TRAI details corruption in Indian Media

You are unlikely to read about the Telecom Regulatory Authority of India’s latest recommendations on Media ownership in tomorrow’s newspaper, or hear about it on tonight’s prime time TV. That is because it is perhaps the biggest ‘expose’ of the not-so-wholesome, behind-the-scenes activities in Indian media ever, except perhaps the famous Radia tapes issue. In painstaking detail, TRAI, headed by chairman Rahul Khullar, has done a thorough job of explaining what is wrong with the state of Indian media. It has highlighted two big problems –

1) Indian media is overwhelmingly owned by corporates, who are using their media clout to push their own agendas and get what they want for their other businesses.

2) Politicians have a high degree of control over media, especially in states like Tamil Nadu.

However, given its scale and impact, it is the corporate ownership and misuse of media that has occupied TRAI’s attention the most.The TRAI recommendation paper is also a rare unvarnished glimpse into some of the malpractices in Indian media. Every prominent media house is named in the TRAI report.

We bring you some excerpts –

“There are two facets to the problem of corporate ownership of the media. First, many non-media corporate entities with varied commercial interests are increasingly interested in controlling media outlets. Second, many media corporates diversify into other, non-media, businesses by leveraging their clout and visibility. The reasons for their respective diversifications differ, but, in both cases, the media entity has multiple business interests, and the inherent conflict of interest raises questions about the extent to which this affects the balance in the presentation of news and opinions. Clearly, this requires close scrutiny.

Non-media corporates provide several reasons to explain their investments in the media sector. For some, it may be a forward or a backward linkage to their existing businesses while for others it is just another business, an opportunity to reap profits. But in most cases, as journalists and media experts point out, the intent of owning the news media goes far beyond returns on investment, given that the media itself complains about the financial difficulties they face. Arguably, it is the easiest and quickest path to reach a position of power. As Pradyuman Maheshwari, editor-in-chief, MxM India puts it, “Many years back when I asked a leading industrialist why he was keen on starting a news channel he replied with the famed Deewar dialogue: Aaj mere paas buildingey hai, gaadi hai, bank balance hai, but even then these guys owning newspapers and channels are ruling the world.”

Shekhar Gupta, former Editor-in-Chief of The Indian Express, also points to a similar trend, “If you have a couple of news channels and newspapers, a few well known (and well connected) journalists as your employees, give them a fat pay cheque, a Merc, and they solve your problem of access and power. They also get you respect, as you get to speak to, and rub shoulders with top politicians, even intellectuals, at awards and events organised by your media group. It is the cheapest ticket to clout, protection and a competitive edge.”

There are some others who invest, rather bail out, those media companies that are not doing well financially, and thereby enter into a quid pro quo deal that gives their companies favourable media coverage. On the whole, it would be entirely naïve to believe that such ownership does not influence the content produced by the media outlet. 5.24 In an Economic and Political Weekly article it is explained that in India, as in the world over, large media corporations are clearly playing a bigger role in the political economy that they report on

Corporates also find the need to invest in the media to counter the attacks made against them with a view to advancing their commercial interests. As reported in the Frontline magazine35, in the 1980s and early 1990s, Reliance Industries Limited (RIL) ventured directly into the media business by buying the daily Business and Political Observer. There is some speculation in the public domain that RIL did so to counter another leading newspaper that had carried many stories attacking their group’s policies. 5.25 Thus, as in the case with political ownership of media, corporate ownership is often driven by vested interests. Media is used for corporate propaganda in order to alter the business environment to one’s advantage. This is not only detrimental to investors but also the economy as a whole.

Alex Carey, an Australian writer and social psychologist who pioneered the study of corporate propaganda said, “The 20th century has been characterized by three developments of great political importance – the growth of democracy; the growth of corporate power; and the growth of corporate propaganda as a means of protecting corporate power against democracy.”36 In India, the problem of corporate ownership is further aggravated by the lack of publicly available ownership records of media entities.

