The field is all set for the entry of foreign players in the print media, albeit with restrictions, with the Information and Broadcasting Ministry announcing the guidelines.
THE Union Cabinet's decision last June to throw open the print media to foreign direct investment (FDI) was followed by a furious public debate in which the implications of the decision for national security and press freedom, and its impact on existing market configurations were minutely examined. Now, the speculation has finally ended, with the Information and Broadcasting Ministry announcing on November 21 formal guidelines for FDI in the print media. The major players now believe that with the rules laid out, the game may well begin.
"A cautious opening up" was how Pavan Chopra, Secretary in the I&B Ministry, described the guidelines. As decided in June, publications in the news and current affairs category will be allowed up to 26 per cent foreign equity, while others dealing in specialised and technical areas could have up to 74 per cent of their capital opened to foreign ownership.
According to the guidelines, foreign investors will have to possess "sound credentials and international standing". Potential investors would be screened by the I&B Ministry after inter-ministerial consultations, which will include the Home Ministry.
The guidelines for news publications specify that FDI of up to 26 per cent of the paid-up equity of the `new entity' will be permitted only in cases where equity held by the largest Indian shareholder is at least 51 per cent of the total, excluding the holdings of public sector banks and financial institutions. In the case of an Indian company, or group of companies, under the same ownership and management control, this would legally bind them to act as a single unit in managing the new entity. Also, at least 50 per cent of the FDI will have to be raised by the issue of fresh equity while the remaining 50 per cent may be inducted through the transfer of existing equity.
The groups that had been pushing for FDI were led by The Pioneer, Business Standard, Indian Express, India Today and the Hindi-language newspaper Dainik Jagran. This "Group of Five", as they came to be known in newspaper circles, encountered a surprisingly friendly environment in policy circles. The I&B Ministry braved an internal rift in the administration, the recommendations of a Standing Committee of Parliament, and the bitter opposition of the large majority of the Indian newspaper industry, to push through the policy change.
Most leading newspapers as well as other players in the media, including the Press Council of India, the Indian Newspaper Society and smaller industry associations, had resisted FDI in the print media. Several small and regional newspapers also expressed strong opposition to the move. Almost all political parties, including those dedicated to deregulation in other areas, voiced the fear that the move rendered the Indian press vulnerable to manipulation by global corporations with bloated budgets and covert agendas. They expressed the anxiety that this would give foreign entrants undesirable influence over the country's news and information flow, thereby threatening internal security, public order, communal harmony and relations with other countries.
In partial recognition of these concerns, the guidelines stipulate that Indians should hold at least three-fourths of all key editorial positions in a newspaper enterprise. Also, the shareholders' agreements and the loan agreements of the new entity will have to be disclosed to the I&B Ministry at the time of application, and any alteration in this would have to be communicated to it within 15 days. It also requires them to disclose the names and details of any foreigners/non-resident Indians (NRIs) to be employed in the new entity, in any capacity, for more than 60 days a year.
"The policy is well-conceived in that it opens up the sector to international competition while providing for safeguards to tackle the fears that people have expressed. The Indian media will emerge stronger and more competitive from this, and hopefully evolve better internal practices and publishing standards, in line with the best in the world," said T.N. Ninan, Editor of Business Standard. Ninan predicts that the initial action is likely to be in the English language press. "Current market leaders are likely to be unaffected," he said, "as it takes more than money or imported expertise to guarantee a successful media organisation." In fact, these enterprises, which staunchly opposed the policy change, would ironically be in the best position to tie up foreign investment sources, if they were to choose to do so, Ninan observes.
Pavan Chopra emphasised that the guidelines had been formulated with care so as to protect the interests of the domestic media. He cited how the committee had decided against the controversial "golden share" proposal (which endowed minor partners with veto power), on the grounds that it could be perceived as unnecessary interference with media autonomy.
What remains unclear is the identity of the prospective foreign investors in the Indian print media. Beyond a few possibilities such as Financial Times resuscitating its proposal to invest in Business Standard or AOL Time Warner investing in the India Today group, there are no indications on the nature of investment expected.
Ninan explains that it is "much too early to say". "I imagine that that it will take some weeks for proposals to get ready before any application comes in. The fate of the early applicants might influence those in the queue," he said. However, there are some strong advocates of FDI in print who believe that the current policy changes do not amount to much. "Too little, too late" is how Deepak Shourie, managing director of Discovery Communications, describes the attractiveness of the current minority stake with all its accompanying restrictions. His reaction seems to suggest that there is an active lobby building up to work for doing away with the ownership limits currently in force.
Chandan Mitra, Editor of The Pioneer, wonders whether the policy had "erred on the side of caution", as it excludes foreign participants from any say in corporate affairs, while granting "steamroller authority" to the Indian promoters. He described the stringency of the guidelines as a case of good intentions having gone bad, and expressed the hope that they could be further relaxed in the future.
