A perilous policy shift

Published : Jul 06, 2002 00:00 IST

Reversing a time-tested policy, the National Democratic Alliance government opens up the print media for foreign direct investment.

IT took over a decade of relentless campaigning for one of the last redoubts of domestic initiative and enterprise to yield to the rampant forces of globalisation. Organised as a commercial venture, though perhaps more appropriately viewed as a sector of political and cultural activity, the print media in India will now be opened up for foreign direct investment. In accordance with a Union Cabinet decision of June 25, publications dealing with news and current affairs could have foreign shareholding to the extent of 26 per cent of total equity. Other publications of a specialised or technical character could have up to 74 per cent foreign equity holding.

The Union Cabinet was by all accounts divided on the question that was placed before it - reportedly for the third time in less than a year - by Sushma Swaraj, the Union Minister for Information and Broadcasting. That a Minister known to be rather squeamish about the entry of alien influences into the mass media should show this manner of enthusiasm in pressing the case for foreign investment in print, speaks of a certain lack of consistency in thinking. It also bears testimony to the vigour of the lobbying effort mounted by a section of the Indian media industry, and the Union government's eagerness to placate special interests even at the risk of sacrificing principle.

Apart from the mandated ceilings on foreign equity holding, the new policy conceives of two principal kinds of safeguards. First, the principal Indian shareholder in any print media enterprise should have a stake that is substantially in excess of 26 per cent, presumably to ensure that there is no abridgement of his or her autonomy. Second, the policy stipulates that at least three-quarters of all key editorial designations should be held by resident Indians.

These stipulations may seem superficially adequate to ensure that the tradition of independence that the Indian print media has built up over the years is not imperilled. In reality, though, they seem to betray a certain ignorance about the manner in which the media function and the sources from which a threat to their independence could emanate. Influence on editorial policy, for instance, need not be even remotely connected to the pattern of equity holding. In an economic downturn, such as the current juncture, cutbacks in advertising spending tend to cause acute financial stringency for newspapers. Much influence could be won in these circumstances through extending working capital loans to media enterprises.

In determining who would be deemed eligible among prospective investors in the print media, the government by all accounts has failed to cast its gaze beyond the narrow perspective of security concerns. As Sushma Swaraj put it, the Union Home Ministry would carefully examine the credentials of every investor on a "case-to-case" basis. Assigning the gate-keeper's job to the Home Ministry was evidently of crucial importance in wearing down the resistance to change from that quarter. Earlier this year, the Home Ministry had submitted a written deposition to the Parliamentary Standing Committee on Information Technology, arguing that the "present internal security scenario" in the country was "not conducive to relaxations" in the policy banning foreign investment in print.

It does not take great percipience to see that assigning these discretionary powers to a group of politicians and bureaucrats in the Home Ministry is not the best guarantee of the freedom of the press. The Home Ministry under the present dispensation, for instance, is known to be indifferent to certain kinds of voices in the domestic political milieu and unduly attentive to others. On the global plane, it has shown an unseemly affinity towards outlaw regimes such as Israel, while turning its back on the honoured principles and alliances of Indian foreign policy. There could be few prognoses that are more disastrous for the Indian print media than the free importation of these predilections into its functioning under the new policy dispensation.

"A careful opening up," is how Sushma Swaraj chose to describe her policy initiative. It was, she said, a "logical and timely decision" since there was little sense in prohibiting foreign investment in print when few such fetters were imposed in other sectors, including the visual and electronic media.

Informed commentators have pointed out that India's record of regulation in the electronic and visual media was for long one of wooden obstinacy in preserving an unsustainable governmental monopoly. And when the irresistible forces of technology began altering the ground rules in broadcasting and communications beginning in the early-1990s, the government consistently chose the worst of the options before it.

Allowing the satellite uplinking facility for fully domestically owned companies would have established a regulatory parity between the print and the electronic media. It would also, conceivably, have enabled domestic enterprises to build up the critical mass of expertise necessary to cope with rapid changes in the global broadcasting scene. But the official response steered clear of all such potentially constructive avenues and opted for a course that actively discriminated against domestic enterprises. When the formal liberalisation of policy was initiated in piecemeal fashion in the latter half of the 1990s, its impact was skewed in favour of foreign multinational entities that had been not been shackled over the previous years and had built up the commercial and technical power to rush into newly opened domains.

Sushma Swaraj's intent to replicate the regulatory history of the electronic media in the print sector cannot be very good news. Indeed, if ever there was a case for a crossover of ideas and principles, it would have been for the electronic media, steeped in the unwholesome tradition of manipulative government control, to learn from the traditions of fierce independence and commitment to national sovereignty that the print media had come to embody.

REACTIONS to the government's decision were almost unanimously adverse. With the exception of the Bharatiya Janata Party, all political parties including the BJP's closest political soulmate, the Shiv Sena, condemned the move. Industry associations such as the Indian Newspaper Society (INS) termed it ill-thought-out and ruinous in its implications. Professional bodies of media personnel again displayed no great appreciation. Only business lobbies such as the Confederation of Indian Industry (CII), which have learnt almost as a conditioned reflex to welcome any move that answers to the description of liberalisation, had anything positive to say about the government decision.

A newly established confederacy of newspaper editors and industrialists had a different perception. In a joint statement issued shortly afterwards, Narendra Mohan, the proprietor of the mass circulation Dainik Jagran published across the Hindi belt, teamed up with the Editors of India Today, The Indian Express, The Pioneer, and Business Standard, to welcome the government decision. The opening up of the print media, the group of five argued, was a long overdue measure. While commending the government for its boldness, the group cautioned the public against being swayed by the adverse reactions of other media groups.

