Friday, January 24, 2014

India's media and the ad world: a time for transparency

September 10 2013

It may be the best of times or the worst of times. The health of the corporate balance sheet may vary but not the profit obsession. And irrespective of the temper of the times, reliable old pursuits such as mergers and acquisitions can be counted on as entertainment sport.

At the end of July 2013, two giant conglomerates in the advertising business -- one headquartered in Paris and the other in New York – announced a merger that would swamp cross-Atlantic linguistic and cultural dissonances in the sheer power of lucre. Groupe Publicis of Paris and Omnicom of New York are both creations of the furious wave of consolidation that began in the advertising world -- indeed, in the entire global business scenario -- in the 1980s. By the dawn of the new millennium, equilibrium of sorts had been achieved, with half the world’s advertising agencies being under one or the other of four giant transnational umbrellas: Omnicom and Interpublic, both of the U.S., Groupe Publicis of France and WPP of the U.K. Apart from the clout that came with the most prestigious corporate brands being their clients, the “big four” also consolidated their power over the media through strategic acquisitions across a spectrum of related businesses: notably market research and audience measurement.

This merger on equal terms between unequal partners creates a new entity that pays equal homage to both the names it inherits, though in inverted alphabetical order. And in a studied attempt at neutrality, the new entity will establish its new global headquarters in the Netherlands, cutting itself free of older geographic moorings. By combining their business accounts, Publicis and Omnicom securely bring within their grasp a dominant share of advertising expenditure in the U.S. and a more than ample share across the globe. But  Publicis Omnicom, as the new company will be called, has stirred up size envies just when competitive equations seemed settling into a stable four-way oligopoly (with a few small but significant players making up the peripheral cast). Publicis Omnicom may well be precursor to further rounds of furious consolidation in the ad industry. And entities that have been relatively quiet and have stayed outside the main theatres of action -- such as the Japanese conglomerate Dentsu -- could likely to be pivotal elements in future rounds of business agglomeration.

The newly minted ad industry behemoth was expected to have a tough job of persuasion on its hands, since giant corporations that spend lavishly on self-promotion -- CocaCola and Pepsico, Apple and Samsung, so-called “power brands” built up in equal parts through puffery and the denigration of rivals – are unlikely to be comfortable when their ample budgets for advertising are all poured into a corporation that is an equal opportunity panderer to both theirs’ and the main competitors’ vanity.

Conflicts of interests are an issue that the ad industry has learnt to address without great difficulty: through their massive consolidation spree, agencies managed to appease client anxieties by erecting “firewalls” that completely segregate competing accounts. The Publicis-Omnicom merger is estimated to be valued at US$ 35 billion in combined share market value. On combined revenue of US$ 22.7 billion, arrived at by aggregating two separate accounts, the total “synergy” anticipated from the merger – or the savings achieved through pooling resources that would otherwise be deployed in repetitive tasks -- would be about US$ 500 million, i.e., just over 2 per cent.

A question might crop up in minds schooled in the grand tradition of laissez faire economics: is it really worthwhile having this manner of corporate agglomeration for a measly 2 percent gain in profit margin, when the preservation of competition and consumer choice is ostensibly the singular justification of free enterprise systems? In the practical realm at least, this is a question that has been rendered superfluous since corporate concentration in all domains of industry and business has been the pace-setter of capitalist development since at least the 1980s.

At a time of rising livelihood anxiety, the authors of the new cross-Atlantic alliance were keen to dispel any impression that “synergies” would be sought through job cuts. The merger’s main objective as they explained it, was to meet the challenge posed by the mass migration of advertising to the digital world. Traditional media are bleeding from the technical creativity of interlopers from the new media world such as Google and Facebook. And the ad agency’s function of brokering the best deal between the advertiser and the media platform that reaches the audience of interest, is severely challenged by user profiling algorithms that the main players in social media today deploy. The large-scale and aggregative methods of audience measurement and identification used by old media seem really no match for the precision on offer from the user profiles that Google and Facebook, for instance, could generate, merely through logging every mouse click and looking for each user’s deeper behavioural patterns.

The Hidden Persuader
Advertising has been among the most loosely monitored and governed areas of global business. Yet it is of sufficient consequence in an average life to have gained the title of "the hidden persuader", the unseen accessory of corporate power which works its influence subtly on the mind of the consumer to bring it in the groove that serves corporate ambitions. Vance Packard, the U.S. journalist and social commentator who coined that phrase in a classic 1958 book, soon found himself demonised by the ad industry, which dismissed his work as an effort born in deliberate malice, to destroy the choices advertising opened up before the average consumer. Since then, advertising has in U.S. jurisprudence, acquired the status of free speech, protected under the first amendment to the constitution. Early judicial pronouncements seemed to classify advertising under the rubric of “commercial speech” which would not warrant as strong a measure of protection since it came lower in the scale of social values. But subsequent rulings, not to mention the brute realities of a commercially organised media, effaced these subtleties. Advertising was soon a powerful driver of media content.

In 1997, media analyst Russ Baker, wrote in the respected professional magazine, the Columbia Journalism Review about the “chemistry” between advertisement and editorial “changing for the worse”. “Corporations and their ad agencies have clearly turned up the heat on editors and publishers”, he wrote, “and some magazines are capitulating, unwilling to risk even a single ad. This (was making) it tougher for those who do fight to maintain the ad-edit wall and put the interests of their readers first”.

