47 years later, nanosecond advances in information dissemination are not enough to change the outlook

On Tuesday, Parliamentary Standing Committee on Information Technology voted against the entry of foreign direct investment in Indian print media. This holds the 1955 Cabinet Resolution, forbidding foreign investments, relevant for today's age. Sadly, the otherwise champion of plurality, competition and global economy- the monopolies within the Indian press, has shirked from this moment of truth.

1955 Cabinet Resolution, based on recommendations by First Press Commission, had banned foreign investments in Indian print media. "No foreign owned newspaper or periodical should, in future, be permitted to be published in India. Foreign newspapers and periodicals which deal mainly with news and current affairs should not be allowed to bring out Indian editions," reads the Resolution. The primary concern driving this resolution was to protect the 'national interest'.

Much has changed since. Media has undergone a metamorphosis with Television and Internet becoming the primary 'news' media, relegating Print from almost only to increasingly just another source. Images, more than words, have shaped the public opinion (Remember Tehelka?). Also, the definition of what is in 'National Interest' has also undergone a change with FDI investments being accepted even in Defense sector!

Surely, the current state suits some. Unlike many industries, print has enduring monopolies harbored through generations. In most segments, often just one or two publications dominate the readership and advertising market leaving very few options to the consumer. Compare that with more plural markets like in sectors such as services, consumer durables and FMCGs where more than half a dozen serious competitors are slugging it out. Should print business be treated any differently from other businesses?

Such protectionism suppresses competition and breeds monopoly. The wages of such battles among unequal are for anybody to see. The leader builds volume (read annihilates rivals) through very low cover prices (read dumping). Cover prices of Indian newspapers and magazines are among the lowest in the World. So low that they do not make sense from any perspective- whether it is the cost of production or consumers' ability to pay. On the other hand, the advertising tariffs bear the cross for such fratricidal tendencies of the monopoly. This leaves the weak in need of much more than just good content and marketing- financial resources- to endure the unfair market warfare. To them, foreign investments, especially from organizations that have domain understanding (read media houses) will surely help in fighting at least an equal battle which will benefit the democracy and consumer alike.

Before we progress on this issue, let's look at key international Press Trends.

1. Print is the dominant medium:
   Across the world, Print is the dominant medium. See chart 1 for country wise trends. As per exchange4media estimates of Indian advertising market, print has 55.7% share accounting for over Rs. 3,600 crores. This is in line with the global trends.
   
   Chart 1
   Share of Print advertising in Top 10 markets
   Figures per capita in US dollars, 1999
   Source: World Advertising Trends 2001

2. Print is losing ad share to Television
   While print is a dominant medium, World over Television has been growing at rapid pace. Chart 2 shows the European trend. Our estimates for Indian market show a similar trend. According to our estimates, share of print has fallen from 65.8% in 1996 to 55.7% in 2000.
   Chart 2
   Media Split of advertising spending in Europe Source: Polling data from Zenith Media in PRIMA/Pira "The future of Print"

   Relative cost efficiency (in reaching consumers) offered by Television medium is one of the reasons of TV making inroads into press share. Another important reason is the 'fragmentation' of TV viewership over a large number of television channels, usually 8-10 channels for an audience cluster. This forces media planners to allocate budgets to more than just a few channels and thereby increasing the total allocations on television. The same cannot be said of Print where usually top 2 publications generally suffice the audience delivery targets. Hence, the argument of more competition leading to more equitable market shares.

   Returning to the debate, media analysts point out that media scene has changed dramatically. Most television channels have foreign equity In fact, Government has allowed up to 20% foreign investment in channels that can be beamed from Indian soil! Every International newspaper worth its words is available freely on the net. Several large Internet portals like Rediff.com are listed on international stock exchanges. And news is the key offering from such portals. Therefore, the often-stated fear that some Murdoch will come and sweep us off our feet seems like hogwash, to put it mildly.