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Curbing Media Monopolies

Will restrictions on cross-media ownership impinge on freedom of expression or will the absence of rules stifle plurality and dissent? The debate on this issue continues even as the Telecom Regulatory Authority of India recommends legal restrictions on corporate conglomerates owning media.

Date published: April 20, 2013Publication: Economic and Political Weekly Link to original article

A consultation paper prepared by the Telecom Regulatory Authority of India (TRAI) and released in mid-February makes out a strong and persuasive case for imposition of legal restrictions on cross-media ownership by corporate conglomerates. In the past, there have been several organisations, including TRAI and a committee of Parliament, that have argued why the domination of particular groups over different sections of the mass media, including print, radio and television, in specific geographical areas and market segments, is unhealthy for media plurality in particular and democracy in general. However, given the huge influence wielded by large media organisations on the government and on politicians cutting across party lines, it seems unlikely that such restrictions will be imposed in India in the near future.

In May 2008, the Ministry of Information and Broadcasting (MIB) had first sought the recommendations of TRAI in order to devise a policy for imposing restrictions in the pattern of ownership of media companies seeking licences/permissions/registrations under various laws, rules and guidelines. In response to a specific query from TRAI, the MIB clarified that the authority should include the print medium while examining the need for any cross-media restrictions vis-à-vis the broadcast media. The authority was asked to examine the issue in its entirety, looking at the trend of companies and groups that were earlier confined to the print medium entering television and radio broadcasting.

In February 2009, TRAI submitted its recommendations[1] to the government covering the issues of horizontal integration, vertical integration, limit on the number of licences held by a single entity, concentration of control/ownership across media and control/ownership across telecommunications and media companies. It recommended that the mergers and acquisition guidelines for the sector should be put in place to “prevent media concentration and creation of significant market power and no restriction should be imposed on cross control/ownership across telecom and media sectors” at that point in time, with a provision for reviewing the issue after two years.

Even as TRAI was preparing its report, in 2008, the MIB sponsored a study through the Administrative Staff College of India (ASCI), Hyderabad, to examine the nature and extent of cross-media ownership, existing regulatory frame work, relevant markets and the international experience in this regard. The ASCI report[2], submitted in July 2009, recommended that “cross-media ownership rules for broadcasting, print and new media must be put in place since there is ample evidence of market dominance in certain relevant markets”. On the issue of vertical integration, it suggested that the cap on vertical holdings should be carefully determined based on existing market conditions. It also recommended that disclosures regarding cross-media affiliations and ownerships should be brought into the public domain.

On 15 February 2013, TRAI released its second consultation paper on issues relating to media ownership and sought comments and counter-comments from stakeholders.[3]

At present, restrictions on cross-media holdings are imposed only on direct-tohome (DTH) television services and private FM (frequency modulation) radio companies in India. Broadcasters, cable operators, and publishing companies have no such restrictions even though there are enough examples of print companies operating in television broadcasting, internet and radio, and vice versa.

Most leading media houses opposed TRAI looking into the activities of print companies that had ventured into television. Almost all large media groups in India have staunchly refused to accept restrictions over ownership and control. Their spokespersons have argued that such measures would result in devious and dubious forms of censorship and have invariably resurrected the ghosts of the 1975-77 Emergency whenever there have been suggestions in favour of restrictions on cross-media ownership. The government too, by and large, has played along with the interests of India’s established media conglomerates. After all, powerful politicians and media barons have a reciprocal need for each other, a mutually beneficial back-scratching society of sorts.

According to the TRAI report, 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”. The ASCI report, which runs into almost 200 pages, argued in favour of an “appropriate” regulatory framework to enforce cross-media ownership restrictions, especially in regional media markets where there is “significant concentration” and market dominance in comparison to national markets (for the Hindi and English media).

At the consultation phase, media groups offered strong resistance to the idea of restrictions on their activities. Among other contrary opinions, they argued that regulation would stifle growth, that the multiplicity of media and the highly fragmented nature of the Indian market in any case prevents monopolisation, and that regulation of the sector amounts to an impingement on the right to freedom of expression as specified in Article 19(1)(a) of the Constitution.

