Media giants see dollar signs in
India By Raju Bist
MUMBAI -
Blame it on Rupert Murdoch. Last September, the chairman
and chief executive of News Corporation bowed down to
new laws formulated by the Indian government and ceded
control of his popular Star News India TV channel to the
local Ananda Bazaar Patrika (ABP) publishing group.
Since then, there has been a flurry of media deals
involving foreigners, and the Indian media landscape has
suddenly acquired an international sheen.
After
reporting extensively about alliances, partnerships and
agreements in the business world, Indian media barons
are now themselves an important part of the deal-making
game. Thus, United Kingdom finance firm Henderson Global
Investors has tied up with the Hindustan Times daily.
The Financial Times of London has entered into a
strategic alliance with the Business Standard newspaper,
which is backed by finance whiz-kid Uday Kotak as the
majority shareholder. Star TV is at it again, hobnobbing
with the Tata Group, this time for a direct-to-home
foray christened Space TV. Singapore-based Standard
Chartered Private Equity Ltd has invested US$11 million
in satellite broadcaster New Delhi Television (NDTV),
which runs two popular channels.
The rash of
deals follows two important decisions taken by the
Indian government: allowing foreign investors to buy up
to 26 percent in Indian print media, and the capping of
foreign shareholding in TV news channels at 26 percent.
The path to the ultimate entry of the foreign players,
however, was riddled with many potholes, some of them
going back to the 1950s, when India had just become a
republic. In 1954, the first press commission of India
had been instituted and one of its first tasks was to
warn the country against the entry of foreigners in the
print media. This advice was taken up seriously by the
government led by prime minister Jawaharlal Nehru which,
in 1955, barred foreigners from running or investing in
newspapers and foreign publications from having Indian
editions.
But the winds of economic
liberalization unleashed in July 1991 by the pro-reform
Congress government gradually engulfed the media sector
and some of the Indian players started clamoring for
foreign tie-up permissions. This led to the government
in 2001 proposing part modification to the 1955 cabinet
resolution. The matter was debated heatedly in
parliament, as well as other fora. In February 2002, a
parliamentary standing committee rejected, by a 16-10
vote, the proposal to allow foreign direct investment
(FDI) in the print media.
Along with media
organizations like the Indian Newspaper Society, the
Press Council of India, the All-India Newspaper
Employees Federation, the Indian Journalists Union and
the National Union of Journalists, opposition political
parties had also strongly opposed any move to introduce
FDI in the print media. Congress, the main opposition
party, argued that giving a green signal would be
against the national interest. "The Congress' position
remains unchanged on FDI in print media, which has been
reflected in the cabinet resolution of 1955," said party
spokesman Anand Sharma.
"Those who are selling
away our national assets and interests in the economic
and political field, in foreign affairs and so forth,
have now handed over our national identity and dignity
even in the respect of the print media," thundered A B
Bardhan, general secretary of the Communist Party of
India. Some other protestors argued that foreign entry
would lead to a compromise of the freedom of the Indian
press. Still others felt that by toying with the idea of
FDI in the media sector, the government had played into
the hands of certain vested interests. As expected, the
ruling Bharatiya Janata Party (BJP) favored the proposal
all along . "This will lead to an improvement in the
quality of newspapers as well as service conditions of
employees," claimed Jagadish Shettigar, convener of
BJP's economic cell.
Such polarization of views
soon saw the emergence of two media camps, with each
indulging in fervent rounds of political lobbying. Those
that wanted FDI in the print media included the
crusading Indian Express Group; Living Media, publishers
of the popular India Today news magazine and Magna
Publications, whose main claim to fame is the
publication of titles like the fluffy Stardust, South
Asia's bitchiest film gossip magazine.
On the
other side, trying their best to thwart the entry of
bigger foreign players, were the biggies of the Indian
publishing world, each with its carefully-nurtured turf
to protect: the Malayala Manorama Group, which
publishes, in the vernacular Malayalam language, India's
largest circulated daily; the Times of India Group (TOI)
, publisher of a slew of general interest and
specialized newspapers and magazines; the much-venerated
Hindu Group, based in the south Indian state of Tamil
Nadu and the Eenadu Group, floated by newspaper and
cinema mogul Ramoji Rao. Most of these media barons
inundated the editorial columns of their publications
with articles extolling the role of the media in
"guarding national security and social cohesion".
It was only in June 2002 that the BJP and its
political allies could push through the much-debated
proposal on the entry of FDI in the print media. Apart
from allowing 26 percent FDI in news and current affairs
publications, the decision also permitted 74 percent FDI
in non-news and non-current affairs publications (like
medical and technical journals).
Then
information and broadcasting minister Sushma Swaraj told
the media that the decision of her government was
"logical, timely, unanimous and an example of careful
opening up of an Indian sector". She also added that
special safeguards would be put in place to ensure that
all editorial and management control remained in Indian
hands. Thus, according to the historic decision, all key
editorial posts, including chief editor and resident
editor, are to be held by resident Indians. Similarly,
three-fourths of the board of directors will have to be
resident Indians.