Advertiser motivations were clear. The special virtues of a product made for highly refined tastes, would look distinctly less alluring when placed in an “editorial context” that bore reference to the seamy underside of life, to a world where poverty and deprivation are rampant, and ill-health and disasters -- both manmade and natural – extract an enormous toll in human suffering. As Baker put it: “Colgate-Palmolive .. won't allow ads in a ‘media context’ containing ‘offensive’ sexual content or material it deems ‘antisocial or in bad taste’ - which it leaves undefined in its policy statement sent to magazines. (T)he company (has said) that it ‘charges its advertising agencies and their media buying services with the responsibility of pre-screening any questionable media content or context’.”

In January 1996, Chrysler Corporation, then the fifth largest advertiser in the U.S., sent out a letter to all major media outlets – urgent and peremptory in its tone -- demanding that a responsible person from the editorial side sign and return it without delay as a gesture of compliance. The letter explained that “to avoid potential conflicts”, the corporation was to be “alerted in advance of any and all editorial content that encompasses sexual, political, social issues or any editorial that might be construed as provocative or offensive”. Every media outlet that carried Chrysler advertising would need to file with the company’s ad agency, a “written summary outlining major themes/articles appearing in upcoming issues”. These summaries were to be filed sufficiently prior to printing deadlines, “in order to give Chrysler ample time to review and reschedule if desired”.

Evidently, a qualitative change occurred in an already poor ad-edit chemistry in the 1990s, with corporations in the U.S. going beyond unstated pacts, into demanding explicit commitments of compliance with their larger agendas. Yet, these changes in the ad-edit relationship escaped serious contemporary critique, simply because the media was not keen on a major public dissection of its profit calculus, at possible risk to its public image.

In her 2000 book, No Logo, Naomi Klein reviewed the rapid convergence between media content and advertising, a feature of the tumultuous decade that had passed. The trends were bleak, but by no means all doom and gloom. “Advertisers don’t always get their way”, she observed: “Controversial stories make it to print and to air, even ones critical of major advertisers. At its most daring and uncompromised, the news media can provide workable models for the protection of the public interest even under heavy corporate pressure, though these battles are often won behind closed doors. On the other hand, at their worst, these same media show how deeply distorting the effects of branding can be on our public discourse – particularly since journalism, like every other part of our culture, is under constantly increasing pressure to merge with the brands”.

Through two decades of “globalisation” -- a policy commitment that could be dated with some precision to 1991 -- India also saw the transformation of media platforms into brands. It is a process that has been analysed from two ends of the spectrum: the corporations that drive the transformation of content and the journalistic practices that are the recipients of often unwelcome attentions. Once seen as a passive intermediary that would be content with a small sliver out of the ad monies that corporations pour into the media, the advertising industry today has acquired agenda-setting functions which could potentially make or break media fortunes. There was a longish time when the going was good and the collusive arrangement between the larger media houses and the ad giants held up without serious strain. It did not seem to matter that the ad giants – despite obvious conflict of interests issues -- were also beginning to dominate the market research function, where the numbers that would enable the best deployment of advertisement budgets were expected to emerge from.

A pact of silence
Truth-telling is the function the media ostensibly performs for the wider social constituency. But there are larger and lesser truths and there are some that are acknowledged to be about a particular way of seeing. Truth-telling was a role the media was always uncomfortable with, since in the real world, it has always been a forum for the articulation of specific interests. There was a time when the media gained the legitimacy and authority of speaking for the “nation” – a time which corresponded with the industrialisation of the press and the standardisation of the vocabularies of public discourse to suit the needs for homogenisation that a “nation” imposed. But since recasting itself as an industry organised purely in accordance with the profit principle, accountable only to the imperative of the bottomline, the media has shown a certain discomfort with the “fourth estate” role that historical circumstances have cast it in. It has also shown a marked aversion to speak the truth about itself.

A rare breach in the pact of silence occurred in March 2013, though the truths uttered were by no means esoteric or abstruse. The occasion was an annual conclave on the media hosted in Delhi by the Federation of Indian Chambers of Commerce and Industry (FICCI) –where the most influential members in the business community assemble to make their collective voice heard. And if it was by then, common knowledge that the Indian media industry like counterparts elsewhere, was facing a serious crisis of viability, Uday Shankar, chief executive of the Rupert Murdoch owned Star TV network in India chose to look at a different part of the canvas. India’s media industry, he said, faced a massive deficit of reliable data. His words deserve to be carefully parsed since they reflected a deep sense of frustration at being unable to find a pathway out of the troubles he faced as a business leader. “Numbers are supposed to be the foundations of rational business decisions but how can we make decisions when professionals in the business of numbers can’t get their numbers straight? .. As a TV executive, I am surprised sometimes how I am even able to function. I do not know enough about my viewers – in fact I don’t even know how many of them are there. There are 140 million cable and satellite homes but the measured universe is 62 million households. The country’s premier media agencies can’t even seem to agree on a fact as basic as the size of the advertising market”.

These utterances carry layers of meaning and also offer a rather rueful retrospect on two decades when the media seemed intent on expansion beyond the limits inherent in economic realities. The industry has additional reason for worry in that this dip in its fortunes has been accompanied by an upturn in government attentions and fresh intent to remedy its unregulated, virtually anarchic state. These unwelcome attentions could have been easily repulsed if the media industry had been true to its ethos of self-regulation in times of plenty. But in the roaring 1990s and the still more boisterous decade that followed, there seemed no need to attend to this task with any urgency. Assembly a reliable data-base was considered superfluous, since the moment promised infinitely expanding frontiers of growth. But roughly at the same time that the chief executive of the Rupert Murdoch channel was issuing his mea culpa about the information vacuum that lay at the foundations of recent media growth, the much feared and reviled prospect of government mandated regulation was assuming threatening dimensions.

