It used to be spoken of in whispers and written about obliquely; now it is reported openly. But the questions around big businesses investing in media remain.
About four months ago, it was reported that Reliance would, in a typically complex transaction, invest Rs 1,500 crore in the companies that control Network 18 Media and TV18 Broadcast, two listed entities of TV18. To put that sum in perspective, at the time of reporting, the two listed companies had a combined market cap of about Rs 1,800 crore. The deal will enable TV 18 to acquire the TV business of Eenadu, and make Reliance effectively the largest shareholder in TV18.
Now it is reported that at least three big business houses are interested in acquiring 26% of TV Today. The Aditya Birla Group is reportedly the front-runner but denies any interest, which is of course standard practice. Market sources say Birla is expected to invest Rs 300-350 crore. Again, to put that in perspective, the market cap of TV Today at the time of writing is Rs 390 crore.
So what is the issue? These are diversified conglomerates, one may say, with interests in everything from shirts to cement and oil exploration to supermarkets, so why not in TV channels?
First of all, you expect such conglomerates to go where the money is, but there is no money in the media business, and certainly not in broadcasting.
Of the touted Rs 72,800 crore Media & Entertainment sector in 2011 (FICCI-KPMG), television accounts for Rs 32,900 crore, or 45%. The KPMG report does not give the composition of that, but the PwC report (India Entertainment and Media Outlook) of 2011 estimates the share of distribution to be 63%; of content providers 4%; and of TV advertising – the sole source of net revenue for broadcasters – at 33%, which makes it just under Rs 11,000 crore in 2011. That’s the entire television business, comprising, at last count, 623 channels: an average of Rs 18 crore per channel per year. That’s less than half the cost of distribution for a medium-sized channel.
With the impending digitization of cable, the equations and economics of the business are expected to change, in favour of broadcasters. That, perhaps, is the golden future big business is betting on. Well, if FICCI-KPMG estimates are to be believed, after full digitisation in 2016 broadcasters will begin to get about a third of what consumers pay, against 10-15% now. Distribution will still get two-thirds.
Small wonder that of the top ten media and entertainment companies by market cap on the BSE, only five are in the television space, and three of those are pure play distribution companies – two of which belong to broadcasting networks.
In the present instance, Network 18 is bleeding money from every pore while TV Today is barely profitable, with its revenue hovering around the same level for several years. Why would global scale, highly diversified, globally invested conglomerates with wide open opportunities invest in a losing business in a bleeding sector?
If it is simply a desire to be in the media business – a perfectly legitimate desire – it is interesting that they go only into the news space, not into entertainment. A notable exception is Reliance ADAG’s Big TV, which is apparently part of a larger, serious play in the cinema and entertainment space.
The mainstream media have reported these developments, but briefly – and almost entirely without comment. No noisy TV debates, no editorial comment of note. The media don't write or talk about each other, and certainly not critically.
Rajya Sabha TV, lamentably little watched, did have a discussion featuring senior journalists and commentators – and not a good word to say on the matter. Journalist Madhu Trehan summed up the picture when she said, “When a politician or a government spokesman speaks, we don't believe them, but when somebody like Rajdeep Sardesai or Sagarika Ghosh speaks, or anyone at IBN7 or TV18 comes on, we presume we should believe them. Now there is a big question mark [when Reliance has indirect control over CNN-IBN].... We are looking at very subtle plants of stories, subtle angles, subtly putting things in a certain way...” While Trehan cited Reliance and TV 18 in the context, the principle obviously applies to any such situation. If there are some 15 news channels in Telugu, for instance, that cannot be because it is a large and lucrative market. So there is really no difference, in principle, between Reliance buying control of TV 18 and a small businessman or a local politician owning a local news channel in Ranchi or Amritsar or Tiruchi. The difference is of scale and therefore of its potential to influence.
Many countries do regulate cross-holding in media, with a view to preventing media monopolies. For all that, even in a highly regulated, media-rich country like the United States, the media business is oligopolistic. In India the government tried about five years ago to bring in cross-holding legislation but had a huge fight on its hands, with both the political establishment and the media establishment waging all-out war against it, and ultimately shelved the draft bill.
The real issue in cross holding, to my mind, is not when a single company owns properties across print, TV and radio, but when a broadcasting network owns distribution channels. For a content owner to be in a position to control what gets to the viewer, and so be able to choke the pipeline for its competition, is a serious travesty of consumer rights. In India every major broadcasting network owns distribution platforms, and there is no law to protect the consumer.
While there is a modicum of action on other aspects of regulation, even if of questionable effectiveness, when it comes to regulating who may invest in media at all there is little or no legislation in the free world, nor does it appear practical. It does seem, on the face of it, well nigh impossible, in a free-market democracy, to stop anyone from owning anything unless it is established that such ownership distorts the free market.
If you can’t regulate the ownership of media, can you regulate its use, or misuse? Even regulation of content is a fraught issue. The Press Council of India is famously toothless. The News Broadcasters Association took a laudable initiative in self-regulation, but the effectiveness of the mechanism is debatable and indeed frequently debated. The Indian Broadcasting Foundation, after squirming and obfuscating for years, finally set up a mechanism, but it is too early to say how – even if – it works.
Any discussion on regulation – of ownership; of cross holding; or of content – runs into questions of freedom of speech and raises constitutional issues; and the haloed Article 19 is invoked, and with good reason. Now the Supreme Court has asked what can be done if business entities use the media to harass rivals, what mechanism is available to deal with such a situation. In response counsel for the media, said – predictably, but not wrongly – that the court can do whatever is in its power, but not at the cost of the right to free speech.
Mediaman Dilip Cherian holds out no hope for media legislation in India, citing the nexus between business and politics. “Big business houses have an influence on policy-making. And when you bring legislation (on regulation) up, the other group that is affected are the politicians who own media houses of their own. You are talking about a new coalition of forces which the public is incapable of handling.”
It’s a complex web of issues. Where we are today is the outcome of conflicting forces and vested interests playing out over many years. It’s like global warming: it affects my life in fundamental ways; its effect is not dramatic today but its potential to damage is huge; and I don't have a cogent solution, but I know it is something I have to be concerned about.
(The author is Senior Advisor, R K Swamy Hansa Group)
This Guest Column was first published in exchange4media Group publication IMPACT