That major control of the
media continues to remain with Indians is believed to be
the direct result of the intensive lobbying of a
powerful cluster, the Indian Media Group (IMG), which
comprises of several publications and broadcasters. The
IMG is headed by Subroto Roy, chairman of the Sahara
Group, whose "contacts" range across the political
spectrum. The IMG had all along been urging the Indian
government to come out with a "uniform and
comprehensive" media policy for foreign investment in
print, television and radio. Another demand of the IMG
has been the institution of a regulatory authority to
administer all media policy and handle complaints.
The Indian government's decision to take
necessary safeguards came in for praise from unexpected
quarters. "The provision that there must be a prior
government permission before any change in the
shareholding pattern takes place and the assurance that
credentials of the investors would be thoroughly
scrutinized must be lauded," said the Federation of
Indian Chambers of Commerce and Industry (FICCI) in a
press release. The complex financial holding of many
overseas companies at times are too complicated for
casual investigations. The government must have
thoroughly trained professionals to crack such jigsaw
puzzles so as to identify the persons behind any FDI
proposals mooted, suggested FICCI. The leading business
body further added that the government should look into
the fact that there should not be any monopoly in print
media created as a result of a dominant group's entry
from overseas.
Media professionals are now
happy, expecting fatter pay packets with the advent of
the foreign players with deeper pockets. Indian readers,
too, stand to gain. They can now lay their hands more
easily on classy products from major news organizations.
And, as a direct result of the 74 percent FDI permission
in the case of non-news publications, readers are given
cheaper access to a world-quality magazine like National
Geographic - if it decides to print an Indian edition.
In addition, a major fallout of the government's
decision has been that the monopoly interests of the
bigger Indian publishing houses now stand threatened.
Directed at TOI's monopoly of the lucrative
Mumbai market is the Hindustan Times-Henderson Global
tieup. The New Delhi-based newspaper, a part of the
gigantic Birla business family, was planning a Mumbai
edition for a long time but had been thwarted for lack
of funds. But it has now picked up Rs 1.2 billion
(US$26.8 million) by selling a 20 percent stake to
Henderson in HT Media, a new company formed specifically
to launch the Mumbai daily.
Perhaps the biggest
beneficiaries are the smaller publications which now
suddenly find a ready-made conduit to global capital.
Take the case of Business Standard, which for long has
had to face the ignominy of playing second fiddle to the
Economic Times, which is part of the powerful TOI Group.
Ask any India media hack worth their salt and they will
tell you that the Economic Times is a better-marketed
paper, but it is the Business Standard which is the more
readable. And yet, thanks to the TOI's stronger balance
sheet, the Economic Times has repeatedly thwarted
rivals, including the Business Standard, by resorting to
aggressive and expensive marketing gimmicks. These have
included putting on the pink paper an edition price of a
mere Rs 1, under the guise of "introductory offer" in
newer markets.
But Business Standard's tieup
with the Financial Times could make the fight more
balanced. The Pearson Group, the British daily's parent
company, has pumped in Rs 141 million for a 13.85
percent stake in the Indian newspaper. Published from
seven centers in India, Business Standard is sold in
more than 500 towns and cities. It suddenly has access
to the editorial and marketing expertise of an
international financial media giant with a worldwide
readership of more than 1.6 million people and editions
in 21 cities across the globe.
Pearson - and
other big global media giants - are lured by the promise
of the vast, untapped market that is India. This country
of 1 billion-plus souls has about 800 English
publications. At first glance, this large figure may
dissuade newcomers. But their hopes turn buoyant
considering that every year, clients splurge Rs 60
billion in advertising on the print media, and a further
Rs 40 billion into TV channels. According to a report on
the Indian TV broadcasting industry prepared jointly by
FICCI with management consultancy firm KPMG, by 2007, 64
million Indian homes will be linked by cable and
satellite connections. By then, the overall revenues of
TV broadcasters are expected to shoot up to Rs 139
billion.
Like Pearson, BBC Worldwide, which
publishes around 50 magazines, has been quick on the
uptake and has just cemented a tieup with the magazine
wing of TOI. A new joint venture has been floated in
which both partners will have equal stake. To begin
with, TOI's women's magazine Femina and movie title
Filmfare will be transferred to the joint venture. At a
press conference in Mumbai to announce the marriage,
Peter Phippen, managing director, BBC Magazines, said:
"We were excited by the opportunity we saw in India. Our
excitement is palpable because in this environment of
growth, magazines will grow faster as the economy
grows."
Intelligent Computing Chip, published by
TBW Publishing, is already seen in an Indian avatar. Par
Golf from Exposure Media is expected to follow soon.
Other deals in the pipeline include a tieup between
BusinessWeek and Cybermedia, a leading Indian publisher
of IT magazines. It is reliably learned that Walt Disney
has approached the Foreign Investment Promotion Board to
set up an Indian subsidiary. Dainik Jagran, the Hindi
language newspaper, whose owner Narendra Mohan was in
the forefront of the pro-FDI lobby, is talking to the
Wall Street Journal.
Media giants like
Bertelsmann, Vivendi Universal and Time Warner have sent
their representatives to India to do the initial
leg-work. Finally, existing financial content and data
processing companies like Dow Jones, Reuters, Bloomberg
and AFP - which currently operate in India through their
100 percent subsidiaries - are toying with the idea of
seeking fresh equity partnerships.
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