There are many ways by which non-media corporates control a media entity. Some corporates directly own equity in media groups. The KK Birla group, for example, own HT Media Ltd that publishes The Hindustan Times. In other cases, corporate control over media is inconspicuous and is exercised indirectly through indirect equity ownership via a chain of companies or Trusts.

A few such instances that are available in the public domain are those of RIL’s control over News X37; the Aditya Birla group’s control over the TV Today network (see Box 3); and ADAG’s investments in UTV Bloomberg via Reliance Capital38. Corporate entities also use loans to exercise control over media entities, a practice that became evident from RIL’s financial arrangement with Network18 in January 2012 (discussed earlier in Box 1). Non-media corporate can also influence editorial and business decisions of media entities by being members on the Board of Directors. Box 3 containing

The case of RIL, Network18 and Eenadu groups is interesting due to the complexity of the investment transaction. See Box 4 for details of the arrangement. Initially, RIL denied management control over the media entity. However, in this case, the Competition Commission of India (CCI) concluded39 that the “… acquisition of the right to convert the ZOCDs into equity shares, at any time before the expiry of ten years from the date of subscription, confers on IMT (Independent Media Trust) the ability to exercise decisive influence over the management and affairs of each of the target companies. Since control over the target companies is being acquired by IMT, the subscription to ZOCDs in-turn would also result in indirect acquisition of control over Network18 and TV18 as these companies would be under the control of the target companies.”

Thinning of the line between the boardroom and the newsroom significantly impacts the output of the media entity. Examples of such corporate influences are aplenty. When the CBI named Kumar Mangalam Birla in its Coalgate investigations, the only major broadsheet that did not carry the news on its front page was the Hindustan Times40. So was the case when Subrata Roy was arrested recently – the Sahara Group did not carry the news on its TV channels. With the takeover of the Network18 media Group by RIL in May 2014, many journalists quit the Network 18 media group, including the editor-in-chief of one of the network’s English news channels CNN-IBN, who in a note to his staff is reported to have written “Editorial independence and integrity have been articles of faith in 26 years in journalism and maybe I am too old now to change!”

Many media houses are now primarily run with a business motive, which more often than not, supersedes the objective of providing accurate and unbiased news and information to the public. As much has been accepted in an interview to Ken Auletta, by Vineet Jain, Managing Director of BCCL who has said, “We are not in the newspaper business, we are in the advertising business. If ninety per cent of your revenue comes from advertising, you’re in the advertising business.” Bhaskar Das, who was then serving as President and Principal Secretary to Vineet Jain said in the same interview, “We are a derived business. When the advertiser becomes successful, we are successful. The advertiser wants us to facilitate consumption.”

This is non-adherence to even the fundamental objective of the news media – 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. Even if a more benign view is taken of the tendency of media owners to assume increasing control over the newsroom, questions regarding where the line should be drawn to separate ownership and editorial independence persist.

This is reflected in the recent ‘exodus’ of senior editors from The Hindu after the owners decided to directly run the newspaper. One of the editors describes the circumstances of his departure: “It began to feel a little bit like working for Pol Pot, and I didn’t want to hang around until I was executed or sent off for re-education.” 43 Box 5 illustrates how the objectivity of news is compromised upon when the profit motive assumes priority. 5.30 Many media entities use the profits earned from the media business to diversify into other businesses. Thus, as they have wider commercial interests, there is a clear incentive to bias reporting in support of these commercial interests.

This phenomenon is not new to the Indian media. As Paranjoy Guha Thakurta explains, the country’s first Prime Minister Jawaharlal Nehru and his Defence Minister V.K. Krishna Menon would castigate the ‘jute press’ in a clear reference to BCCL which was then controlled by the Sahu-Jain group which also controlled New Central Jute Mills. Then came references to the ‘steel press’. The Tata Group, which had a substantial presence in the steel industry, and used to be a part-owner of the company that published the once-influential The Statesman. Ramnath Goenka, who used to head the Indian Express Group, made an aborted attempt in the 1960s to control the Indian Iron and Steel Company (IISCO). What was being clearly suggested by leading politicians was that particular family-owned groups could and would use their news companies to lobby for their other business interests.