 In March 2013, the Telecom Regulatory Authority of India (TRAI), which enjoys a mandate from the Union Government to lay down norms of conduct for the broadcast sector, imposed a twelve-minute ceiling on advertisements in every hour of programming. Broadcasters protested vehemently to begin with, claiming that their finances would be irreparably damaged. But in the face of the quite palpable public disenchantment at the relentless barrage of distracting commercials and declining programming standards, the broadcast industry agreed to comply on condition of being granted a reasonable transition period. In an indication of divided counsels, the News Broadcasters’ Association of India (NBAI) – a newly assembled lobby that springs into action at every prospect of constraints being imposed on the freedom they enjoy to saturate air-waves with material of arbitrary choice -- filed suit with the Telecommunications Disputes Settlement and Appellate Authority (TDSAT), where initial appeals against TRAI decisions must be heard.

The broadcast industry is divided for reasons that are easy to figure. Despite layers of opacity, the revenue model of the industry is increasingly being exposed as audience unfriendly, all too willing to not just accommodate, but actively pander to the advertiser. Viewer subscriptions have a large share – roughly 67.5 per cent – of total industry revenue. But the bulk of this money is retained by cable operators who perform the last-mile function of delivering the signal to subscriber premises. Estimates of the total subscription value that the cable operators corner, vary from 80 per cent to 91 per cent – either way, the share they keep for themselves sheltering behind the virtual impossibility of an audit of their widely dispersed operations, is regarded as inimical to quality and diversity in television content.

A transition to “digitally addressable systems” (DAS), which would enable greater clarity in assessing viewership data, has for long been the remedy recommended for this particular ailment. This rather self-evident remedy has been kept at bay literally from the time it was first proposed, by the cable operators’ lobby, which numbers in tens of thousands and has considerable heft in local politics. At the end of its tether by 2011, the Union Cabinet in 2011 made DAS the statutory norm, though one to be enforced in stages. All subscribers in the country’s four metropolitan cities would be required to switch over by the end of June 2012. An ensuing phase of frenetic lobbying by the cable operators ensured that the deadline was extended to end-October. Public indulgence for the cable operators was also perhaps beginning to wane by then. In April 2013, a second phase of digitisation began, covering another thirty-six cities, including significant urban agglomerations such as Bangalore, Hyderabad, Pune, Ahmedabad, Nagpur, Kanpur and Lucknow. Cable operators with overt and covert political patronage, succeeded in delaying the transition through various devices, including judicial writs. But with all the hiccups, the process was seemingly completed within the next four months.

Recessionary trends
Digitisation fell well short of the saviour’s role in which it had been cast. Broadcasters were not yet organised to start harvesting subscriptions. And the extra revenue that began trickling in could not quite remedy the ill-effects of the collapse in advertising spending. Trapped in this limbo of losing one revenue stream while the promises of another still remained remote, the broadcast industry responded querulously, seeming at one point to go along with the advertising time cap and at others to challenge it as a virtual threat to the most fundamental of human freedoms.

Predictably, the government came up with its stock prescription of infusing another dose of foreign direct investment (FDI) into the stricken industry. Its proposal on the media were one element in a broader policy initiative to snap the economy out of a spell of gloom and retrieve the Indian rupee from the slough of despond it had fallen into. At the end of June, the Department of Industrial Policy and Promotion (DIPP) in India’s Union Government circulated a set of proposals for raising the FDI ceiling applicable in various sectors. In the case of the print and other news media, the proposal was to raise the permissible ceiling on foreign equity holding from 25 to 49 per cent of paid up capital. The proposal entered the public policy dialogue with surprisingly little acrimony, which was strange, considering the agonising and exaggerated nationalist posturing that preceded the lifting in 2002 of the prohibition on foreign equity holdings in the media. Though voices of dissent were muffled, unanimity within the industry proved rather difficult to achieve. The Information and Broadcasting Ministry played coy about committing itself one way or the other since the industry ostensibly was divided. The Union Home Ministry expressed concerns over the security implications since foreign interests could presumably leverage media ownership into an undue degree of influence over domestic politics. Mid-July, when the Government announced significant measures of FDI policy liberalisation, the media was left out of the mix. Since national security was the residual basis on which the limits to foreign involvement in vital economic sectors was determined, the implication here was, quite clearly, that the media industry posed greater security dilemmas than telecom services, mining, insurance and defence equipment, all sectors where the raising of FDI limits was announced with little discord.

This would undoubtedly have flattered the mythology of the media as a distinct entity – where the mind, the imagination and the civic sensibility are involved -- where rules applicable in other business sectors could not possibly be applied. It proved an image the media industry could not quite live up to. Within days, it was lining up abjectly, asking that all puffed up notions of its importance in the national scheme of things be discarded. The hallowed status bestowed upon it was simply misplaced, since it was just another business desperately in need of money. Within the broadcast industry, there was just a little indecision: networks with entrenched positions in the English broadcast segment – small in numbers but vastly better off in advertising support than more widely watched Indian-language counterparts – were supportive of the move. But regional networks were unconvinced. And if the newspaper industry seemed initially undecided, its main lobby, the Indian Newspaper Society (INS) had within days -- with only two regional newspaper groups from Kerala being in dissent -- endorsed the proposal to raise the FDI ceiling to 49 per cent.

For a longer perspective, it may be fruitful to travel back to the early years of the century, when the media, after a phase of fairly rapid growth, was gearing up for another. It was also a time when the industry took what would turn out to be its last stand on the high ramparts of nationalism. In January 2001, the Standing Committee of Parliament on Information Technology began hearings on the longstanding policy of proscribing foreign direct investment (FDI) in the print media. Beginning in January 2001, the committee held thirteen sittings at which it heard senior editors and journalists, media professionals and jurists. The views of three Union Ministries - Home Affairs; Law, Justice and Company Affairs; and Information and Broadcasting - were sought.

