Debating TRAI's proposals

BY hoot| IN Law and Policy | 15/08/2014
THE MEDIA REGULATION DEBATE: Do TRAI's latest set of recommendations constitute regulatory overreach or an attempt at vital reform?
Respond to THE HOOT

On August 12 The Telecom Regulatory Authority of India put out these final recommendations

http://trai.gov.in/WriteReadData/Recommendation/Documents/Recommendations%20on%20Media%20Ownership.pdf

 We give the salient features below.

 

The Hoot invites 300 to 500 word   responses to some of the key recommendations from people in the media sector.  Article  length submissions will also be considered.

 

  • Should political ownership of media be immediately debarred, providing an exit route? 
  • Should government and self governance institutions be debarred?
  •  Should media concentration in relevant markets be regulated?
  •  Should paid news, advertorials, and  private treaties be immediately tackled by executive order as TRAI suggests?
  • Should  there be an independent regulator as opposed  to self regulation?
  • Are  the transparency measures proposed sufficient to let the news consumer judge  whether the news and information should be taken as accurate and unbiased?
  • We welcome a debate on any aspect of the recommendations made. Please send your submissions to editor@thehoot.org  right away.

 

 

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What has Trai said?

Essentially that the right to press freedom comes with a set of obligations.  Namely, “to convey information and news that is accurate, truthful and unbiased. “  It repeats this three times in one para.

The regulator says plurality is important Ensuring both external plurality, namely multiple voices in the national media market, and internal plurality, i.e. presentation of a range of facts and news in an unbiased manner by a media outlet, are fundamental to the working of a democracy. “  

Its recommendations on restrictions on cross-media holdings seek to ensure external plurality in the media market.

There has been  some sarcastic comment about the fact that  TRAI has restricted its media dominance concern to a combination of print and TV, and ignored the digital realm. The rationale for that is given here: The Authority notes that while only twenty per cent of Indians have internet access, broadband subscription is only at five per cent. Hence, the vast majority of individuals still depends on the television and print for access to news and information. Nevertheless, the impact of the new media platforms on plurality could be reviewed at a later stage when their penetration becomes deeper and usage substantial.

Why has the issue of market dominance not been left to the Competition Commission of India to decide?

This is the rationale given: The CCI watches over the markets for goods and services an…The Authority is of the view that the media cannot, and should not, be bracketed with general commodities and services. The market for ideas is very different from that for, say, shoes or biscuits…The principles adopted in the competition law may not serve the special purpose of addressing the need for plurality of news and views. Besides, interventions of the CCI are ex-post in nature. The intention of the Authority in the current recommendations is to put in place, ex- ante, a framework that will ensure plurality and diversity in the media.

The key concepts introduced by this report into the debate on media regulation are the following:

·      Plurality

·      Internal plurality

·      Defining ownership and control separately

·      The multiplicative rule with regard to indirect holdings.

·      Relevant markets for the purposes of defining cross media dominance

 

Plurality

Identification of who controls a media outlet is the first step in documenting plurality. There may be thousands of newspapers and hundreds of news channels in the news media market, but if they are all “controlled” by only a handful of entities, then there is insufficient plurality of news and views presented to the people. Thus, it is essential to know the actual number of independent voices in the market to determine the extent of plurality.

 

Internal Plurality

 Defining its notion of internal plurality it says:  The Authority, during the consultation process, has come across issues, practices and trends that may jeopardize internal plurality of media outlets that place news in the public domain. The upshot is that such threats are in no way less pernicious to plurality than the cross-media ownership issues being discussed.

 

The following are listed as threats to internal plurality:

·  Political and corporate control of the media to serve vested political and business interests

·  The insidious practice of “paid news”; and threats to editorial independence are manifestations of the menace that has severely compromised the rights of individuals to truthful and objective information.

·  Direct intervention by an owner;

·  Indirect influence of an owner through the appointment of an editor who shares his view;

·  The influence of the business approaches that an owner can take;

·  Different approaches to journalism.

 

Defining ownership and control

The recommendations say there is a clear distinction between the terms ‘ownership’ and ‘control’. Ownership implies a pure economic interest in the form of equity or shareholding in a company. Control implies the ability to influence decision-making in the company, which is of greater significance in the media context, as those who exercise control over management and operations of the company could also control content. As ownership of equity beyond a threshold level can contribute to control and influence over content, the ownership clause is subsumed in the definition of control. Control of a media company can be acquired through capital ownership either directly or indirectly through associates, subsidiaries or relatives of the entity.

