The draft Broadcast Bill and Content Code recently revealed by the Ministry of Information and Broadcasting have raised some heat and dust within the Indian media community. Much of the discussion so far has focused on the Code and its likely effects on freedom of expression. Although initial reactions from the media industry reflected some unhappiness with the Bill's provisions relating to media ownership, that issue subsequently slipped out of sight. Yet matters relating to ownership are central to debates on media regulation across the world and need to be taken on board here, too.

The controversial Section 12 of the Bill introduces 'restrictions on accumulation of interest' – or curbs on media ownership. Two clauses restrict cross-holdings between broadcasters (e.g., television channels) and network operators (e.g., cable and DTH companies). Another proposes restrictions on the number of channels a broadcaster can control within a city or a state; a ceiling at the national level is also mooted. The clause relating to cross-holdings across media segments (print and broadcast, for example) at present only gives the government the right "to prescribe eligibility criteria and restrictions... from time to time."

According to the draft legislation, the purpose of this section is to prevent monopolies across different segments of the media, as well as within broadcast segments, in order to ensure plurality and diversity of news and views. However, it is not clear whether the government's intent is to restrict market presence (in terms of media outlets) or market share, and within the latter whether the criteria relate to revenues or audience. The draft also stops short of fully addressing what media reports have loosely termed "cross-media ownership".

The draft legislation certainly does not reflect a nuanced understanding of the complex and contentious issues relating to media ownership, which continue to be debated by regulators, media organisations and citizens across the world. At the same time the objections raised by India's media industry do not acknowledge the fact that media regulation in most 'mature democracies' includes restrictions on media ownership. The necessary discussion on media ownership issues in India could be enriched by a closer examination of international experience in this area.

In defense of diversity and plurality

The preservation of diversity and plurality in the media is globally recognised as a legitimate goal of media policy. It is widely accepted that plurality of voices in the media, diversity in sources of news and information, and access to varied ideas and opinions are of vital importance because of the critical role the media are supposed to play in democratic societies.

Contrary to the impression conveyed by the Indian media industry and its advocates, restrictions on media ownership are very much in place in most parts of the democratic world.

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In several 'developed' countries existing restrictions on cross-media ownership within broadcasting legislation have in recent times given way to regulation under competition laws and policies, but ownership matters remain a relevant and valid aspect of media regulation. At the same time, it is widely understood that the only justifiable purpose of any regulatory interventions in issues of ownership in the media sector is the protection and promotion of the public interest.

In fact, all media regulation is meant above all to serve the public interest. This is explicitly stated in the terms of reference of regulatory bodies in many parts of the world. For example, under the Communications Act, 2003 of the United Kingdom, the principal duty of the Office of Communications (Ofcom) -- the independent regulator and competition authority for the UK's communications industries -- is to further the interests "of citizens in relation to communications matters" and "of consumers in relevant markets, where appropriate by promoting competition." Among its specific duties are "ensuring a wide range of TV and radio services of high quality and wide appeal" and "maintaining plurality in the provision of broadcasting."

In its 2003 guidance notes on cross-media ownership the UK's Radio Authority (subsequently subsumed within Ofcom) listed the various matters to be taken into account in determining public interest. The document also highlighted the need for public comment and/or consultation on transactions under consideration by the regulatory authority.

Two years earlier, the UK government's paper titled 'Consultation on Media Ownership Rules' prompted responses from a variety of interests -- ranging from regulatory bodies like the Radio Authority through media companies like Bloomberg to citizens' groups like the Campaign for Press and Broadcasting Freedom. Despite their varied views on the details of the Consultation, all of them acknowledged the importance of plurality in media and the need for regulation – to a greater or lesser extent – to protect and promote it.

The Australian Press Council's 'Freedom of the Press Positions' includes a section on ownership issues: "Access by all Australians to full, truthful, unbiased information about world and domestic events and to a pluralist range of opinions and commentary about those matters from an Australian perspective is the key issue to be considered in determining government policy on media ownership."

The APC's policies in this area favour plurality of media outlets, diversity of views, and due regard for Australian content in the print media. According to the Council, media ownership should be governed by competition law, with ownership regulation handled by the Australian Competition and Consumer Commission under the competition policy aspects of trade legislation. However, it proposes the application of a media-specific public interest test, which would place a high value on the need for media diversity and the significance of local content.

Interestingly, in view of Rupert Murdoch's growing global media empire, the APC believes foreign takeovers of major city newspapers and free-to-air TV channels should continue to be subject to the Australian Foreign Acquisitions and Takeovers Act in his country of origin.