Today, the situation described by Jawaharlal Nehru has intensified manifold. In India at present, promoters of media companies have subsidiary business interests in sectors as varied as aviation, hotels, cement, shipping, steel, education, automobiles, textiles, cricket, information technology, and real estate. For example, the Dainik Bhaskar Group owns seven newspapers, two magazines, 17 radio stations, and has a significant presence in the printing, textiles, oils, solvent extraction, hotels, real estate, and power-generation industries44. The Sun group has diversified into sectors ranging from film distribution to airlines

In the early 2000s, a national media company unveiled a new way of doing business. It entered into “private treaties” with its advertising clients, where it offered advertising space in exchange for equity and thus became part-owner of that corporate entity. In effect, the treaty entailed a quid pro quo, namely, that the media entity not only provided favourable editorial coverage to the corporate clients but also blacked out adverse comments against them. Such arrangements also disallow their corporate clients from advertising in rival media outlets, thereby blocking out revenue to competitors and ensuring dominance in the market.

The Parliamentary Standing Committee on Information Technology noted in its 47th Report45 that “‘Private Treaties’ between the media companies and corporate entities is one of the most dangerous manifestation/precursor of ‘Paid News’. ‘Private Treaties’ is referred to as an agreement between the media company and another non-media company in which the latter transfers certain shares of the company to the former in lieu of Advertisements, space and favourable coverage. The Committee note that the phenomenon blatantly violates the journalistic ethics and gives rise to the menace/malpractice of ‘Paid News’/’Advertorials’. Today, this phenomenon which was initially devised for marketing, has reached the level of giving favourable coverage/editorial and adverse comments against the opponents”. The Authority notes that “private treaties” could be in various forms, 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.

“The media-houses have a structural compulsion to lie”, he says. The implication is self-evident: it would be irrational on the part of the media corporate to write or speak ill of companies they owned. This heavily compromises the most basic ethical principle that the media has to publish accurate, objective and unbiased news.

In the wake of “private treaties” gaining prominence in the media market, the Securities and Exchange Board of India communicated47 to the Press Council of India (PCI) that a “free and unbiased press is crucial for the development of the securities market, particularly with respect to aiding small investors to take a well informed decision” and urged the PCI to address this issue at the earliest. The Parliamentary Standing Committee too noted48 the contents of the PCI Report that as early as July 1999, SEBI “expressed its concern that many media groups are entering into agreements, called “Private Treaties‟ with companies which are listed or coming out with a public offer for stake in the company and in return providing media coverage through advertisements, news reports, editorials etc.”, and that “such private treaties help to promote and build “brand” of the company through print or electronic media, which the media group owns in exchange of shares of such company”. 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.

Also, as the media entities still had to pay tax on advertisement space, they were actually paying tax on money that they were losing in the form of falling share prices. This, media experts argue, propelled numerous media entities to resort to “paid news” as a method of extorting from political entities in the 2009 Lok Sabha and Assembly elections, to help them recover their losses49. 5.34 In recent years, several cases have come to notice in which huge payments in cash or kind have been made by political and corporate entities to media entities to publish or broadcast favourable content as “news” instead of advertisements. News is meant to provide information that is accurate, truthful and neutral, unlike advertisements that are paid for. 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. The phenomenon of “paid news” is not new to the Indian media; what is new is that in place of isolated instances of corruption by individual journalists, the practice has now escalated to an institutional level where large segments of the media entity are involved. The media’s muscle coupled with the lack of conclusive evidence to prove such violations have acted as barriers in the way of punishing the guilty and checking this malpractice.