A key decision on foreign equity
From around December 2001, with deliberations entering their final phase, the committee began to witness an insistent campaign, associated in particular with newspaper magnate and Bharatiya Janata Party (BJP) MP Narendra Mohan, to permit FDI in the print media to a limit of 26 per cent, subject management and editorial control being securely in Indian hands. Mohan, who was chairman of the Jagran Prakashan group - one of the most successful media enterprises in the Hindi belt - succeeded to the extent that, when the committee met in February, it had two draft reports before it: one reflecting his position and the other upholding the 1955 Union Cabinet resolution reserving the print media exclusively for Indian ownership.

With veteran left parliamentarian Somnath Chatterjee heading the committee, the revisionist position failed to gain great traction. A few procedural manoeuvres by Mohan at a committee meeting in February 2002, proved futile, with the left parties and the Congress firmly backing the 1955 position. The findings of the parliamentary committee made little difference to the subsequent course of policy, partly since the ranks of the Indian media industry were by then deeply divided. The Jagran group had for long had allies in the campaign for relaxing FDI norms in the Indian Express (IE), India Today (IT) and Ananda Bazar Patrika (ABP) groups. But this campaign, underway since the early part of the 1990s and deploying the seemingly persuasive argument that the media industry had no reason to hold out against the tide of liberalisation sweeping over other sectors, did not make much headway since it was met by an even more formidable lobby espousing the high nationalist stand: an informal coalition of the country’s three most influential English language publishers, the Times of India (ToI), the Hindustan Times (HT) and The Hindu.

The formidable clout of the big three was buttressed by many of the regional papers, particularly in the southern states, where they were well organised, innovative and financially powerful. To the argument that the print media had no worthwhile reason to resist or stand aside from the wave of liberalisation, this lobby responded  with a powerful counter: the newspaper was a unique cultural product that had a deep influence on the public mood and the political agenda, even more so than the electronic media. To demand that the sector be opened up to foreign investment – which would lead inevitably to an erosion of editorial control, given the asymmetries of power – was to invite alien and potentially corrosive influences into the political process. Opening up the print sector to foreign investment of any kind posed the danger of converting the domestic political landscape into a battleground for foreign lobbies and interests.

By the early-2000s, the alignment of forces within the media industry had begun to shift ever so significantly. The principal switch in the balance was effected by HT, which had come through distinctly the loser in its home territory in Delhi, from an intense price war against ToI. The ToI group had signalled its intent to launch a war of manoeuvre to corner ever larger shares of the national advertising pie as early as 1986, when it launched a package of incentives for advertisers, across its publishing centres and platforms. In March 1994 it moved aggressively to the next stage in the competition for reader loyalty in Delhi, by cutting daily selling price in this key market to just a rupee-and-a-half. To guard against a catastrophic loss of revenue, it raised the price of the newspaper on one day of the week to six rupees, but soon enough, cut even this to two rupees and ninety paise.

HT responded by first seeking to stop the distribution of the ToI, using its clout with syndicates of news vendors, nurtured through years of dominance in the Delhi market. That brought it short-term gains, but soon began to turn into a public relations nightmare as ToI took a stand on the lofty pedestal of consumer choice and sovereignty. Like other newspapers in the Delhi market, HT soon found that it had no option but to emulate ToI and slash prices. But then as ToI moved aggressively to corner a larger share of Delhi’s advertising business, offering attractive incentives for ad placements in its various daily publications and most importantly, tailoring editorial content to appeal maximally to the changing worldview of India’s globalising anglophone elite, HT was driven deep into the red. By the early years of the century, ToI was revelling in the claim that it had captured top position in Delhi and securely locked in the loyalty of the demographic strata most prized by advertisers.

By early-2002, without explicitly acknowledging it, HT had shifted discreetly to the pro-FDI corner. In June that year, the BJP-led government, reassured that it had sufficient backing to risk angering a powerful section within the newspaper industry, opened up the print media to FDI, to the limit of 26 percent of total equity. Editorial control was to remain in Indian hands and at least three-quarters of all senior positions with decisive influence over news agendas would necessarily be occupied by Indian nationals.

The response of the newspaper industry was split. The apex organisation of the industry, the Indian Newspaper Society (INS) reacted with some asperity: the decision, it said, would lead to the death of the small and medium newspapers. Individual news industry groups, such as Business Standard, IE and IT, cheered it as an overdue measure to bring much needed capital and state-of-the-art practices to the country.

By 2005, HT’s apostasy on the FDI issue was complete when it came out with an Initial Public Offering (IPO) of shares. Early conviction having evaporated in the heat of competition with ToI, foreign entities including Citigroup and the Henderson group, were invited to pick up sizeable chunks of the IPO. Other news industry groups to allow significant equity dilution through foreign investments, were Jagran Prakashan, Midday Multimedia and Business Standard. In the satellite TV sector, Asianet Communications, the market leader in Malayalam language broadcasting, attracted a significant equity investment from a Mauritius based enterprise.

Takeover of the ad space
While the newspaper industry was engaged in this series of skirmishes over FDI, a major operational manoeuvre was executed on its flanks, leading in effect to its complete encirclement by foreign interests. Being narrowly focused on the issue of ownership in the industry, the newspaper lobby failed to recognise the signals from a policy move initiated in 2001 with little public debate or discussion, when the doors were opened up for 100 percent foreign investment in the equity of ad agencies and market research firms. At a time when over 65 percent of total newspaper industry revenue came from advertising – and ad placement decisions depended crucially on the results that market research firms turned in – these policy decisions of immense consequence for the print media passed without serious opposition, indeed without even a cursory examination in regard to longer-term implications.

