India needs cross media restrictions

A report prepared by an independent institution recommending imposition of cross-media ownership restrictions recently entered the public domain nearly three years after it was submitted, following a rebuke to the government by a panel of lawmakers.

The report, running into nearly 200 pages, was prepared by the Administrative Staff College of India (ASCI) at the instance of the Ministry of Information & Broadcasting (I&B). Though this report was submitted in July 2009, it was placed on the Ministry’s website only after Parliament’s Standing Committee on Information Technology sharply criticized the government for not initiating any action on the ASCI report’s recommendations.

The Hyderabad-based ASCI report pointed out that there is “ample evidence of market dominance” in specific media markets and 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).

The government seems unlikely to accept the recommendations of the report prepared by ASCI, which describes itself as an “autonomous, self-supporting, public-purpose” institution. In fact, a senior official of the I&B Ministry said so to this writer in an off-the-record conversation. The Ministry has, for the time being, tossed the contentious set of issues on cross-media ownership on to the court of the Telecom Regulatory Authority of India (TRAI).

The Standing Committee on IT, headed by Congress MP Rao Inderjit Singh, noted 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”. It urged the Ministry to “formulate” its stand on the issue in coordination with the TRAI “after taking into account” prevalent international practices.

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

On 16 May, exactly a fortnight after the Standing Committee’s report was presented in Parliament on 2 May, I&B Secretary Uday Kumar Verma wrote to the 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.”

Verma’s letter, quoted in a report put out on May 22 by the news agency, the Press Trust of India, added that the I&B Ministry had asked the 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 to Khullar reportedly pointed out that certain companies that have control and ownership of television channels had ventured into cable distribution, direct-to-home (DTH) broadcast and internet protocol television (IPTV). Further, the Secretary stated that there were other implications related to cross media ownership including ensuring quality services at reasonable prices.

The Standing Committee on IT pointed out that after an “extensive” study, ASCI had recommended that rules relating to cross-media ownership “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 Services Regulation Bill in restricting ownership of equity in media companies, the committee stated.

The panel of MPs said it was “surprised” to note that while ASCI had established the existence of cross-media holdings, the I&B Ministry “has neither taken any concrete action” in accordance with the suggestions made “nor set any deadline to finalize/formulate the rules” on cross-media ownership.

The committee said the I&B Secretary “instead of giving his considered view” on the issue of cross-media ownership restrictions, “dealt with the issue of monopoly in the context of DTH”. The panel put on record that some of the stakeholders who had deposed before the Standing Committee while examining the Cable Television (Regulation) Network Second Amendment Bill, 2011, had highlighted the “emergence and growing trend” of cross-media holdings.

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

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 Appellate Tribunal (TDSAT) “could also be extended to cover the print media”.

Under this option, either a new law would have to be enacted by Parliament or the government would have to formulate a policy defining cross ownership and empower the regulator (TRAI) to draw up rules restricting cross-media ownership and accumulation of interest. The ASCI report suggests a second option, namely, to set up a Broadcasting Regulatory Authority.
On the question of jurisdiction, the report notes that although TRAI had been 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 proving HITS (head-end-in-the-sky) services. Almost all these operators are not licenced and many of the provisions of the TRAI Act pertain to licencees. “This limits TRAI’s jurisdiction on broadcasting companies,” the ASCI report observes.

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 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 concludes that while a sector regulator (in this case, TRAI) is required to look into issues relating to cross-media ownership and vertical integration (including issues relating to pricing, market shares and restrictions on ownership), it should work in tandem with the regulator responsible for enforcing competition law.

Thus, it recommends that the Competition Commission of India (CCI) be involved in issues relating 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.

The ASCI report suggests that there be transparent norms for disclosure of cross-media affiliations and ownership. 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 report studied major media conglomerates in the country including the following groups: Sun, Essel/Zee, STAR India, Times of India/Bennett, Coleman, Eenadu, India Today/TV Today, ABP (Ananda Bazar Patrika), Jagran Prakashan, Malayala Manorama, Mid-day Multimedia, Rajasthan Patrika, Dainik Bhaskar/D.B. Corp, Hindustan Times/HT Media, Network18, Reliance Anil Dhirubhai Ambani group, New Delhi Television, Malar, B.A.G. Films, Positiv Television, Outlook and Sahara. Cross-media ownership was detected in most of the above groups.

In May 2008, Asha Swarup, the then Secretary, Ministry of I&B, had written to Nripendra Mishra, the then Chairman, TRAI seeking its recommendations on cross-media ownership restrictions. In September 2008, a consultation paper was put out by TRAI. After receiving comments on the paper, the TRAI produced a report in February 2009. While the TRAI was preparing its report on media ownership, ASCI was asked by the Ministry to prepare another report. The latter, prepared by a three-member team from ASCI led by Dr Paramita Dasgupta and comprising Dr Usha Ramachandra and Ashita Allamraju, is described as a “draft” report.

The TRAI had recommended that broadcasters should not have “control” over distribution of television channels and vice versa. The regulator had also called for putting safeguards for horizontal and vertical integration for broadcasters and distribution companies and suggested separate M&A guidelines for the sector to prevent media concentration and creation of significant market power. Most leading media houses have opposed the TRAI’s role in probing print companies that have ventured into television.

Not only that, India’s established media conglomerates have staunchly refused to accept the need for restrictions over ownership and control, arguing that this would result in devious and dubious forms of censorship. Their spokespersons resurrect the ghosts of the 1975-77 Emergency if cross-media restrictions are imposed. The government too has, by and large, played along with the interests of India’s large media groups. After all, powerful politicians need media barons as much as they need them – 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”. However, during the consultation phase, there was strong resistance on the part of media groups to the idea of restrictions on their sector. Many different arguments were proposed, among others that regulation would stifle growth, that the multiplicity of media and the highly fragmented nature of the Indian market prevents monopolization, and that regulation of the sector amounts to an impingement on the Constitutional right to freedom of expression [specified in Article 19(1)(a)].

Further, some groups, “particularly those associated with print” even argued that it was not under the jurisdiction of the TRAI to make recommendations on any matter which did not relate directly to telecommunications. Given that no regulatory authority exists for the media as a whole, this argument conveniently sought to suppress the debate on cross-media ownership. After a fuss was kicked up about whether the TRAI had the jurisdictional right on the media other than telecommunications, the I&B Ministry clarified that the issue of cross-media ownership restrictions “should be examined in its entirety” and that it was within the jurisdiction of the TRAI to make recommendations regarding cross-media ownership.

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.

The 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 the 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 licenses 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.

Regulation may not be a panacea for all of the Indian media’s problems -- far from it. The real challenge becomes apparent when one accepts the fact that the media is, and will always be, a business. Its dual role – as a profit-maximization enterprise and as the “fourth estate” with a commitment to the dissemination of information for the benefit of the public – creates a set of dilemmas.

Given the slowdown in the Indian economy and the Great Recession worldwide, it is not surprising that many media companies argue in favour of 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 resources such as talent or technical equipment.

However, in an intensely competitive market, small media companies will have an increasingly difficult time to survive, leave alone prosper. Those in favour of cross-media restrictions lean on 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”, to argue that “reasonable restrictions” can be imposed on the media in order to maintain plurality and diversity of views 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.

Meanwhile, the Secretary to the I&B Ministry has invited comments from various stakeholders, including the media industry, civil society organizations and the public at large to the ASCI report which can be accessed from: (Under Documents, Broadcasting)
The TRAI report is available at:…
The report of the Standing Committee of IT can be accessed from:…
(In the above report, pages 29 and 30 deal with cross-media restrictions.)

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