As Rachna Burman wrote in an opinion article in the Times of India (20 August 2012):

There has recently been some talk about the holding patterns of media companies, in the context of cross-media ownership in India. Certainly, the imperative in any democracy is to ensure a pluralistic environment with multiple views and a thriving, competitive media industry that can compete globally. In this regard, ironically, India is known for actually having too many ideas – with the government recently suspending the issuance of licences for new TV channels for some time because it felt (the) numbers were already too high. In fact, India today has more newspapers and TV news channels than any country globally, and if anything, economics will force a contraction of media outlets. So concerns about a lack of pluralism of ideas are not warranted. In any case, globally and locally, the facts show that a plurality of ideas thrive, irrespective of cross-media ownership.

[4]

Unions of journalists have a different point of view. In a response dated 8 March 2013 to TRAI’s invitation for comments on its consultation paper, as a stakeholder, the Delhi Union of Journalists (DUJ), a 64-year-old organisation representing print media journalists in the main, stated:

We...have been witness to massive changes in the media as a consequence of policy decisions of the government of India, changes in economic policies and of course technological leaps. Our members have both benefited from some of these developments and suffered from them. The nature of our work and our working conditions has changed rapidly. Our life experience of working within the media tells us that there is a great deal of unknown, unvoiced censorship within the media that stems from patterns of ownership and employment.

In an off-the-record conversation with this writer, a senior official of the miB acknowledged that it seems unlikely the government will accept the recommendations of either TRAI or those contained in the report prepared by an “autonomous, self-supporting, public-purpose” institution – as the Hyderabad-based ASCI describes itself. For the time being, the ministry has tossed the big ball of these contentious issues on crossmedia ownership into the court of TRAI instead of taking a firm position itself.

The Parliamentary Standing Committee on Information Technology, headed by the Congress Member of Parliament (MP) from Haryana, Rao Inderjit Singh, has observed that the issue of restrictions on cross-media ownership “merits urgent attention” and “needs to be addressed before it emerges as a threat to our democratic structure”. The committee urged the ministry to “formulate” its stand on the issue in coordination with TRAI “after taking into account” prevalent international practices.

Exactly a fortnight after the standing committee’s report[5] was presented in Parliament on 2 May 2012, Uday Kumar Verma, secretary in the miB, wrote to the then newly-appointed chairman of TRAI, Rahul Khullar, stating: “Major players are looking for expanding their business interests in various segments of print and broadcasting sectors. In this scenario, issue of media ownership and the need for cross-media restrictions assumes great significance.”

Quoted in a report put out by the Press Trust of India on 22 May 2012, Verma’s letter added that the miB had asked TRAI to look into both horizontal and vertical aspects of cross-media ownership. Horizontal domination usually implies domination by a corporate entity or group of different media (print, radio and television) in a geographical area, while vertical domination implies control over both the creation of media content as well as its distribution.

Verma’s letter reportedly pointed out that certain companies which have control and ownership of television channels had ventured into cable distribution, DTH broadcast and internet protocol television (IPTV). The secretary further stated that there were other implications, including ensuring quality services at reasonable prices, which too were related to cross-media ownership.

As the standing committee on Information and Technology (IT) pointed out, after an “extensive” study, the ASCI had recommended that cross-media ownership rules “must be put in place” after conducting periodic market analyses and surveys every three or four years to “ascertain the structure of ownership and the level of competition”. The study had pointed to the inadequacies of the draft Broadcasting Ser vices Regulation Bill in restricting ownership of equity in media companies, the committee stated.

The multiparty panel of MPs noted with “surprise” that while ASCI had established the existence of cross-media holdings, the miB “has neither taken any concrete action” in accordance with the suggestions made, “nor set any deadline to ‘finalise’/formulate the rules” on crossmedia ownership. The panel put on record that some of the stakeholders had highlighted the “emergence and growing trend” of cross- media holdings when deposing before the standing committee while examining the Cable Television (Regulation) Network Second Amendment Bill, 2011. The committee rued the fact that the miB secretary “dealt with the issue of monopoly in the context of DTH instead of giving his considered view” on the issue of cross-media ownership restrictions.

Writing in the Times of India, Burman had argued:

...today, technology is forcing media companies across the world to diversify across mediums as the digital revolution flowers into convergence. TV, newspapers and radio are all converging onto digital platforms of the computer and mobile phone – and to be relevant, a media company must offer access to all forms of content (text, audio and video). Diversification across different media is hence a necessity for survival in order to remain viable in the digital and mobile environment. Hence cross-media ownership is a necessity and any restrictions on it totally unwarranted.