In 2002, pioneering market research professional and media analyst, N. Bhaskara Rao, wrote that the debate on foreign ownership in the media was superfluous, if not entirely futile, for reasons that were fairly simple: the entire public discussion had “quite overlooked the fact that increasingly, the pace and path of the media is being determined by advertising, and is influenced by market research and media planning strategies in which corporate (sic), Indian and foreign, have invested heavily”. While the media and newspaper barons carried out their phony wars over FDI in their narrow turf, the territory all around was rapidly being colonised by corporate interests, both Indian and foreign.

The implications for the Indian media scenario are best illustrated in the career of the advertising conglomerate WPP, recently knocked off its perch at the top of the global rankings but comfortably retaining its leading position in the country, despite the emergence of the Publicis Omnicom behemoth. WPP started operations in 1985 in a business sector rather remote from advertising, manufacturing supermarket shopping trolleys in the U.K. as Wire and Plastic Products. It was a modest operation begun on the side by Martin Sorrell, then a senior executive in Saatchi and Saatchi, the U.K. ad agency that enjoyed a purple patch of growth through the 1980s, partly because it parlayed an advertising contract acquired from the British Conservative Party – the dominant political force through the decade – into expanding global influence. In 1987, WPP created a major flutter in the business world with a takeover of the U.S.-based ad giant, J. Walter Thomson (JWT). Within just two years, it had taken over another storied global player, Ogilvy and Mather (O&M). A string of other acquisitions followed. Though it was yet to gain absolute control, since 100 percent foreign equity was only permitted in 2001, through the 1990s, WPP had already begun to exert substantial influence over the associated companies of JWT and O&M in India, including, the Indian Market Research Bureau (IMRB) which was promoted in 1970 by JWT associate Hindustan Thomson Associates (HTA).

In 1993, WPP formed the Kantar group within a complex web of holdings across the world, as its market research arm. AC Nielsen, the firm named after the man who brought to market a technique of judging radio audiences for tastes and aptitudes that would serve as best grounds for advertising decisions, was by this time acknowledged global leader in audience measurement. In 1996, AC Nielsen passed into the control of a finance conglomerate based in the Netherlands, VNU. In 1998, Kantar teamed up with AC Nielsen, to set up Television Audience Measurement (TAM), with the promise that it would offer a unique combination of skills that would be invaluable for the rapidly growing Indian broadcasting industry. The main competitor for this system of television audience measurement was INTAM, set up then by a rival market research firm, ORG-Marg. In 2000, ORG-Marg was itself acquired by the VNU conglomerate. TAM and INTAM then merged to offer a singular and unified measure for advertisers to bet on various channels.

The world of newspaper readership surveys also went through a number of tumultuous changes through this period of globalisation. The National Readership Survey (NRS), promoted by a council of the same name, in which three bodies – the INS, the  Advertising Agencies Association of India (AAAI) and the Audit Bureau of Circulation (ABC) – were represented, remained the industry standard through much of the 1990s. The NRS was a fairly indifferent process, which often failed to deliver – as between 1990 and 1995, there were no surveys conducted. It then became a little more serious about its biennial commitment, and carried out nation-wide surveys in 1997 and 1999. The sudden seriousness was occasioned in part by the emergence of a rival in 1995, when a newly constituted coalition of advertising and media companies floated the Media Research Users' Council (MRUC) and launched an alternate process which it called the Indian Readership Survey (IRS). Directly challenging the indolence of the NRS, the IRS promised quarterly surveys, synchronised presumably with the reporting cycle for corporate enterprises.

Advertising spending was increasing rapidly by this time, with liberalisation being the established motif of economic policy. The placid newspaper scenario witnessed a new competitive dynamic, focused entirely on capturing advertising spending. It was very important to secure bragging rights over readership surveys, since the reward for a podium finish in the survey was an assurance of a significant share in advertising monies. Both the NRS and IRS were soon sunk in a competitive swamp where reason was diminished and volubility prevailed.

Dodgy figures
Early in the year 2000, M&A, a monthly magazine catering to the advertising professional, sought a comparison of most current results from the NRS and IRS. And it must be kept in mind here, that the IRS and NRS results are privileged information, since they are paid for by client organisations that determine how they spend a cumulative sum (at the turn of the century) of about Rs 8,000 crore. The comparison yielded several interesting nuggets about competitive dynamics within the newspaper industry, one of the most piquant being the relative positions of the two leading Hindi language dailies. “Perhaps the most interesting views ought to come from the two players that are in sharp contention for the title of India’s most-read Hindi daily”, said M&A: “While NRS shows Uttar Pradesh’s Dainik Jagran the leader, way and away, IRS almost reverses the figures (strikingly wide lead-gap and all), with Madhya Pradesh’s Dainik Bhaskar in the clear lead”. The figures were indeed exactly reversed: while the NRS reported just over 9 million readers for Dainik Jagran and a little under 4 million for Dainik Bhaskar, the IRS had virtually the same figures, but with the order of precedence reversed.

The survey results further, were not proving to be really of great consequence in ad budget allocations. To quote M&A again: “media planning per se has lost some of its importance to negotiations and discounts. Publications with far less market share than the leaders offer huge cuts in ad rates to swing a campaign in their favour. Satellite channels are notorious for discounting of this sort”.

