It explicitly names newspapers and channels — including some of the biggest groups in the country — seen as having indulged in the “paid news” practice.

“The phenomenon of ‘paid news' goes beyond the corruption of individual journalists and media companies. It has become pervasive, structured and highly organised and in the process, is undermining democracy in India.” So finds the draft report of inquiry conducted into the phenomenon by the Press Council of India to be discussed by the full Council on April 26 in Delhi. The Hindu has obtained a copy of the report to be put up at that meeting.

The report is titled “Paid News: How corruption in the Indian media undermines Indian democracy.” It marshals a vast amount of material on the issue and is a compendium of media malpractice. It explicitly names newspapers and channels — including some of the biggest groups in the country — seen as having indulged in the “paid news” practice. The report could run into rough weather for that reason, with a few Council members reluctant about naming names. (Though it gives space and weightage to the denials of the media groups under the scanner.)

The “lack of consensus” over naming names also extends to the report's reflection of the views of journalists' unions which have called for strengthening the Working Journalists Act. The unions assert that the contract system of employment now in vogue undermines the independence of the journalist and the primacy of the editor. The Delhi Union of Journalists even informed the Council that “selected journalists had been targeted by managements of media companies for not acquiescing with such malpractices”.

Interestingly, many prominent politicians and public figures either deposed before the inquiry panel or made written submissions to it. Others also handed the panel their statements on the subject elsewhere. Across the spectrum, points out the report, even politicians normally loath to antagonise the media have complained bitterly about what many of them see as little more than extortion. A Sub-Committee of the Press Council, comprising Paranjoy Guha Thakurta and K. Srinivas Reddy, conducted the inquiry. Their report quotes opposition leader Sushma Swaraj's statement that the “paid news” menace had “started out as an aberration, went on to become a disease and is now an epidemic”.

The report speaks of the “deception or fraud” that paid news entails as having three levels. First: “the reader of the publication or the viewer of the television programme is deceived into believing that what is essentially an advertisement is in fact, independently produced news content.” Second: “By not officially declaring the expenditure incurred on planting “paid news” items, the candidate standing for election violates the Conduct of Election Rules, 1961, which are meant to be enforced by the Election Commission of India under the Representation of the People Act, 1951.” And third: “by not accounting for the money received from candidates, the concerned media company or its representatives are violating the provisions of the Companies Act, 1956 as well as the Income Tax Act, 1961, among other laws.”

The report notes the “huge amount of circumstantial evidence that has been painstakingly gathered by a few well-meaning journalists, unions of journalists, other individuals and organisations together with the testimonies of the politicians and journalists who have deposed before the Press Council of India.” And says this “goes a very long way in establishing the fact that the pernicious practice of paid news has become widespread across media (both print and electronic, English and non-English languages) in different parts of the country. Interestingly, this phenomenon appears to be less pervasive in states (such as Kerala or Tamil Nadu) where the media is clearly divided along political lines.”

The report traces the emergence of the paid news phenomenon over years and phases including such forms of space selling as MediaNet and Private Treaties. “In pursuing its quest for profits,” it says, “it can be argued that certain media organizations have sacrificed good journalistic practices and ethical norms”. What began as individual or one one-off transgressions, it points out, became institutionalised over the years. “Private Treaties” involve deals where corporates pay media companies in shares for advertising, plus other, favourable treatment. The “Private Treaties” have also disturbed the Securities Exchange Board of India (SEBI) which, as early as July 2009, wrote to the Chairman of the Press Council of India, Justice G.N. Ray, that such strategies “may give rise to conflict of interest and may, therefore, result in dilution of the independence of [the] press vis-à-vis the nature and content of the news/editorials relating to such companies”. SEBI “felt that such brand building strategies of media groups, without appropriate and adequate disclosures, may not be in the interest of investors and financial markets as the same would impede in them taking a fair and well-informed decision”.

The “Private Treaties” structure lost its sheen when the stock market crash of 2008 saw those shares acquired from corporates plummet in value. However, the media companies were still to be assessed for tax purposes at the old values prevailing at the time of such contracts. “Paid news” was one way out of this trouble. Since all the transactions were illegal and off the account books, it benefitted both media owners and politicians.

The report explores several ways to curb the menace of “paid news”. It seeks a far more pro-active role from the Election Commission for instance. It calls on the ECI to set up “a special cell to receive complaints about ‘paid news' in the run up to the polls. Where a prima facie case is established, it calls on the ECI to initiate action against offenders.

It asks that the ECI nominate independent journalists or public figures to help monitor the phenomenon during elections. It calls upon media organisations to desist from having their correspondents “double up as agents collecting advertisements for their organisations and receiving a commission on that revenue”, instead of regular salaries, retainers or stipends.

The report also calls for giving regulatory bodies like the Press Council more teeth. It further appeals to media organisations to adopt a number of principles that would curb “paid news”. However, it recognises that self-regulation and civil society oversight, while welcome and useful, can tackle the problem “only to an extent”. There would have to be effective use of existing laws to “apprehend those indulging in practices that are tantamount to committing a fraud on the public”.