In July and August, instead of breaking news, Deccan Chronicle, reportedly the largest-selling English daily published out of Hyderabad, was making news, especially on the pages of its rival publications such as The Times of India. The newspaper’s publisher Deccan Chronicle Holdings Limited (DCHL) and its flamboyant chairman T. Venkattram Reddy are going through their worst-ever crisis. The company and its promoters are deep in debt, they are facing criminal charges of forgery and fraud, share prices have collapsed and their reputation is muck.
Mint (August 8) claimed that DCHL which, besides Deccan Chronicle, also publishes Financial Chronicle, Asian Age and Telugu daily Andhra Bhoomi, “is battling the worst crisis faced by an Indian media company in recent years…its survival (is) uncertain”.
Like Ramoji Rao, Raghav Bahl, Aroon Purie and Prannoy Roy, Venkattram Reddy sought a white knight in the form of Kishore Biyani of the Future group to bail out his debt-strapped group. But unlike the media entrepreneurs mentioned, he sought to diversify his group’s business interests away from the media--into cricket (DCHL owns the “Deccan Chargers” team in the Indian Premier League), retailing books, stationery, and gifts (through the Odyssey chain of stores) and civil aviation (through Aviotech), besides racing horses.
Many have argued that Venkattram Reddy’s problems began when be diversified into areas that were unrelated to his core business, that is, media. He, of course, has a different point of view. In a statement published on the front page of his own newspaper on August 2, he claimed: “DCHL would like to clarify that the real issue is a liquidity crisis that has arisen due to significant reduction in ad(vertising) spend by domestic and multinational companies in India…The debt that the company has incurred is in (its) usual course of business, and the amount stated in a section of media, that it is to the tune of thousands of crores, is false.”
The significance of the examples of corporate alliances cited in this article--involving Reliance Industries, Network 18 and Eenadu; Kumara Mangalam Birla and Living Media; Oswal and NDTV; and the Future group and Deccan Chronicle--lies in the initial argument made, namely, that corporatization institutionalizes third party interests, which, against a background of the need for financial viability and revenue certainty, could result in certain conflicts of interest. It is a given that a business of for-profit organisation works to maximize the wealth or income of its stakeholders and that a narrower stakeholder base makes it all the more difficult for an organisation to be inclusive. A large section of the mass media in India, therefore, stands at a junction of stakeholder benefits, divided between their corporate stakeholders and their stakeholders among mass audiences. It is not necessary that the interests of both sets of stakeholders will converge or be complementary. Therein lies the basis and the scope for conflict of interests.
The last few years have been particularly bad for the media in India and the world. The Great Recession in the West and the economic slowdown in India have resulted in many advertisers curtailing their spending thereby squeezing the revenues of media companies. The deceleration or curtailment of advertising expenditure coupled with higher borrowings has contributed to the ongoing phase of consolidation in the media.
The recently formed media conglomerates already have a significant presence in urban India and are clearly looking at expanding in smaller (Tier II and Tier III) cities and in rural areas where media penetration levels are relatively low and the potential for growth high. The aim at consolidating operations is to offer to advertisers a combination of readers, viewers and listeners to make advertising in group media properties and vehicles more attractive for national advertisers in markets that have been traditionally highly fragmented. In many of these markets, entry barriers are low. This would help television broadcasters in particular as they are currently saddled with high carriage fees charged by distributors as a result of which the top two or three channels have a disproportionately high share of the market and with it, advertising expenditure.
Key concerns
Sectors such as telecommunications, consumer goods, and automobiles are considered high growth sectors especially in Tier I and II cities and rural areas. Revenue from advertising for regional channels is thus expected to increase significantly. Regional media have been relatively insulated from market fluctuations, a recent report by KPMG has pointed out. Whereas deals such as the RIL-Network 18-Eenadu deal, by diversifying into different media genres, are potentially lucrative for the corporate entities involved, several key concerns are raised from the point of view of users or consumers, namely, readers, listeners and viewers.
As already stated, in India and in the world, large media corporations are today clearly playing a bigger role in the political economy that they report on as a result of forward and backward linkages. (The dominance in Italy’s media of companies controlled by Silvio Berlusconi, that country’s longest serving head of government, is a case in point.) In this country, large international television broadcast networks including Turner/CNN, Viacom/MTV and Sony are acquiring or partnering regional networks. Moreover, a fair degree of consolidation and convergence has already taken place.
According to the February 25, 2009 report on “Recommendations on Media Ownership” prepared by the Telecom Regulatory Authority of India (TRAI), it is important that “necessary safeguards be put in place to ensure plurality and diversity are maintained across the three media segments of print, television and radio”. It has argued for restrictions on vertical integration, that is to say on media companies owning stakes in both broadcast and distribution companies within the same media. The reasoning behind this restriction is that vertical integration can result in anti-competitive behaviour, whereby a distributor can favour his own broadcasters’ content over the content of a competitive broadcaster. In this scenario, large conglomerates would be able to impose their preferred content, which is clearly undesirable.