As competition intensified, major players saw little amiss in calling into question the whole exercise of audience measurement when it was seen not to be serving their purposes. Recriminations reached a particularly noisy crescendo in December 2003 and the months following, when ToI ran a high-voltage campaign on its front-page, sharply attacking the HT for allegedly seeking to suppress the NRS findings which they claimed, put it ahead of its main competitor in the Delhi market.

Questions of methodology continued to swirl around the NRS in subsequent years. In 2006, it was compelled to substantially revise its initial readership estimates after a number of publications that had signed on, threatened to withdraw patronage because they were allegedly given a raw deal. The NRS shut shop soon after that public relations debacle, leaving the IRS as the sole player in the field.

In terms of the global dynamics, this meant that the WPP conglomerate, which dominated the AC Nielsen ORG Marg combine that carried out the NRS, ceased having a role in the newspaper ad allocation process. That role passed exclusively to the control of the Omnicom group, whose Indian subsidiary, Hansa Research had bid for and earned the IRS contract in the late-1990s with the patronage of a rival consortium of newspapers working outside the formal framework of the INS while still exerting influence within. In 2008, the NRS made a feeble effort at resumption, under the technical supervision of IMRB (formerly the Indian Market Research Bureau), a part of the WPP consortium. That effort did not quite succeed, though the parent company could not have been greatly worried, since it remained unchallenged in the TV ratings business.

With every round of IRS results, each newspaper group seems to stake out an exclusive basis for bragging. If ToI claims highest readership in Delhi, HT goes with the argument that the more relevant basis would be the National Capital Region which has richer demographic strata than merely the capital city. IE has been routinely known, without a hint of irony for a seven-decade old newspaper, to brag that it has the fastest growing readership of all English dailies. An identical boast has also become the stock response of the Daily News and Analysis, a newspaper that boasts in years the same vintage that IE has in decades. And in the midst of all this turmoil, the Hindu remains content with its claim to being the largest newspaper in the four southern states. All the pretensions of the Deccan Chronicle to being the big new player in the southern states, alongside its associated publication, the Asian Age, were rudely punctured when the downturn caught it out badly over-exposed in terms of debt.

Authenticity in newspaper readership surveys is one among a host of problems in the print sector that remain to be dealt with. Meanwhile, the TV news industry has blundered into a credibility crisis of its own. Despite the growth in numbers of TV news channels, audiences by 2013 were convinced that they suffered a serious deficiency of choice. As if to confirm worst suspicions that the entire broadcast industry was no more than an elaborate charade, a shallow pretence of speaking truth to power, tapped telephone conversations between an industry lobbyist and a number of influential media professionals surfaced in November 2010, which showed how the media were in fact, feeding off the thriving nexus between big business and politics. Though privacy issues were undoubtedly involved, the tapped conversations, known since as the Niira Radia tapes – after the industry lobbyist who was their main protagonist -- revealed much that was of public interest. The context in which they emerged was the heightened sense of public outrage over irregularities in the allocation of the radio-frequency spectrum for second-generation telecom services (dubbed the “2G scam” in India’s media shorthand). Since India’s biggest industrial groups had vast stakes in spectrum allocation, many among them had been key players in determining the appointment to the Telecom Ministry after general elections to Parliament were concluded in May 2009. The Radia tapes reveal just what were the stratagems that went into determining this, among many other, ministerial choices.

As the global winds in the advertising business continued to gust through the Indian economy, the territory surrounding the Indian media continued to witness intense corporate consolidation. In 2002, WPP like all other advertising conglomerates, moved its media buying activity into a separate clutch of companies. This was partly on account of the large number of media platforms that had come into existence through the 1990s boom, which made it difficult for individual ad agencies – focused on what is referred to as the “creative” function -- to decide on optimal ad placements. WPP’s three ad agencies in India  – JWT, O&M and Contract – agreed through this arrangement, to delegate the entire function of buying media space and time to the newly created firm, WPP Media Communications, which through this one move, became sole arbiter over roughly 30 percent of total ad monies spent in the Indian economy. By 2005, the media buying arms of the four global giants were believed to control no less than 80 per cent of the Indian market.

Cooking the books on TV ratings
Despite losing its influence in newspaper ad allocations with NRS shutting shop in 2006, WPP remained a powerful player by virtue of its control over television ratings. Signs of disgruntlement at its rather arbitrary methods and monopoly status were always evident. In December 2008, the Standing Committee on Information Technology in the Indian Parliament called for an end to the monopoly enjoyed by TAM. It was especially irked apparently, by the low ratings that TAM always turned in for the state-owned broadcaster, Doordarshan. Soon afterwards, Prasar Bharati, the supposed public service broadcaster, began negotiations with another market research company to start a rival television ratings system.

That initiative seemingly did not get very far. But the mood of the broadcast industry was transformed with the economic downturn that in September 2008, stole up on its celebrations of the good times. Its first impact was to disrupt the easy concord that had till then existed between India’s main broadcast enterprises. In August 2012, a leading news channel, NDTV Ltd, filed suit for $ 1.4 billion against TAM in the Supreme Court of New York for allegedly falsifying records in exchange for a monetary consideration. NDTV, a news broadcaster in Hindi and English, claimed that TAM had caused it losses to the tune of $ 800 million by deliberately understating its viewership numbers. And this was done as part of a collusive arrangement with rival channels to earn an illicit fee. TAM’s joint owners -- AC Nielsen and Kantar -- the NDTV petition alleged, had sold off enormous share holdings to a consortium of private equity firms based in New York. These investments had begun turning sour after the September 2008 meltdown, putting an added onus on TAM to come up with earnings that would repay them at least in part. TAM had for this reason, failed to invest in the necessary expansion of its surveying methodology, which would have been indispensable to achieve a reasonable estimate of the rapidly growing and increasingly competitive TV viewership market. It had also resorted to a number of other sharp practices, such as revealing the identity of the households within its sample, allowing several among NDTV’s competitors to infiltrate them with inducements to press the right channel buttons at critical times of the day.