An entity (E1) is said to ‘Control’ another entity (E2) and the business decisions thereby taken, if E1, directly or indirectly through associate companies, subsidiaries and/or relatives,

(a)  Owns at least twenty per cent of total share capital of E2. In case of indirect shareholding by E1 in E2, the extent of ownership would be calculated using the multiplicative rule. For example, an entity who owns, say, 30% equity in Company A, which in turn owns 20% equity in Company B, then the entity’s indirect holding in Company B is calculated as 30% * 20%, which is 6%.; Or

(b)  exercises de jure control by means of:

(i)  having not less than fifty per cent of voting rights in E2; Or

(ii)  appointing more than fifty per cent of the members of the board of  directors in E2; or

(iii)  controlling the management or affairs through decision-making in strategic affairs of E2 and appointment of key managerial personnel; or

(c)  exercises de facto control by means of being a party to agreements, contracts and/or understandings, overtly or covertly drafted, whether legally binding or not, that enable the entity to control the business decisions taken in E2, in ways as mentioned in (b) (i) (ii) and (iii) above.

For this purpose: (i) The definitions of ‘associate company’, ‘subsidiary’ and ‘relative’ are as given in the Companies Act 2013. (ii) An ‘entity’ means individuals, group of individuals, companies,

firms, trusts, societies and undertakings.

2.14 Stakeholder comments emphasised that indirect control in the media sector for influencing the news content can also be achieved through extending loans to media organisations. Accordingly, the Authority recommends that the following proviso be added to the definition of control as provided in the ‘Recommendations on Issues related to New DTH Licenses’ dated 23.07.2014: “Provided that if E1 advances a loan to E2 that constitutes not less than -

[51%] of the book value of the total assets of E2, E1 will be deemed to ‘control’ E2.”

Relevant markets

.  The definition of market dominance is defined  by relevant market.

.   This includes product relevance and geographic relevance. The relevant product market could be characterized with respect to two parameters – genres (as media outlets within a genre, say news, would be substitutable by the consumer) and segments, such as television, radio, print, etc. as each media segment has a different focus.

    Langauge is  the basis for determining the relevant geographic mar The regulator has listed 12 regional language markets within which  cross  media dominance in terms of share of ownership of print and TV will be   measured.  

   It is concerned with cross media ownership only in the News and Current Affairs genre, including business and financial news and information, because it is of utmost importance and direct relevance to the plurality and diversity of viewpoints.”

.   Internet not a relevant segment due to low penetration.

 

The metric for measuring concentration

 

The Authority recommends that a combination of reach and volume of consumption metrics should be used for computing market shares for the

television segment. For the print segment, using only the reach metric is

sufficient.

The Authority also recommends that for calculating market shares, in the

relevant market for the television segment, the GRP of a channel* should be compared with the sum of the GRP ratings of all the channels* in the relevant market and the market share of an entity# would be the sum of the market shares of all the channels* controlled by it.

 

Measuring Concentration

The Herfindahl Hirschman Index (HHI- sum of squares of market shares of all entities in a relevant market) has been taken as the  measure of concentration within a media segment

The Authority recommends that a rule based on HHI be implemented i.e. if the

television as well as newspaper markets are concentrated in a relevant geographical market (HHI> 1800 in each), then, an entity (as defined in Para 3.37 & 3.38) contributing more than 1000 to the HHI of the television market, cannot contribute more than 1000 towards HHI in the newspaper market as well, and vice-versa. If it does so, it will have to dilute its control (as defined in paragraph 2.13 & 2.14 above) in one of the two segments. This rule applies only if the HHI thresholds are violated consecutively for two years.

Finally the TRAI document recommends that political, government, and pachayat bodies should not be allowed to control media.  These include political bodies, religious bodies, urban, local, panchayati raj, and other publicly funded bodies, and Central and State Government ministries, departments, companies, undertakings, joint ventures, and government-funded entities and affiliates. They should be barred from entry into broadcasting and TV channel distribution sectors; 

In case permission to any such organisations have already been granted an appropriate exit route is to be provided.  

At the same time it declares that some pressing issues such as measures debarring state bodies, and political parties from owning the media could be decided straight away by executive order. 

It suggests steps for transparency, spelling out which facts of media ownership could immediately be put in the public domain.

Regulator

The TRAI report makes a case for the fact that media needs to be regulated. Not by the government, not by self regulation,  but by an independent regulator whose contours  must be determined by  a commission headed by a retired supreme court judge .

It says a single regulator is needed for both print and TV  and it must not have majority of media industry people sitting on it. It suggests that one reason why the Press Council of India is not particularly effectively is because it is packed with people from the media.

Punitive measures for violation of laid down regulations have also been suggested.

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