The DUJ, on the other hand, stated:

Plurality and diversity of opinion in the media can only follow from genuine freedom of the press which first and foremost must mean genuine freedom of press persons to voice their opinions. It must mean democracy within the media. This definitely requires diversity of ownership of media. Too many of our members have suffered the stifling of their voices and the censoring of their beliefs simply because these conflict with the unwritten policies of their employers. Some have been victimised, some demoted, some transferred and others simply fired for standing by their beliefs. Crossmedia holdings are enabling employers to enlarge and extend their domains, bringing them greater political clout and financial might.

In recent years the media, particularly the rapidly growing business press, has been a dominant voice in the clamour for economic ‘reform’ that will benefit business interests but not necessarily other sections of society. The needs of rural India are largely neglected in an advertisement-driven media targeted at urban consumers. The media aggressively promotes the ‘growth’ agenda over the ‘development’ agenda. These are opinion choices made by media employers (motivated by their revenue models) that do not refl ect the opinions of large numbers of Indians. It is vital for democracy to have more plurality of opinion in media. This requires the dismantling of existing monopolies and cross-media empires and a check on the growing concentration of media ownership.

The ASCI report stated:

It would appear rational for the government to extend TRAI’s jurisdiction in the arena of economic regulation (that is) the accumulation of interest to the print media as well so that the economic regulation of the entire media would vest with one regulator.

It added that the jurisdiction of the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) “could also be extended to cover the print media”.

Under these circumstances, Parliament would either have to enact a new law or the government would have to formulate a policy defining cross-ownership and empowering the regulator (TRAI) to draw up rules restricting cross-media ownership and accumulation of interest. The ASCI report suggests a third option: the setting up of a Broadcasting Regulatory Authority.

On the question of jurisdiction, the report notes that though TRAI was notified by the government in 2004 to regulate broadcasting, companies in this sector included over 60,000 cable operators, DTH providers, multi-system operators (MSOs) and operators providing headend-in-the-sky (HITS) services. Almost all these operators are unlicensed and many of the provisions of the TRAI Act pertain to licensees. The ASCI report observes, “this limits TRAI’s jurisdiction on broadcasting companies”.

The report “draws attention to the fact that international experience has shown distinct moves towards consolidating regulatory frameworks to cover all media and telecommunications under one umbrella in line with the emerging market realities and technological developments”. It points out that having a separate broadcasting regulator “has the danger of fragmenting regulation and goes against the international tide of consolidating regulatory frameworks to adapt to the convergence taking place between broadcasting and telecommunications”.

The ASCI report found that developed countries such as the United States (US), Australia, the United Kingdom (UK) and Canada, as well as developing countries like South Africa had put in place a set of rules for cross-media ownership. The report added that internationally, crossmedia restrictions in terms of presence (or absolute restrictions) have been in place for varying periods in these countries. While “there have been some discussions about relaxing these restrictions, none of these countries...have in fact removed cross-media restrictions”.

The February 2013 TRAI consultation paper too has detailed the nature of restrictions on cross-media ownership in the UK, the US, South Africa, Australia, Canada and France. A table in the TRAI consultation paper summarises by category the presence of relevant restrictions on media ownership prescribed in various international markets. The ASCI report concluded that while a sector regulator, and in this case TRAI, is required to look into issues relating to cross-media ownership, vertical integration, as well as issues related to pricing, market shares and restrictions on ownership, it should work in tandem with the regulator responsible for enforcing competition law. It therefore recommends that the Competition Commission of India (CCI) be involved in issues related to market power, concentration of ownership, formation of cartels, mergers and acquisitions (M&A), bid rigging, tie-in arrangements, exclusive supply and distribution agreements and predatory pricing.

“Consultations with CCI on all these matters by TRAI should be made mandatory by law”, the report recommends. That there be transparent norms for disclosure of cross-media affiliations and ownership is also suggested in the ASCI report. It argues that regulations on vertical integration are necessary to ensure that the “must carry” – as against “must provide” – provisions of the broadcasting law are mandatory and non-discriminatory. It adds:

The appropriate regulator must also be able to monitor compliance and regulate the rate at which access to broadcasting service networks are provided so that the delivery platforms do not block competition from others. A cap on vertical holdings must be carefully determined. The suggested cap must be based on existing market conditions, and be implementable.