The Press Council of India’s Sub-Committee ‘Report on Paid News’ brings together numerous such cases, which throw light on the nature and extent of the problem. One such example involving the ex-Chief Minister of Maharashtra is given in Box 6. Niira Radia, whose telephone conversations were tapped and recorded by the Income Tax Department in 2008-09, was a powerful lobbyist for DMK, the Tata Group and Reliance Industries. Her conversations with well-known journalists, like Barkha Dutt and Vir Sanghvi revealed media-persons to be power players, acting as middlemen between the lobbyist and the political party in the allotment of Cabinet portfolios, right after the 2009 Lok Sabha elections. Journalists were also found discussing with the lobbyist the viewpoint to be expressed in their articles, to see if it matched with what the corporate owners wanted.”


“The increasingly blurred line between politics, business and news is not only controlling people’s minds and opinions in the above manner, but in the process, has eroded editorial independence. In many instances, owners are perceived to be dictating the editorial stances to suit their vested political and/or commercial interests. Free expression of facts and opinions by the editor and journalistic staff has become a casualty. Bylines of senior journalists were often used by the media to give ‘credibility’ to their paid news advertorials, which were mostly written by the PR Depts. of the respective political or corporate group. Reporters and correspondents being offered cash and other incentives for favourable reports on a company or an individual were, until recently, considered more of an aberration. But now, the frequency of such incidents has increased where reporters interviewing celebrities also double up as marketing agents. It is not unknown that the job of a political editor of a magazine can be terminated on the wishes of the industrialist owner in case the dictated line of the owner’s commercial interest is crossed.


Excerpts from “Bal, Open and the Perils of Political Journalism”, by P. Guha Thakurta

Hartosh Singh Bal, political editor of Open, was served a notice of termination of employment on Wednesday November 13, 2013. The weekly is published by Open Media Network Pvt Ltd, a company in the RP-Sanjiv Goenka group headed by industrialist Sanjiv Goenka. … Bal said Joseph told him that Goenka wanted him out because his writings and the airing of his views on television had earned the industrialist a number of “enemies” in political circles. … When asked to enumerate the reasons why Bal was served a notice of termination of employment, Goenka said that “as a matter of policy, I don’t want to comment on any individual employee”. However, a source close to Goenka told this writer on condition of anonymity that the “mandate” of Open magazine is “more to report than provide opinion”, that this mandate was specified to each employee recruited, that Bal had been “providing more opinion than reporting news” and that he was “excessively judgmental”. In this context, without referring specifically to Bal, the source added that if someone is told what to do “once, twice, thrice….ten times but chooses not to respond, action will be taken”. … Bal: “… the issue is not just the financial loss that they are inflicting on me. They are stopping me from writing as a political journalist when it matters the most. This is again an impingement on the kind of work I do.”

Mrinal Pande, a senior journalist and Chairperson of Prasar Bharati, observes “Editors in respectable houses have now become fixers. They actually travel location to location, meet up with local government officials and solicit DAVP advertising and make sure that it is in substantial amounts. Three quarters of their work when they are not working as editors goes in chasing these. This issue has also been pointed out by the Delhi Union of Journalists in their comments54. They explain that there is a great deal of unknown, unvoiced censorship within the media that stems from patterns of ownership and employment. Too many journalists 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 dominant newspaper groups have grown by leaps and bounds, making super profits while simultaneously retrenching their workforce and forcing employees, including journalists, to sign short-term contracts in place of the previous form of permanent employment. They have circumvented laws such as the Working Journalists’ Act in the process. The contract journalist is an insecure journalist who is afraid to take an independent stand or voice an unpopular opinion, they argue.

There is a preponderance of evidence that political and corporate ownership of the media is a cause for serious concern. Such ownership in various forms – direct or indirect; through surrogates; or via loans and private treaties – has encouraged proliferation of biased and, at times, untruthful news in all forms of media. They have contributed to the erosion of editorial freedom and independence. All the essential democratic processes and institutions – the elections, the government, the media and most importantly, the right to know and be an active participant in the everyday functioning of the democracy, have been adversely affected, albeit in various degrees. Ownership issues have to be addressed to ensure plurality, objectivity and fairness in reporting news.” (रीयल टाइम न्यूज वेबसाइट में दीप्ति राजन की रिपोर्ट)

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Push to keep corporates off media

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