More than 65 per cent of the total television audience is now controlled by five large networks: Star India, Sony, Network18, Sun and Zee group. Note that this refers to the audiences that they command as networks. As digitisation happens on schedule, a similar scenario should emerge on the fragmented distribution side too. Already, seven direct-to-home (DTH) operators control over 50 million television households — or one-third of the total television households in India. It is safe to assume that, by the time digitisation is completed in December 2014, four large cable companies and six-odd DTH operators will control India’s 148 million television households.
In the newspaper market things are even clearer. In Hindi the top five brands – Dainik Jagran, Dainik Bhaskar, Hindustan, Amar Ujala and Rajasthan Patrika – control roughly 60 per cent of the audience and total revenues. In English the top three groups – The Times Group, HT Media and The Hindu Group – control a chunk of the readership and revenues. More consolidation continues as brands either die or are snapped up.
At over 75 per cent, television and print are the biggest chunk of the Rs 80,000-crore M&E business. If they are finally consolidating, what does it mean?
First, the good news. It means that profitability could start creeping back into the business, at least in television. Both fragmentation and hyper-competition had ensured that broadcasters had no power to price either their content or their advertising time. As their networks gather audiences, they get pricing power with advertisers. As the cable and DTH companies that distribute these networks gather power, broadcasters are in a position to get a better share from DTH and cable companies. Eventually as digitisation spreads and they can market channels in tandem with DTH or cable operators, average revenues per user, or ARPUs, too should go up.
Already, operating margins for some of the bigger television firms are creeping back to the 15-18 per cent level. They had gone down to 10-13 per cent a couple of years ago, thanks to stagnant pay revenues and hyper-competition pushing down advertising rates.
Newspapers traditionally have had more pricing power than television because it is a steady-state business. Once you have a huge circulation in a state, language or genre, you have to do something really foolish to lose it. So most papers, English or Hindi, that are at the top of the circulation charts get the rates they want. Where the game gets hazy is in pay revenues. For instance, Hindi papers, which form the largest chunk of the language pie, are losing pay revenues in their bid to expand. But once they have spread their wings and consolidation is complete, they can raise their cover prices again.
Now, the bad news. The coming of some scale means that regulators and policy makers will start turning up the heat on cross-media norms. The Telecom Regulatory Authority of India (Trai), which functions as the broadcast regulator, produced a paper on this in 2008. Earlier this year the ministry of information and broadcasting asked Trai to bring out another one. This year there have been two major conferences where Trai Chairman Rahul Khullar spoke at length about cross-media regulation.
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The building of cross-media monopolies, if any, however is not as worrying as the ownership of media. Two new kinds of owners are emerging. One is corporate India. Earlier this year Mukesh Ambani funded the merger of Network18 and Eenadu. Then the Aditya Birla Group bought a minority stake in the India Today Group. The other is politicians. More than a third of news channels are owned by politicians or builders affiliated to them. An estimated 60 per cent of cable distribution systems are owned by local politicians. There are dozens of small and big newspapers that are owned by politicians or their family members. Some of them own television stations and the odd internet portal too. Now state governments want to own and broadcast television channels.
This is more worrying than the hypothetical monopoly power of a consolidated media business. Before we get to that, we must first answer a basic question: who can own media outlets?