated that WorldSpace would be given three years to comply with the guidelines.
In an email notice to its 150,000-odd subscribers in India, WorldSpace has said that "on December 31, 2009, the WorldSpace satellite radio broadcast service will be terminated for all customers serviced from India".
It added that "this action is an outgrowth of the financial difficulties facing WorldSpace India's parent company, WorldSpace Inc., which has been under bankruptcy protection since October 2008".
Although the notice does not name the buyer of the WorldSpace global assets, sources said that Liberty Media Corporation has struck the deal. It is believed that Liberty Media is paying only around $18 million to buy much of the WorldSpace's global assets including two satellites and technology.
WorldSpace India's revenue last year was pegged at $6 million to $7 million. India is the largest market for WorldSpace, accounting for 95 per cent of its global subscribers.
WorldSpace officials could not be contacted for comment on the story.
Sources pointed out that the new owner of the satellite radio platform may restart the India operation, perhaps with a new brand name. "They would return if the system allows them. After all, they have retained the satellites, technology and the associated assets," a source argued.
However, the receiver sets may have to be changed even if the India operation resumes, as the new service may be offered on terrestrial platform.
Several media houses in the country are believed to have been keen on buying the WorldSpace India business, but no transaction has been executed so far.
Besides India, WorldSpace operations in many other regions of the world have been shut down including in Europe and the Middle-East.
Around 300 employees in the WorldSpace India office, in Bangalore, have lost their job due to the closure. Also, the receiver sets with the existing WorldSpace subscribers would now go waste. The subscription money paid by the users will also not be returned unless one approaches the bankruptcy court.
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