According to the TRAI’s report, vertical integration in the media market is already causing serious problems. There have been numerous disputes brought before the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) between broadcasters and cable operators alleging denial of content by other service providers. New cases are being added regularly, which the TRAI regards as “a clear indication that the current market situation requires corrective measures”.
Further, the report calls attention to the fact that all restrictions on vertical integration are currently placed on companies. However, Indian media conglomerates comprise many different companies which allow them to have controlling stakes both in broadcasting and distribution by acquiring licences under their different subsidiary companies, thus totally bypassing current restrictions and defeating the purpose of their existence in the first place. The TRAI report, therefore, suggests that the restrictions no longer be placed on “companies” but on “entities” or groups, which would include large groups and conglomerates such as the Bennett, Coleman Company group (publishers of the The Times of India) and the group that publishes the Dainik Bhaskar newspaper, which, besides owning newspapers, magazines and radio stations, also has a significant presence in the printing, textiles, oils, solvent extraction, hotels, real estate and power generation industries.
The Union Government has not accepted the recommendations of the TRAI and--given the clout of media groups among Indian politicians cutting across party lines--seems unlikely to do so in the foreseeable future.
The Ministry of Information and Broadcasting and TRAI have made concerted efforts to promote digital addressable systems such as direct-to-home (DTH), head-end in the sky (HITS), internet protocol television (IPTV), and digital addressable cable television (DACT), to improve the quality of television services provided to subscribers. What this has done is to bring the largely analog and non-addressable cable and satellite television sector under the purview of the law of the land and made cable operators--there are an estimated 60,000 of them in India at present, according to some estimates--accountable by facilitating enumeration and plugging leakages of revenue. This has been done through the Telecommunication (Broadcasting and Cable) Services (Fourth) (Addressable Systems) Tariff Order, 2010, and the Cable Television Networks (Regulation) Amendment Act, 2011, the latter seeking to make full digitization of cable television mandatory in three years.
This new wave of consolidation threatens, as Arvind Rajagopal points out in his article in the Hindu (January 24, 2012), to effectively “disenfranchise” a number of Indian citizens as television broadcasters and cable distributors vertically integrate their operations, combining both hardware and software within the ambit of corporate conglomerates with the same controlling interests. He points out that “with greater economies of scale for business promoters, and far more viewing options for those who can afford them” the issue of “affordability for the wider public…remains a big question”.
The rationale for digitization is that more and better television channels and value-added services will be available and that broadcasters and cable service providers will be able to monitor their subscriber bases and determine which channels are available and at what prices. Broadcasters, who currently claim that local cable operators under-report the number of subscribers they have to deprive the former of their legitimate share of subscription revenues, will now have the upper hand. This shift in the balance of power, Rajagopal has argued, tends to be “ignored in most of the celebration that has greeted the new legislation”.
Rajagopal points out that “television is the source of information for the largest number of people across the country” (as it is in most parts of the world). He writes that for most of the post-Independence period, broadcasting “was considered part of the national infrastructure and treated as a natural monopoly of the state”. As telecom firms enter the media space in a major way, “media industry leaders suggest that the government should consider television as a non-essential item and as an optional commodity”. Rajagopal has added: “…we are asked to believe that what was infrastructure has suddenly become superstructural and akin to a disposable good. But there is no reason to adopt such a view.”
Conclusion
The Indian skies opened up over the last two decades to coincide with the period of economic liberalization and deregulation. With a relatively small number of corporate groups dominating the industry, there is a concomitant tendency to narrow the agenda of journalism and, at deep cultural levels, simultaneously make it self-serving. For democracy to strengthen and mature, the presence of people with informed opinions and plurality in dialogue become intrinsic. The boundaries between the boardroom and the newsroom have become increasingly blurred.
Complicated holding structures and investments made through layers of subsidiary companies make it difficult to discern the real “bosses” and the power they wield. Rural affairs editor of The Hindu P. Sainath (quoted in Outlook) sees the Reliance-Eenadu-Network 18 deal “as an example of a corporate consolidation within a corporate deal” that “only adds to the process of shrinkage of diversity and lends itself to increasing homogeneity in news and entertainment”. “The fourth estate is now about revenue streams and corporate profits--really just real estate,” he contends, adding that journalism ought to be for the public and not merely for corporate stakeholders.
Though a free media is fundamental to the existence of a liberal democracy, questions about the accountability and transparency of media companies need to be addressed. In India in particular, these concerns have acquired greater relevance after the disclosure of the role played by particular prominent journalists in the nexus between politics and big business in the Niira Radia conversations.
The challenges that lie ahead for the media in India are to ensure that growing concentration of ownership in an oligopolistic industry does not lead to loss of plurality. In the absence of cross-media restrictions and with government policies contributing to corporatization, diversity of news flows could be adversely affected contributing to the continuing commoditization of information, making it less and less of a “public good”.
(Research assistance: Ahana Banerjee)