NDTV did not have great success.  In March 2013, the New York court dismissed its lawsuit on grounds that it was not the appropriate forum to hear the matter. A subsequent defamation suit brought against WPP’s chief, Martin Sorrell, also stood dismissed. And all this was despite it being common knowledge that the ratings system had been “cooked for years”. By this time though, there was a generalised air of rebellion with numerous other broadcasters, all for their own reasons, ending participation in the TAM ratings system. Each had its own motive for pulling out and the meltdown of the TAM system seemed to have been precipitated by multiple causes. The Sony Network which held broadcast rights for the Indian Premier League (IPL), felt hard done by in the dismal viewership figures recorded for the hugely hyped cricket tournament in its 2013 season. That the entire tournament was conducted under the constant buzz of massive corporate corruption and match-fixing, which turned off a number of otherwise devoted viewers, was not considered germane. The news broadcasters’ cabal, including NDTV, was turned off by the expansion of TAM’s ridiculously small sample to take in some part of the rural TV audience. Unsurprisingly, with this very modest expansion of the sample, the state-owned broadcaster Doordarshan’s viewership, showed a substantial increase, puncturing the conceit of the corporate channels which imagined they had a monopoly on truth.

Media industry fortunes went into freefall with the global economic meltdown of September 2008. In March 2009, the editor of the Indian Express, Shekhar Gupta, addressed a memorandum to all colleagues, saying that profitability had vanished in the entire media industry over the preceding six months and that indeed, there seemed “no end” to the crisis. It was a call to severe austerities of the flesh and the soul by one who was renowned for being among the most avid celebrants of the cult of material success. The months that followed though, brought some elevation in the mood. It was another matter that the stimulus for a new phase of growth was earned after a fairly undignified procession by some among the Indian media’s more notable figures to the doorsteps of the Ministry of Information and Broadcasting (I&B). The special pleading for a way out of economic misery, was just so slightly at variance with the robust free enterprise doctrine that these particular media enterprises were known to advocate as firmly held editorial philosophy. But that unswerving commitment to the cult of competitive efficiency, much like the virtue of transparency, was evidently for others. The media even as it sets down the rules for all other sectors, believes it is entitled by virtue of its exalted and in large part, self-appointed, status of being the voice of the people, to play by a different book.

A week since Shekhar Gupta, Shobhana Bhartiya and other notables of the print media industry made their pathway to the doorsteps of the government, the I&B Minister announced an increase in the rate paid on government advertising by about 24 per cent, and managed to persuade his cabinet colleague in Finance, to eliminate the customs duty on newsprint. Since parliamentary general elections, though not formally notified then, were widely expected within two months, the timing of the Minister’s announcement seemed a transparent concession to the power of the print media.

Political rescue act
It was a far from edifying sight for an industry which has always taken pride in its independence, to present itself as a supplicant at the doorstep of the government, while being a loud opponent of the coddling state when other business enterprises were involved. Some of this unease at the signals that went out, was expressed by The Hindu, southern India’s dominant English-language newspaper, which chose not to join the delegation to the doorstep of the I&B ministry and to not argue for any special favours in its editorial space. As N. Ram, a major shareholder in the business and then editor-in-chief, explained: the withdrawal of import duty on newsprint was a demand that The Hindu as a corporate enterprise supported. Ram conceded that the sequence of events probably reflected an unstated tradeoff: “.. that is the reality. When the elections come, they (the government) are wary of the media, they want to be nice to the media”.

Aside from these specific measures, the surge in advertising expenses during the national general elections of 2009 contributed in some measure to a short-term stimulus for the media industry’s fortunes. And then, a government that had earned an unexpectedly sweeping mandate, introduced strong budgetary measures to reinforce the flagging momentum of the economy. Things started looking a great deal more upbeat for the Indian media, but by the latter half of 2011 the fresh stimuli were beginning to fade. A report commissioned by FICCI from the global accounting firm KPMG Ltd, found that this was in part, because the “long-promised digital ecosystem began to impact various (media) segments”. That is a judgment that could be questioned. The digital impact on conventional media remains the great unknown, allowing its deployment in both good times and bad in support of just about any proposition -- and its opposite. The identical report from FICCI in 2007, when the times were distinctly better and the outlook rather rosy, had an epigraph from the icon of the modern information age, Bill Gates, celebrating that his prediction, made at the beginning of the decade, that this would be a period “when the digital approach would be taken for granted” was being fulfilled even faster than expected.

Despite frequently miscued interpretations, the FICCI report released at its annual gathering remains one of the few sources to tap for information that even remotely points towards the economic aggregates of the media industry. Till 2009, FICCI had been contracting with PriceWaterhouseCoopers (later rebranded as PwC) to produce this annual report. As long as it was in charge, PwC used to preface its report with a subtle disavowal of faith in the authenticity of the information provided, the full text of which read as follows:
Since much of the industry does not have an organised body, lack of a centralised
tracking agency that could provide us with accurate figures was the biggest challenge
before us to compile figures and determine the size of each segment. This
challenge was exacerbated by the fact that most companies in the industry do not
have their financial information in the public domain. We thus prepared this report
on the basis of information obtained from key industry players, trade associations,
government agencies, trade publications and industry sources.

