Big business is entering the news media, creating new challenges for regulators, viewers and producers.
Reliance Industries Limited has confirmed that it has entered into a complex deal which is likely to end up giving the Mukesh Ambani-controlled company significant equity in Network18, which, among other properties, operates the TV channels CNN-IBN and CNBC-TV18. This is landmark news, and heralds the long-expected consolidation of the television news industry — as well as the re-entry of large corporations into the business of owning and producing news. As with banking, there was a time when the media was closely controlled by big business. Indeed, the post-Independence media was sometimes dryly called the “jute press” given the close links that many newspaper proprietors had with the jute industry. Yet those connections frayed over time. Meanwhile, television news started off, and has been entrepreneur-driven in these first years of its existence. Now, as the segment becomes overcrowded and margins begin to decline if not disappear, it is unsurprising that the first generation of news-channel entrepreneurs is giving way to cash-rich corporations — which have already pushed into entertainment television in a big way. This development should be watched carefully, as it throws up a new set of challenges for regulators, viewers and producers.
The news business is not like many others in that the interests of the ownership directly impact the credibility of the product. The old “Chinese wall” between editorial and business has long broken down in most places; news consumers are adapting to that development, and making judgements about what it implies for the nature of the news they receive from a particular source. Under such circumstances, transparency in ownership and purchase lends essential credibility. The RIL-TV18 deal is complex and opaque. It directly follows an episode in which Andhra Pradesh-based Ushodaya Enterprises, which owns the print and television properties associated with the Eenadu name, were invested in by several entities owned by JM Financial’s Nimesh Kampani. The case was made in the Andhra High Court that the Rs 2,600 crore investment came from Reliance — a fact apparently confirmed now, but which RIL did not point out then. Some Eenadu channels are now being bought by Network18 as part of this latest deal. Much remains unclear about the nature and eventual impact of the deal. In fact, TV18’s promoter, Raghav Bahl, has reportedly told investors that, since the deal happened between his promoter companies and a trust set up by RIL, both of which were private entities, he felt under no obligation to reveal further details. Meanwhile, the second Ambani group is said to have invested a sizeable if not controlling chunk in TV18’s rival channel, Bloomberg-UTV, while there has been speculation for a long time about undisclosed sources of funding in some other news organisations.
Neither consumers, producers nor the industry are helped if there is uncertainty about the funding of news companies. While there is little doubt that the logic of the marketplace requires there to be a consolidation in the industry, it is also true that a well-functioning market should allow consumers as much information as possible. Nobody wants a situation in which calls for heavy-handed government intervention in the name of regulation become common. Regulation must be independent of government control — but effectively deal with the issues thrown up by a new era. Ideally, this phase of consolidation should be accompanied by moves towards a greater maturity in norms governing disclosure.