Ninan said that while the conditions were not stifling in themselves, "there is a danger of too much bureaucratic paperwork on applications" slowing down the pace of clearance.
CRITICS of the policy deny that these clauses ensure any meaningful restriction on the power and influence of foreign investors. As the Somnath Chatterjee-led Standing Committee had concluded, the issue is not so much on financial returns as on control over the public domain. It had also noted that India's newspaper industry, which ranks among the largest in the world, had managed to create a fecund, articulate culture without foreign aid. Reflecting these concerns, Dileep Padgaonkar, Executive Managing Editor of The Times of India, said it was vital to have a mechanism that made sure that the proposed foreign investment in print was aimed at making profits, and not some collateral interest that would threaten national sovereignty.
The media groups in favour of FDI couched the issue in terms of competition. The current media landscape in India more closely resembles a cartel than a competitive market. The new policy, they said, would help battle monopolies and give smaller newspapers a voice.
Until a few years ago, the turf was divided by region and dominated by different newspaper groups. The Times of India changed the rules of the game when it started brutal price wars as part of an aggressive expansion plan. This either demolished much of the competition, or forced others to adapt to a changed market reality which rendered them acutely vulnerable to fluctuations in corporate advertisement expenditure.
"The Times group, which currently makes more money than all the rest put together, is the only publication with any pricing power," said Ninan. He claimed that the inflow of foreign funds would give smaller players a chance to compete in the fray, making it a more pluralistic market. However, the question of how much latitude these smaller publications would enjoy once they cede part ownership to foreign players, remains to be addressed.
Manoj Mathur, Editor of Dainik Naiduniya, expressed the views of most advocates of FDI: "It is just commerce - treat it like any other business." He felt that foreign funds could upgrade technological processes and printing quality and improve the terms of employment for journalists.
Advocates of FDI further cite the fact that the foreign media are already a daily reality in India, through satellite television and the Internet: If Rupert Murdoch can rule the air waves, and the public can have access to the anarchic, uncensored sprawl of the World Wide Web, why should newspapers alone be cosseted from the dangerous influence of foreign ownership? "It is high time we stopped treating the print media like a handicapped child," says Chandan Mitra.
Those with their feet more firmly planted in Indian realities question these assertions. They argue that the power and reach of the print media far exceeds that of cable television or the Internet. Along with radio, newspapers form the bulk of credible mass media, which are used for deriving information about public affairs. More than television, newspapers have been recognised to have a major role in informing and shaping the public discourse. "Why have other countries like France and Canada imposed restrictions on foreign participation in print?" asks Dileep Padgaonkar, stressing that the media were an extremely sensitive sector.
Padgaonkar points out that the Indian media have always operated in a policy vacuum and still rely on the Telegraph Act of the 19th century. He expressed the need for a comprehensive communications policy, even as he wondered at the government's audacity in overturning the 1955 Cabinet Resolution proscribing FDI in the print media, while wilfully disregarding the recommendations of the Standing Committee of Parliament and the very vocal disapproval by most of the political class and the media. The issue, he suggests, goes beyond the economics of the newspaper industry, and perhaps has more to do with the media's role in manufacturing consent for a neoliberal society.
Treating a newspaper exclusively as a product is a phenomenon associated with globalisation, launching what critics have called the "rich-get-richer, journalism-gets-poorer" school of media ownership. Content is bound to be altered, even where there is no conspiratorial intent. By simply acting in their own bottom-line interest, media conglomerates gradually water down public sphere substance in favour of easy entertainment.
NEWSPAPERS in India have always had a mind of their own. The press played a crusading role in the freedom struggle, and bravely expressed dissent during the worst days of the Emergency. However, this time they face a subtler silencing. As media theorist Robert McChesney says, "the genius of the commercial-media system is the general lack of overt censorship". He explains how censorship in free societies is infinitely more sophisticated and thorough than in dictatorships, because "unpopular ideas can be silenced, and inconvenient facts kept dark, without any need for an official ban".
McChesney further outlines some of the biases of a globalised media: "Consumerism, class inequality and so-called individualism tend to be taken as natural and even benevolent, whereas political activity, civic values, and anti-market activities are marginalised. The best journalism is pitched to the business class and suited to its needs and prejudices; with a few notable exceptions, the journalism reserved for the masses tends to be the sort of drivel provided by the media giants on their U.S. television stations."
The real fight, then, is to preserve the pluralism and integrity of the mass media, and to ensure public access to the widest possible number of information sources, diverse and antagonistic. This involves preserving the independent spirit of newspapers as well as resisting media consolidation and homogenisation.