"It will kill the media," says Abhinav Shrivastava, an associate with the law offices of Nandan Kamath in Bangalore. He is talking of the Telecom Regulatory Authority of India's recent recommendation on corporate ownership of media organisations. "By restricting corporate ownership, you will be clamping down on the sector's ability to raise funds as a whole," says Shrivastava. "On the face of it, Trai's recommendation looks untenable," adds Chinmayi Arun, assistant professor, National Law University, Delhi. "If the media cannot be incorporated into a company, it cannot grow beyond a point. By not allowing it to corporatise, you could be crippling the media," says she.
Funnily enough, Trai's 23 recommendations on "issues relating to media ownership" released last month are intended to do exactly the opposite. They are meant to foster plurality, independent journalism and build a stronger media industry. While several of the recommendations are sensible, the one on corporate ownership is vexing lawyers, media owners and investors alike.
Trai recommends that "on grounds of the inherent conflict of interest, ownership restrictions on corporations entering the media should be seriously considered by the government and the regulator. This may entail restricting the amount of equity holding/loans by a corporation in a media company to comply with provisions relating to control." The three parameters it uses to define control are: equity holding of 20 per cent or more, 51 per cent voting rights or de facto control by means of being a party to agreements, contracts, or understandings. (Ironically , one of the conditions for getting into the news media is that "the largest Indian shareholder should hold at least 51 per cent of the paid up equity".)
For more than a hundred years, media brands have been created and owned by corporations - in the US, Europe as well as India. The Malayala Manorama, one of the largest selling dailies in India, began in 1888 and survived some serious skirmishes with the British because its founders owned a rubber factory and a bank, among other businesses. The Essel group used its rice export business to finance Zee Television. Ramnath Goenka's other businesses helped finance The Indian Express. The Times of India survived years of unprofitable existence because of the family's chemical and other businesses. "If you are in the media business and want to get into IT, there is no restriction, so why should there be a restriction for anybody from any other industry getting into the media," asks Jayant Mathew, director, Malayala Manorama.
The Trai recommendations completely ignore the economic realities of the media industry. News is an expensive and unprofitable business globally. Advertisers cannot fund it completely and audiences are unwilling to pay for them. "If corporations can't fund it, that leaves only one other option, the underworld," quips one broadcast CEO in frustration. Khullar says that the ownership controls are designed to stop more damage to the media in the future.
India is a free market, so how can anyone be stopped from getting into the media, ask experts. This then is the second question. "Instead of trying to impose ownership limitations which can be breached in a million ways, regulators should allow for full plurality and remove entry and exit barriers," says Bahl. Anyone can set up, own and run a media company in a democracy and India's record so far has been wonderful - maybe too much so with thousands of newspapers and 135 news channels. About a third of these are owned by politicians and random real estate developers, making for some terrible news television. More than 60 per cent of the cable systems are owned by politicians who block other channels at will. So Trai reiterates a suggestion made in 2008 that political, governmental or religious bodies or their surrogates should be barred from broadcasting and distribution of television signals. And any such body already into news should be provided an exit.
Bahl agrees with that. "They (religious and political bodies) are different - their objective is not to operate in a competitive media market but to further a religion or a political party. The media is a competitive economic activity and survives on advertising and other forms of commercial revenues, so only those entities should be allowed to participate which are mandated to compete in commercial activities," says he. Other supporters of the ban -the-politicians-from-news brigade point to Ofcom (the communications regulator in the UK) which regulates media ownership by religious and political bodies. "Ofcom is a quasi-judicial body, it has (legal) competence," points out Shrivastava.
This then brings us to the third and most critical question: Trai's authority to make recommendations in the whole area of plurality and ownership. It is after all just the broadcast carriage regulator. The Competition Commission of India, according to Shrivastava, is the right body to regulate on issues of influence and dominance in any market, a point many media firms have made to Trai in their submissions.
The way out Trai doesn't agree with that view. It makes suggestions on cross-media restrictions such as a newspaper with a dominating share in one market cannot own a dominating TV channel in the same market and vice versa. "The vertical and horizontal limits will take care of plurality. But to handle conflict of interest, you need regulation that is outside of the government. That is where a media regulator would help," says Khullar.
Maybe giving teeth to self-regulatory bodies such as the Press Council of India or the News Broadcasters Association will be more effective, says one broadcast CEO. Others suggest getting the Union ministry of information and broadcasting out of the regulatory picture. Its conflicting roles, as the policymaker, regulator and one of the biggest advertisers, have created havoc with media regulation for years.
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Trai proposals may thwart media growth