Narendra Mohan heads one of the most successful newspaper enterprises in the Hindi belt. In recognition of his influence over public affairs, the BJP has had him elected to the Rajya Sabha, where he has exerted himself strenuously in favour of the cause of foreign investment in print. While the Standing Committee on Information Technology was deliberating over the issue, he was known not to miss out on any opportunity or procedural wrangle in seeking to turn the tide of opinion within the body.

Early in the committee's deliberations, Narendra Mohan had associated himself with a communication that was also signed by his four other confederates in the cause, urging that the potential strengths that could accrue to the Indian print media from the infusion of foreign funds be considered. This letter was addressed to Minister Sushma Swaraj in May last year, and referred by her to the committee. What was striking then is that the signatories represented a mixed group, widely dispersed in terms of financial fortunes as also in terms of brand recognition. While India Today, The Indian Express and Dainik Jagran were among widely recognised brands in their respective segments, The Pioneer and Business Standard were little known or noticed outside their fairly narrow niches. In terms of financial well-being, India Today and Dainik Jagran were known to be amply protected against any vicissitudes that the market might visit upon them. The Indian Express had, however, seen its fortunes plunge after a disastrous wrangle within the top management, and had joined The Pioneer and Business Standard within the ranks of newspapers fighting for their existence.

Appropriately enough, the Standing Committee of Parliament gave this communication from the group of five some attention. It duly recognised the fact that the newspaper sector in the country was going through a serious financial conundrum. But by a majority, though slim, it held that there was no substance in the argument that foreign investment could be a way out of the crunch situation. It also held that of the 50,000 newspapers and magazines that needed to be taken note of, few, particularly in the small and medium segment, had the slightest interest in opening the gates to foreign investment.

There was, however, a recognition within the committee that new avenues would have to be explored in order to restore the faltering financial viability of many of these newspapers. Some members went so far as to name the major newspaper groups that had been instrumental in forcing competitors to the walls. Over the 1990s, they observed, the two newspaper groups that dominate the market in Delhi - one of which is also strongly entrenched in the Mumbai metropolitan market - had capitalised on their advantage in attracting advertisements to wage a war for circulation through price cuts. This had led to a feeble effort by the lesser papers to keep up. Some of them may have managed for a while to maintain circulation figures even at the cost of revenues, but they had all invariably begun losing out.

While the newspaper groups that initiated the price cuts have benefited from rising advertisement support that has perhaps made good their losses in circulation revenue, the smaller enterprises have plunged into the vicious circle of financial erosion, declining circulation and plunging advertiser interest. This situation has been especially painful over the last two years, with the industrial recession having slowed down the growth of advertising spending by the large corporate houses.

The committee's response to this crisis was to recommend some instrumentality of concessional finance. The Press Council of India, it observed, had proposed the formation of a Newspaper Finance Corporation decades ago, following which a Bill for this specific purpose had been introduced in the Lok Sabha in 1970. Once allowed to lapse, the Bill was reintroduced in 1973, but not followed through. The committee urged the government to "seriously consider this problem" and make "institutional arrangements for concessional finance for small and medium newspapers, so that (their) working capital and other essential financial needs" were adequately met.

This suggestion, that the newspapers should be insulated against the vagaries of the market through concessional financial arrangements, would be unlikely to meet with widespread endorsement. It could well substitute the tyranny of the market with the equally irksome burden of governmental control. But it is significant that the committee took note of the problem and urged a coherent policy response that steered clear of the nostrums of liberalisation and foreign investment.

It has been recorded with a wealth of documentation that deregulation in the media industry is little else than a short cut for the rampant growth of monopoly enterprises. The Indian newspaper industry, with its widely dispersed ownership and its sense of accountability to a diversity of interests, has managed to avoid these pitfalls to some extent all these years. But in throwing open the door to big multinational players, the government may well have dealt the death blow to diversity in the media as well as its relative independence from extraneous corporate interests.

Quite a different dimension of the problem would emerge when it is observed that the dilution of the domestic ownership norm is only a part of the problem of growing encroachment on media autonomy. As the veteran media analyst and market researcher Dr. N. Bhaskara Rao, chairman of the Delhi-based Centre for Media Studies, has pointed out, creeping foreign influence has been a fact of life in the Indian media industry over the decade of liberalisation. Over this period of time, foreign ownership and control in the two pivotal industries of market research and advertising has grown, he observes. While market research sets the benchmarks for the media industry, the advertising industry is the channel through which its main revenues flow.

Bhaskara Rao asserts that today it is impossible to find a major market research or advertising firm that is not controlled by foreign capital. The implications that market research may have for the television medium were recently highlighted when allegations surfaced of rampant manipulation of the "Television Rating Points" system, which was introduced as a device to enable advertising agencies to plan media campaigns. As a veteran of several National Readership Surveys, Bhaskara Rao is aware of the pressures that could be brought to bear on research agencies, whose findings could often govern the disposition of massive advertising budgets.

The influence of the advertising industry on the media is more direct. And it is significant in this respect that just when the Parliamentary Committee was finalising its reports on foreign investment in the print media, the Union Cabinet cleared a proposal to have 100 per cent foreign holding in the advertising industry. Ironically, this major development did not seem to exert any bearing at all on the concurrent debate on the autonomy and independence of the print media. But with the recent government decision on media ownership, the last bastion of sovereignty could well be under threat.

In the picturesque turn of phrase used by Bhaskara Rao, Meerut and Panipat fell with the intrusion of foreign capital into the advertising and market research industries. Delhi the capital has itself now been subverted from within and may not hold out much longer.

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