Beyond that plea of helplessness at dealing with an industry that had quite a pronounced aversion to transparency, there was an explicit disclaimer of legal liability for any of the inferences or judgments arrived at in the report:
While due care has been taken to ensure the accuracy of the information contained in the report, no warranty, express or implied, is being made, or will be made, by FICCI or PricewaterhouseCoopers Pvt. Ltd., India (PwC), as regards the accuracy and adequacy of the information contained in the report. No responsibility is being accepted, or will be accepted, by FICCI or PwC, for any consequences, including loss of profits, that may arise as a result of errors or omissions in this report. This report is only intended to be a general guide and professional advice should be sought before taking any action on any matter.

With all the caveats, these are the only aggregate estimates available of the size of the Indian media industry. Anybody seeking an understanding of media dynamics in India, would have to banish all thoughts about PwC and KPMG being two among the infamous quartet -- the others being Ernst and Young (E&Y) and Deloitte -- that have been leading small savers and credulous investors lemming like, over the cliff of illusions manufactured in the global finance industry. And the picture that emerges from three successive editions of this annual report on India, is of a media industry whose misfortunes are yet to bottom out. A single indicator would sum up the situation for an industry whose lifeblood is advertising: gross advertising expenditure in the Indian economy is estimated to have grown 17 percent in 2010 and a rather more modest 13 percent in 2011. In 2012, the growth rate had shrunk still further, to a mere 9 percent.

The Star TV CEO’s admission that the Indian media industry is a territory free of authentic data, perhaps was a cry of frustration at a business environment where strategic planning was virtually impossible and questionable practices, rife. But a crisis also brings clarity, both for the individual and for the collective. In 2009, the newspaper industry responded collectively to an acute crisis, risking serious damage to its public image for a short-term reprieve. But as fortunes falter yet again, there is not an inkling of longer-term remedies being sought.

Dubious stock deals
Ben Bagdikian, the doyen of critical media studies in the U.S., has identified the growth of joint stock ownership and corporate control as a key moment when quality considerations and the traditional values of journalism, were left behind in the mad rush to improving the bottomline. Despite the changes that have been underway since the turn of the century, corporate control over the Indian newspaper industry is still a minority phenomenon. Many of the major print media groups, such as ToI, the Hindu and ABP, remain under family ownership, though they are all reportedly contemplating limited public offerings of shares. Corporatisation in this context has had a different trajectory. The print media groups have in many instances, ploughed some of their profits into other corporate groups. In the case of the ToI, investments have taken on many innovative guises, among them the arrangement known as “private treaties”, which involves an exchange of free advertising space for equity in particular companies. Several other media enterprises have followed suit, though without quite putting this strategy front and centre in their corporate identity. For instance, NDTV in 2010 announced that it was discontinuing participation in private treaties, without quite clarifying when they had entered this enterprise.

In August 2010, the stockmarket regulator, the Securities and Exchange Board of India (SEBI) came out with a directive, evolved in consultation with the Press Council of India, that all media enterprises with investments in other corporate entities should make full disclosure of these interests alongside any report involving these entities. The directive was for the most part, ignored by the Indian media in its news coverage. There has since been no indication at all, that it is being complied with.

In October 2012, the New Yorker,  a globally renowned magazine of long-form reportage and narrative journalism, carried a story on the ToI, in which its Managing Director Vineet Jain – who also owns a substantial part of the company with his brother Samir Jain – was quoted saying with refreshing candour that he did not see himself as being in the “newspaper business”, but rather in the “advertising business”. By this criterion, the ToI must surely be among the greatest success stories not merely in the Indian business landscape, but globally.

Taking the best available current figures for the Indian print media, advertising accounted for about Rs 13,940 crore of total industry revenue of Rs 20,900 crore in 2011, which is the last year for which reasonable information is available. Ad revenue dependence was thus just over 66 percent for the industry as a whole. In comparison, the ToI group earned close to 84 percent of total revenue from advertisements. Looked at another way, the ToI group alone accounted for close to 29 percent of the total advertisement monies flowing into the print media. If the three top English language publishers were to be taken into account, their share in total ad expenditure would run to over 44 percent.

The TV sector earns a relatively modest 35 percent of its revenues from advertising, though a vast share of subscription revenues goes towards carriage rather than content. And in defiance of the global commonsense that carriage and content should be kept distinct of each other in terms at least of ownership interests, India has had a number of TV broadcasters investing heavily in satellite transmission: Zee Entertainment Networks, Sun and Hathway, to name only three. But all these would appear to be bit players, when viewed against the prospective entry of India’s largest industrial conglomerate, the Reliance group, into the sector. Early in 2012, Mukesh Ambani’s Reliance group took a substantial stake in the broadcast and online news enterprise, TV 18. In the following months, he concluded a deal with his brother Anil Ambani’s ADAG Group, to utilise the extensive fibre optic network owned by the latter’s Reliance Infocomm Ltd, to transmit news and entertainment programmes.

Concentration in the Indian media industry is an ever growing reality. This has to be viewed from a broad public interest point of view. The contribution made by the persistent default in policy, which has resulted in an absolute vacuum of media regulatory systems, cannot of course be ignored. But behind this evident failure is a larger collapse of the imagination and a craven submission by the policy establishment to the power of the media and the wider corporate business sector that it has become firmly integrated into. As it enters a phase of more moderate growth and a possible shakeout of unviable entities, the Indian news industry would perhaps discover that the opacity that has been a matter of principle with it – aiding in the evasion of statutory responsibilities such as the payment of fair wages – is really a self-defeating strategy. Regaining public credibility could also mean accepting certain norms of transparency that so far, the industry has been keen only on enjoining on others.

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