So where should the money come from?

BY CHINTAMANI RAO| IN Media Business | 25/08/2014

THE MEDIA REGULATION DEBATE: The TRAI report does not explain who is allowed to own or finance media, nor does it do enough homework.

CHINTAMANI RAO says it is self righteous and of questionable practicality. Pix: afaqs.com

The Telecom Regulatory Authority of India’s (TRAI) Recommendations on Issues Relating to Media Ownership, its second document on the subject, is in the familiar TRAI mould: well presented, articulate, easy-to-read, and theoretically sound, but often opinionated, self-righteous and of questionable practicality.

That there are serious issues relating to ownership is without doubt, and the de facto acquisition of Network 18 by Reliance has thrown many of them up in stark relief. Even if there is no end in sight, they are important enough to discuss periodically, in the expectation that some resolution will evolve over time.

While some have questioned the parameters set by the regulator, it seems sensible to limit the subject for the present as proposed, to where it is most relevant: news and current affairs; on print and TV only; and with markets defined by language-state combination.

That said, it is, in the main, a one-sided view, lacking the very internal plurality it champions. A comprehensive review of it could be longer than the document itself, so I will confine myself to a few salient aspects.

Whose money is it, anyway?

At a seminar some months ago, a senior journalist, who had recently had a public falling-out with his corporate employers, was critical of non-media corporates owning media companies. He was also not in favour of media conglomerates; owner-editors; journalist-owners; and of government or political parties owning the media. I asked who then, in his opinion, should own the media. No answer.

The point is not to find fault with that journalist. It is, rather, to point out that this is a fraught issue, in which every answer raises fresh questions. What is necessary is not to limit who may and who may not own, but transparency about who does. It calls, as with most things in India, not necessarily for new regulations but for implementing existing ones.

No doubt “the mission of the news media is not to promote the advertiser’s interest by facilitating ‘consumption’ but to promote the citizens’ interest by facilitating unbiased dissemination of information”. Nice rhetoric, but where does the money come from? Surely the regulator is aware of the economics of the media business, especially of broadcasting, which is its remit.

Surely, too, the regulator is aware that broadcasters still don’t get the benefits of digitization because the intractable last mile does not implement the mandated subscriber management systems, and no one – not TRAI, not the I&B Ministry – has been able to make LCOs comply. (That is exactly why now, on 23rd August, the government has pushed the digitization deadline by a year.)

As long as people don’t pay for content, advertising will remain the lifeblood of the media business. And as long as all their revenue comes from advertisers, that is who they will cater to. Do they have an option?

A news channel selling advertisements, and ensuring its ability to do so, is like a man who works long hours and has little time for his family. His mission is to provide for the well being of his family, and the job gives him the resources to do that. Stop whipping him for spending all his time at work: instead, ensure he is paid well enough; control inflation; and make quality education and healthcare affordable. Trust me, he would rather be free.

Sound and fury about private treaties

The near obsession with private treaties is out of proportion with the significance of the phenomenon and, if it is significant, with the possibility of doing anything meaningful about it.

This is a line of business in which a media owner has small stakes in multiple companies. Is that a bigger problem than corporate ownership? And what about the influence of big advertisers? Does anyone know what proportion of revenue comes from so-called private treaties deals? And if indeed it is a big issue, has anyone got the media owners’ perspective on it?

Private treaties “could be in various forms,” the TRAI document irresponsibly speculates, “such as advertising in exchange for equity of the advertising company or in exchange for favourable coverage. They could also take the form of giving favourable coverage to companies in exchange for exclusive advertising rights. Other innovative forms of private treaties could also exist.”

Such speculation is out of place in a document of this nature. Surely it is the duty of an authority recommending a policy to do its homework, and surely TRAI has the wherewithal to get the necessary information.

And here is clinching proof offered, of skullduggery: “During the 2008 recession, these media entities refused to admit that the recession had indeed hit the country and instead called it a ‘temporary slowdown’ in order to prevent the stock prices of the companies they owned and companies that owned them from falling; else they were likely to lose big money.”

That is perhaps the single most ridiculous statement in the entire 111-page document. Did the Government of India or the Reserve Bank say it was a recession? Didn’t they, on the contrary, actually insist it was only a slowdown? So did the Finance Minister, too, refuse to admit it was a recession because he risked losing big money? Would it have been better if the media had cried itself hoarse and caused panic, and the markets had crashed?

The simplistic, one-word recommendation to “proscribe” private treaties seems to give little thought to the practicality of such a measure. Does it mean media houses cannot invest in companies, or that their owners cannot? Does it mean they cannot carry perfectly legitimate advertisements of companies they have perfectly legitimate investments in? Does it mean their rate negotiations will be subject to approval by some authority?

Regulation, Self-regulation, Co-regulation

The News Broadcasting Standards Authority (NBSA) is dismissed lightly because its standards apply only to the 57 channels of 28 National Broadcasting Authority (NBA)members.

Sadly, there is no informed assessment of it, or a word of appreciation for the fact that these broadcasters have taken the initiative. Instead, TRAI dismisses it as an “ineffective regulatory framework” and only quotes an unnamed organisation that has moved the Supreme Court against it, describing it as “a self-serving farce”.

The regulator further betrays its bias when, in answering the question, “Has self-regulation worked” it begins disdainfully with, “The cosy club mentality of this mechanism….” That is hardly calculated to give the confidence of the objective assessment that is the bounden duty of a regulator.

In fact, the entire concept of self-regulation has been dismissed, simply because it is a voluntary act. There is not a single reference to, nor a single attempt to give, the perspective of the NBSA, of its Chairman, who is a retired Chief Justice of India, or of editors and broadcast executives – only of their detractors. Thus the document ironically lacks the very internal plurality it champions.

It is fair to have expected TRAI to first assess the NBSA mechanism, and then address the question of what next, and weigh options. What it has done, instead, is to point out the issues of statutory regulation and then go on to recommend it anyway, under the aegis of a Media Regulator.

It does not make the critical distinction between content and structural regulation: statutory content regulation can easily become censorship; structural regulation is essential for fair competition.

There are two key issues with self-regulation. The first is its limited applicability: in the case of NBSA, only to NBA members. The answer to that is to bring all news channels under the jurisdiction of the NBSA.

The second issue is that penalties imposed by self-regulatory bodies are not enforceable, but giving penal authority to self-regulatory bodies has its own set of issues. The only viable answer is co-regulation, in which a self-regulatory body such as NBSA conveys a verdict and a proposed penalty to a statutorily empowered one, such as perhaps the proposed Media Regulator. The statutory body either accepts and implements the recommendation or reviews and modifies it. How hard is that?

Guilty until proven innocent

What is most galling throughout the document is the disdain towards every link in the media value chain. The best that can be said is that it is equal-opportunity disdain: everyone is tarred with the same brush. The only sources and views cited are those that support TRAI’s agenda. No alternative views are presented.

It is no one’s case that all is well with the news media. Everyone knows about motivated ownership, and indeed the document describes the issues in detail. But indicting the entire industry and practically all its constituents is unacceptable. The least an industry can expect of its regulator is even-handedness, and that is regrettably lacking.

(Chintamani Rao is an independent marketing and media consultant. A former broadcaster, he served on the boards of the NBA and the IBF and was engaged with regulatory issues in broadcasting).