The ASCI report found intense competition in three regional media markets it studied – Tamil, Telugu and Malayalam – leading to accumulation of interest and growing instances of cross-media ownership. The report used the Herfindahl- Hirschman Index (HHI) to measure market concentration and the impact on competition.

The ASCI report studied major media conglomerates in the country including the following groups and detected cross-media ownership in most of them: Sun, Essel/ Zee, STAR India, Times of India/Bennett, Coleman and Company Limited, Eenadu, India Today/TV Today, Ananda Bazar Patrika (ABP), Jagran Prakashan, Malayala Manorama, Mid-day Multimedia, Rajasthan Patrika, Dainik Bhaskar/DB Corp, Hindustan Times/HT Media, Network18, Reliance Anil Dhirubhai Ambani group, New Delhi Television, Malar, BAG Films, Positiv Television, Outlook and Sahara.

Some groups, “particularly those associated with print”, even argued that TRAI did not have jurisdiction on any matter that did not relate directly to telecommunications. This argument conveniently sought to suppress the debate on cross-media ownership, given that no regulatory authority exists for the media as a whole. Following the fuss raised about this aspect, the miB clarified that the issue of cross-media ownership restrictions “should be examined in its entirety” and that it was within the jurisdiction of TRAI to make recommendations regarding cross-media ownership.

Once again, the DUJ note elucidated that it

is concerned at the extreme dependence of the print media on advertising expenditure and also worried that in the bid to earn the patronage of powerful corporate and political players who deploy large monies of advertising, the print media may be losing sight of its basic ethos of speaking truth to power and informing the general public.

The DUJ also would like to record here that the anti-competition conduct of certain large print media groups, which have subsequently diversified into the TV and radio spaces, have actively militated against the right of the public to know and be informed. As example, we could cite the “price-wars” launched between the major English-language newspaper groups in the 1990s, which cut newspaper prices but made the publishers dependent ever more on advertising spending. Effectively, this meant sacrificing the interests of the newspaper readers for the advertisers.

The TRAI raised the question “Why Regulate?” and then went on to answer the question:

The products of media are not regular commodities as they constitute and shape cultural life of a society and serve as a strong tool to form public perception. Media products play a special role in democracies as media in modern societies provide the arena for public debates, a virtual public space where different issues of public interest can be represented and discussed. Media influences ideas and therefore can swing opinions.

It went on to state:

The size of the entertainment and media industry, its current growth trends, its future potential and its power to influence news and views within its reach are the factors that attract, amongst others, large corporates and political parties and organisations to the media business.

TRAI categorically stated that political parties and politicians were directly and indirectly influencing print and television content and TV distribution that was

more prevalent in regional markets… Such entities may practically throttle content selectively to suit their own agenda as well as fetter competition in the market, depriving consumers of the benefits of effective competition.

It also stated:

A number of corporate sector entities are entering the media sector. Corporates can use media to bias views and influence policy making in a manner so as to promote their vested interests while generating business revenues for themselves. This has led to emergence of large media conglomerates where single entities/groups have strong presence across different media segments.

The TRAI paper goes on to say that

[I]nherent conflict of interest which arises from uncontrolled ownership in the media sector gives rise to manifestations such as (i) paid news (ii) corporate and political lobbying by popular television channels (iii) propagation of biased analysis and forecasts both in the political arena as well as in the corporate sector (iv) irresponsible reporting to create sensationalism. These are even more lethal where the ownership/control rests with entities which have both business and political interests. Such ownership/control is not uncommon in the country.

TRAI has defined news as that which must provide truthful and factual information of interest to the public and which is “balanced, objective, fair and neutral”. They state that this is clearly different from what is described as “news”, which is paid for by corporate entities, governments, organisations or individuals.

When the distinction between news and advertisement gets blurred, advertisements begin to masquerade as news. When such paid news is published or broadcast, the reader or the viewer is misled into believing that an advertisement or a sponsored feature is a news story that is truthful, fair and objective.

