Media cross-holding in cross hairs

As TRAI prepares to regulate ownership of news organisations to ensure pluralism, big media houses fear shrinking profits and state control by proxy

May 24, 2013 01:10 am | Updated December 04, 2021 11:39 pm IST

NEW RULES: One of the two reasons TRAI points out is political ownership of media, as well as a trend of entities backed by parties taking over distribution channels, which makes broadcasters dependent on them.

NEW RULES: One of the two reasons TRAI points out is political ownership of media, as well as a trend of entities backed by parties taking over distribution channels, which makes broadcasters dependent on them.

Rahul Khullar, the straight-talking chairman of the Telecom Regulatory Authority of India (TRAI), listened attentively to the senior management executive of Bennett Coleman and Co. Limited, one of India’s largest media conglomerates. The latter disagreed with the premise of the discussion — that there was a “problem,” which needed “fixing.” Pointing to another participant, who had moments earlier said “3 or 4 media houses” control everything, Mr. Khullar shot back, “There is a large body of Indian citizens who feel that way. Wake up and smell the coffee.”

The same executive also argued that there was no accurate method to measure media concentration and consumption in India. Mr. Khullar told him, “You are entitled to argue your corporate cause but don’t insult my intelligence. I don’t tolerate bluffing and chicanery.”

The tension in the room, between the regulator and the media house, at a recent “open house discussion” in the capital, illustrated the broad contours of a battle that may reshape the media landscape.

‘Enough is enough’

Last year, the Ministry of Information and Broadcasting (I&B) asked TRAI, for the second time in four years, for its views on horizontal and vertical media integration, with the objective of maintaining media plurality.

In industry parlance, horizontal integration refers to an entity having a presence across different media segments (print, TV, FM radio) while vertical integration arises when a broadcaster has control over a distributor like a multi-system operator (MSO) or cable networks, or vice versa.

In February 2009, TRAI had recommended that safeguards needed to be put in place, a detailed market study ought to be carried out, and broadcasters and distributors should not have common ownership control. In a follow-up study, the Administrative Staff College of India concluded there was dominance of certain players in certain markets, and cross-media ownership restrictions must be put in place.

The reports gathered dust till May 2012, when a parliamentary standing committee expressed “surprise” that the government had neither taken any action nor specified a timeline to deal with an issue that could pose a “threat to the democratic structure.” The I&B Ministry wrote back to TRAI, asking for fresh views.

TRAI has now issued a consultation paper, with Mr. Khullar asserting enough was enough. “Earlier recommendations may have been given the go-by. But I intend to give recommendations that cannot be given the go-by now.”

Political-corporate ownership

The stakes are high. India’s media and entertainment sector now contributes one per cent of the GDP, with a combined revenue of Rs.80,500 crore in 2011 and projected annual growth of 17 per cent. Over 840 channels are registered, out of which 300 are news and current affairs channels. There are over 82,000 registered publications with more than 14,000 daily newspapers. In this crowded market, some ask, why worry about ownership?

TRAI points to two reasons. One is political ownership of media, as well as a trend of entities backed by parties taking over distribution channels, which makes broadcasters dependent on them. The second trend is of corporate ownership across sectors, with the aim of “promoting vested interests,” and “influencing policy-making” to earn revenues.

TRAI lists out examples. Sun TV and Essel Group have interests in print, TV, FM as well as distribution platforms like Direct-To-Home (DTH) and MSOs. The Anil Dhirubhai Ambani Group is present in all media segments as well as DTH, while Star India has interests in broadcasting and radio, as well as distribution platforms. Ushodaya (Eenadu), India Today, Times Group, ABP Group, Bhaskar Group, Jagran Prakashan, Malayala Manorama Group have interests in all three media segments — print, TV and FM radio.

The consultation paper draws a direct link between “uncontrolled ownership” and “paid news, corporate and political lobbying by television channels, propagation of biased analysis and forecast...and irresponsible reporting to create sensationalism.” Regulating media ownership is “essential in the public interest as a guarantee of plurality and diversity of opinion.”

Critics have put forth the constitutional argument of how Article 19 allows for freedom of expression and freedom to run businesses. In 2009, TRAI countered this by quoting a 1995 SC judgment on how a monopoly over broadcasting is inconsistent with free speech rights, and how the right to use airwaves needs regulation for preventing monopoly of information and views relayed.

Three questions

There are multiple issues at stake, including: ways to measure media consumption, how to uncover the corporate veil when entities use other companies to gain indirect influence, whether to allow mergers and acquisitions, and the nature of disclosure regimes. But TRAI’s views on three key themes will set the larger policy framework.

One, who should be disqualified from entering the media sector and hold broadcasting or distribution licences? Asserting that India is one of the few countries with no bar on ownership, TRAI has earlier recommended that political bodies, religious bodies, Central and State government ministries and departments, and public-funded bodies should not be allowed to have interests in the media. Mr. Khullar said there are a growing number of “undesirables” who enter the sector with a self-serving agenda — “politicians, builders” are examples he cited — while passing off as a public news service.

Two, should entities be allowed to have interests across all media segments — television, print, and FM radio? TRAI points out that internationally, the “one out of three” or “two out of three” rule is allowed. Media corporates have forcefully argued that in an age of “convergence,” they have to use all mediums to catch the “migratory consumer” and no restrictions be imposed. While the consultation paper does recognise the power of convergence, Mr. Khullar said with the low internet penetration in a society like India, “convergence cannot be an excuse not to do anything.”

Three, can a broadcaster also own a distribution company? The regulator has earlier suggested that this presents a clear “conflict of interest”; broadcasters must not be allowed to have more than 20 per cent stake in distribution channels and vice versa. Local cable operators support a move to restrict “vertical integration,” though broadcasters have warned that this will have implications on the cable networks too which distribute as well as run local channels.

Pluralism and freedom

While TRAI has insisted it will only deal with ownership and carriage issues, there are apprehensions that the outcome of the process will have consequences for freedom of expression. Chinmayi Arun of the National Law University told Mr. Khullar TRAI’s “solutions were prone to abuse.” She pointed out that corporate control must not give way to state control “by proxy,” for the very threat of taking away a licence or inconvenience can have serious implications on content.

How TRAI balances the key principles involved in the debate — ensuring media plurality and free speech, not allowing “vested interests” to use the privileges given to the fourth estate to advance partisan or monetary goals, yet allow businesses the freedom to grow, invest, rationalise, consolidate and expand in a competitive environment — will shape India’s future media ownership patterns.

( The Hindu competes with some of the media groups mentioned in this piece.)

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