Denial of license by home ministry: Kalanithi Maran's media empire faces bleak future

The reported denial of security clearance by the Home Ministry for the renewal of licenses to about 50 FM stations of the Sun-TV group is yet another setback to billionaire businessman Kalanithi Maran, nephew of DMK patriarch M Karunanidhi.

Maran has been chargesheeted by the CBI in the Aircel-Maxis case and a part of his assets have been attached by the Enforcement Directorate.

 Denial of license by home ministry: Kalanithi Marans media empire faces bleak future

Kalanithi Maran. IBNLive image

Quoting Information and Broadcasting (I&B) Secretary, Bimal Julka, Indian Express reported on Wednesday that security clearance to Sun-TV network companies had been rejected. It also said that the I&B Ministry had asked for the reasons for the denial.

In the Maran empire, FM radios - about 50 of them across the country - may not be big business, but the move means continued political hostility from Delhi because in March the home ministry had streamlined the security clearance procedures to make it easy for the media industry. According to the revised procedures, the security clearance for one entity in the same media sector would be valid for other entities. That despite this streamlining, Maran’s radio stations have been denied permission does hint trouble.

According to this Economic Times report, the grounds for denying the license after the March revision are these: a change in the Board of Director (s) or change in the ultimate beneficial ownership of 10% and above in the company, expansion of existing radio stations to border areas or naxal-affected areas, or anti-national or criminal activities. It’s not yet clear which of these has been held against Maran’s radio stations.

The obvious possibility is the CBI investigation against Kalanithi Maran and his brother Dayanidhi Maran, former Union Telecom Minister, in the Aircel-Maxis case. The brothers were charge sheeted by the CBI in August last year. According to CBI, Dayanidhi Maran had arm-twisted C Sivasankaran, owner of Aircel, a mobile company, to sell his stake to the owner of a Malaysian company, Maxis, who in turn invested in Kalanithi Maran’s Sun Direct. Following the transaction by Sivasankaran, allegedly Maxis routed Rs 599 crore to Sun Direct. In connection with the case, the Enforcement Directorate attached properties of Maran brothers worth about Rs 722.48 crore.

The Home Ministry may have used either the ownership clauses or the “criminal” activity clause to deny the license. The most plausible reason appears to be the CBI chargesheet against Maran.

Maran had faced a similar situation last year when a cable distribution company owned by his family, Kal Cables, was denied license to operate. When the case was taken to the High Court, one of the reasons the Home Ministry cited was national security.

The lawyer for Kal Cables argued that ”none of the management representatives, board members or shareholders are facing any legal issues, no FIRs are filed, no criminal proceedings or complaints are against them”. He also told the court that the Maran brothers had long since resigned from management positions in the company. Interestingly, this case had come up after the CBI chargesheet.

Therefore, it’s likely that the chargesheet against the Maran brothers in the Aircel-Maxis case is the reason behind the denial of the Home Ministry clearance. As in the case of the Kal Cables case, this may also unfold in a court of law. In the case of Kal Cables, Marans indeed got the relief when Madras High Court said that the license couldn’t be cancelled because of security reasons because the cable company was only a distributor and not a broadcaster. However, in the case of the radio stations, this principle may not apply because they are indeed broadcasters.

The political climate in Tamil Nadu, where he built his empire, is also not good for Maran.When Jayalalithaa came back to power, the state police sent the CEO of Sun Pictures, which had enjoyed a pincer-like grip on the film industry along with the production-distribution houses of two grandsons of DMK chief M Karunanidhi, to jail on whom cases were piled up. The CEO, who was otherwise a terror in the film industry, spent a month in jail and came out completely beaten down. She then broke Maran’s monopoly in the cable segment by reviving Arasu cable, the government cable company that Karunanidhi started and then dropped, and imposed heavy tax on DTH. With the backing of the government machinery, the Arasu cable is clawing deeper and faster into every part of the state along with its bouquet of favourite channels.

Till some time back it had been a dream run for Kalanithi Maran, the 17th richest Indian with assets worth about Rs 18,000 crore - with a mix of astute business skills and political patronage. He had built a media empire from literally nothing. His Sun TV network, with a bouquet of 20 channels, is the most profitable satellite TV company in India, which is also watched in 27 countries. His stable also includes DTH, newspapers, films and radio. His Red FM operates in 50 cities across the country. For a short while, he also had a substantial stake in Spice Jet. But with the CBI and ED on hot pursuit and unfriendly governments at the Centre and in the state, it will be a tough ride for him.

Updated Date: May 13, 2015 15:42:18 IST