It has also pointed out that there have been several reported instances of collusion between media companies and corporate houses and politicians exploiting the power of the media to lobby for influencing policy decisions that would favour such corporate entities. That media houses owned by industrialists and business groups have the power to

propagate biased analysis or forecasts to further their business interests or harm the interests of business opponents, to the detriment of the interests of investors and other stakeholders. Such exercises could vitiate the investment climate in the country and jeopardise economic growth. Similarly, media outlets owned/controlled by politicians/political organisations may also try to influence public opinion in their favour by propagating biased analysis or forecasts (for example) manipulated exit polls, etc.

After listing such strong arguments, the TRAI paper concluded that “regulating ownership of media outlets is thus essential in the public interest, as a guarantee of plurality and diversity of opinion. It is, therefore, topical to start talking about regulation of media ownership.”

The DUJ concluded their written comments on the TRAI consultation paper:

Methods of enforcing public accountability on the media industry need to be explored, which are not coercive and which do not threaten article 19 guarantees of the Constitution on freedom of expression. Media regulation needs to target greater inclusion and the possibility of giving voice to the socially and economically disadvantaged as a priority.

Earlier, in 2009, after hearing the arguments of media groups, TRAI came to the conclusion that certain restrictions are required 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 was that vertical integration can result in anti-competitive behaviour, whereby a distributor can favour its own broadcasters’ content over the content of a competitive broadcaster.

TRAI stated that vertical integration in the media market was causing serious problems. There have been numerous disputes brought before the TDSAT between broadcasters and cable operators alleging denial of content by other service providers. New cases are being added regularly, which TRAI regarded as a “clear indication that the current market situation requires corrective measures”.

Further, the TRAI report drew attention to the fact that all restrictions on vertical integration are currently placed on companies. However, large media conglomerates in India are usually groups that own many different companies. This allows 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 report therefore suggests that the restrictions no longer be placed on “companies” but on “entities”, which would include large groups and conglomerates.

All of the Indian media’s problems will not be solved by regulation. The crux of the issues at stake is that the mass media is, and will always be, a business. Its double existence as a profit-maximisation enterprise and as the “fourth estate” that is committed to the dissemination of information for the benefit of the public, creates a set of dilemmas. Consequent to the slowdown of the Indian economy and the worldwide recession, it is not surprising that many media companies are pitching for relaxed legislation with regard to media consolidation. From a business point of view, media consolidation has undeniable advantages. It allows for economies of scale, which enable media companies to absorb the costs of content and distribution over a large volume of revenue. This, in turn, allows companies to invest in better resource banks of human talent and advanced technology.

Yet, in such an intensely competitive market, small media companies will face growing difficulties just to survive, leave alone prosper. The Supreme Court’s observation in the famous February 1995 “airwaves are public property” case (Union of India vs Cricket Association of Bengal) that “the right to participate in the affairs of the country is meaningless unless the citizens are well informed on all sides of the issues in respect of which they are called upon to express their views” is a crutch for those in favour of cross-media restrictions. They argue that “reasonable restrictions” can be imposed on the media in order to maintain plurality and diversity of views, much required in a healthy democracy, and that these restrictions in no way undermine the fundamental right of citizens to freedom of expression.

The debate is unlikely to conclude in a hurry.

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Portions of this article have appeared in an earlier article written by the author for the hoot.org which can be accessed from: http://www.thehoot.org/web/storypage/6005-1-1-4-true.html.

Patrick S L Ghose provided research assistance.

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Notes

  1. Consultation Paper No 13/2008 of the Telecom Regulatory Authority of India, New Delhi, titled “Consultation Paper Media Ownership”, dated 23 September 2008.
  2. A draft report titled, “Study on Cross-Media Ownership” by the Administrative Staff College of India, Hyderabad, 2009. It was presented to the Parliamentary Standing Committee on Information and Technology (2011-12) on 2 May 2012.
  3. TRAI (2013), “Consultation Paper on Issues relating to Media Ownership” (http://www.trai.gov.in/ConsultationDescription.aspx? CONSULT _ID=675&qid=0).
  4. Rachna Burman, “Last Mile Neutrality Imperative” (http://articles.timesofi ndia.indiatimes.com/2012-08-20/edit-page/33273725_1_channelscross-media-ownership-media-companies).
  5. Standing Committee on Information Technology (2011-12) “Thirty Second Report” (Fifteenth Lok Sabha Ministry of Information and Broadcasting).
Date posted: September 8, 2015Last modified: September 8, 2015Posted byEeshaan Tiwary