Trai sets out rules for media owners

Recommends curbs for corporate control & cross-holdings and paid news

The Telecom Regulatory Authority of India on Tuesday recommended curbs on cross-media and corporate ownership of television channels and newspapers and came down on ads-for-equity treaties and paid news.

The telecom and media regulator defined control of ownership at 20 per cent shareholding, or over 50 per cent voting rights or half the members in a media company's board, or a say in its management. According to Trai, control could rest with an individual, group of individuals, companies, firms, trusts, societies and undertakings.

Trai suggested if a media firm was dominant in a market in both print and television, its owner should be made to bring down its equity holding to 20 per cent over time. Dominant market share is 32 per cent in both print and television based on a complicated formula, the Herfindahl Hirschman Index.

A market must be defined linguistically and across states where a particular language is spoken by the majority.  English and Hindi will be considered national languages.

A combination of reach and volume of consumption should be used for computing market shares in television. For print, only reach would be sufficient, Trai said. Only daily publications, including business newspapers, should be considered.

Trai suggested regulations on cross-media ownership be reviewed every three years after rules were framed. Media companies found in breach should get a year to comply. The government will now have to take a call on Trai recommendations.

Repeating a previous suggestion, the Trai said political and religious bodies and government agencies should be barred from the broadcasting and television distribution. If such permission is given, an exit route must be provided as well.

"On grounds of the inherent conflict of interest, ownership restrictions on corporates entering media should be seriously considered by the government. This may entail restricting the amount of equity holding or loans by a corporate to a media company," the Trai said. Surrogates should also be barred from broadcasting and television channel distribution.

Trai considered only news and current affairs in print and television for cross-media ownership rules and has left out the fast-growing online media. "Online is very limited at the moment. If it grows, we may look at it at a later stage," Trai Chairman Rahul Khullar said.

The Trai also suggested a single media watchdog to check for  paid news, private treaties and issues related to editorial independence. Khullar said the regulator should not be controlled by the government or dominated by media representatives.

"Such practices should be immediately proscribed through orders of the Press Council of India or through statutory regulations. This would cover all forms of treaties, including advertising in exchange for the equity of the company advertised; advertising in exchange for favourable coverage/publicity; exclusive advertising rights in exchange for favourable coverage," Trai said, adding all "advertorials" should carry a disclaimer stating the content had been paid for.

"Placing such a disclaimer in fine print will not suffice. The authority recommends that such action on advertorials and other material which is paid for may be taken immediately," it said. For paid news, both parties must be made liable.

Trai said implementing its recommendations would address the immediate purpose of curbing unhealthy media practices, but there remained a need for a "comprehensive evaluation of the legislative and legal framework in order to establish a robust institutional mechanism for the long term".

"The authority, therefore, recommends that a commission, perhaps headed by a retired Supreme Court judge, be set up to comprehensively examine the various issues relating to the media," it noted.

NEW MEDIA MANTRA

• Trai defines control of ownership at 20% shareholding or over 50% voting rights or half the members in a media company's board or in its management
   
• Control could rest with an individual, group of individuals, companies, firms, trusts, societies and undertakings
   
• If a media firm is dominant in a market in print and television, its owner should be made to bring down its equity holding to 20 per cent over time. Dominant market share is 32 per cent in both print and television based on a complicated formula, the Herfindahl Hirschman Index
   
• A market must be defined linguistically and across states where a particular language is spoken by the majority. English and Hindi will be considered national languages
  

 

A combination of reach and volume of consumption should be used for computing market shares in television. For print, only reach would be sufficient
 

Trai suggested regulations on cross-media ownership be reviewed every 3 years after rules are framed