The Securities and Exchange Board of India must be commended for making it mandatory for media companies to disclose their stake, where such exists, in companies they write about. SEBI has been particularly wary of the system of ‘private treaties' between media houses and non-media companies that are listed or are in the process of being listed. Private treaties involve deals where corporates pay media companies in shares for advertising plus other favourable coverage. There is no obligation for the newspaper to let its readers know it has a vested interest in the coverage accorded to these companies. By obliging the Press Council of India to issue guidelines making such disclosures mandatory, SEBI is not only protecting investors from being misled by the coverage. It has also taken the cause of media accountability a significant step forward. From now on, such disclosure would have to be made in any “news report/article/editorial in newspapers/television relating to the company in which the media group holds such stake.” Some media houses are understood to have private treaties with a large number of companies. In fact, SEBI wrote to the Press Council more than a year ago: “It is our concern that such agreements may give rise to conflicts of interest and may, therefore, result in dilution of the independence of the press vis-a-vis the nature and content of the news/editorials in the media of companies promoting such agreements.” What is more, the private treaties system has been seen as a precursor to the scandal of ‘paid news' during last year's national and State elections.
While SEBI clearly disapproves of the system of private treaties for the news media, at the heart of the guidelines issued at its instance is honest and full disclosure. Media groups must disclose, at their websites, the percentage of stake they hold in their private treaty clients. There must also be disclosures about any nominee of the media group being on the board of directors of companies they have ‘treaties' with, and any other details that “may be a potential conflict of interest for the media group.” All in all, SEBI's prescription, if sincerely implemented, will be excellent for the health of India's burgeoning news media. It is unfortunate that the Press Council, a statutory body mandated to protect the freedom of the press as well as to maintain and improve its standards, has taken a whole year after it received SEBI's “suggestions” to issue a press release on “Guidelines concerning mandatory disclosure by the media of its stake in corporate sector.” But take nothing away from SEBI. With its clear-sightedness and persistence, it has brought an unsavoury practice under the glare of public scrutiny.