The perils of laissez-faire for India

At present Indian broadcasters' opposition to the provisions on media ownership in the draft Broadcast Bill essentially amounts to a generalised rejection of the very idea of ownership regulation, based on the notion that such restrictions are archaic and would stunt the growth of the media industry. Criticism of this aspect of the Bill has also implied that rules restricting ownership have been reversed in other countries.

That is not strictly true. If there has been a period of deregulation in some countries, there is now widespread concern about the impact of such policies: the US is, of course, a prime example (See: Public missing in Broadcast Bill debate). But so is Italy, where former conservative Prime Minister Silvio Berlusconi owns three of the country's seven national television channels, two newspapers, the largest publishing house, the biggest advertising agency and numerous Internet ventures. When in power he also held sway over the state-owned broadcaster, Rai, which accounts for three other national channels. Berlusconi's Mediaset and Rai together dominate Italy's TV market. In addition, his huge presence in advertising guarantees him considerable influence over commercial media that he does not directly own or control.

To make matters worse, media legislation passed in 2004 during the Berlusconi regime rolled back ownership restrictions and initiated the partial privatisation of Rai, apart from creating new digital TV channels. Critics claim the law only reinforced Berlusconi's hold on the country's media. The new government headed by Prime Minister Romano Prodi plans to reverse these changes and also make it illegal for a media company owner to hold public office without divesting his or her holdings.

Canada provides another example of rampant media concentration, with three companies controlling most of the country's private media. In June 2006 a Senate Committee released a detailed report on the Canadian news media, based on a two-year investigation, which identified as a serious problem the fact that "many regions and markets are characterised by high levels of concentration in news media ownership and/or cross-ownership." Pointing out that there were many "areas where the concentration of ownership has reached levels that few other countries would consider acceptable," the Committee highlighted the weaknesses of the present regulatory system that had permitted such developments. According to the report, "Any proposed solution must recognise, as a matter of policy and law, that there is a public interest in news media mergers."

In what may well amount to closing the stable door after the horse has bolted, the Canadian Radio-Television and Telecommunications Commission announced earlier this year that it would hold "a public hearing to review its approach to ownership consolidation and other issues related to the diversity of voices in Canada … in light of the current wave of consolidation in the Canadian broadcasting industry." Issuing a public notice in April that set out the scope of the proceeding, the Commission gave the public three months to submit written comments on the various matters under consideration. The hearing is slated for next month.

Contrary to the impression conveyed by the Indian media industry and its advocates, restrictions on media ownership are very much in place in most parts of the democratic world. French law, for example, restricts the ownership and control of private sector broadcasters. The United Kingdom limits ownership of national newspapers and certain types of broadcast licences. Germany restricts cross-ownership of multiple media outlets, as does the US – which also restricts the number of broadcast stations (radio or television) that a single person or entity can own in a given geographical area. Australia restricts foreign investment, concentration and cross ownership of broadcasting.

Emerging evidence of consolidation in Indian media

The media industry here may be justified in pointing out that there is at present nothing close to a monopoly situation within the Indian media. However, there is some evidence that the process of consolidation is well under way. For example, while the 1995 figures of the Audit Bureau of Circulations (ABC) led South Asia and media scholar Robin Jeffrey to conclude that there was considerable diffusion of newspaper ownership in India, within a few years the situation had changed quite dramatically. According to Jeffrey, the ABC's 2001 figures indicated trends towards market domination, if not monopolies, within the press.

In the 2003 edition of his landmark book, India's Newspaper Revolution, he observed that the overwhelming dominance of two newspapers (per language) had become evident in seven of India's 13 major languages: in three of these (Malayalam, Punjabi and Tamil) the two lead papers controlled more than 80 per cent of the total circulation, while in another three (Assamese, Gujarati and Kannada) they controlled over 70 per cent, and in one (Bengali) over 60 per cent. In English two newspapers accounted for nearly 50 per cent of the total circulation. In Telugu, there was just one dominant player, boasting nearly four times the circulation of its nearest rival.

If this is the trend within the large, privately owned, and traditionally diverse print media sector it is unlikely that the relatively new, even more capital-intensive private broadcast sector is any different, especially with the rise of cross-media ownership and the blurring of boundaries between old and new media. Already several media houses have stakes in print, radio, television, the Internet and cable operations.

In this context, a recent article on the Voice & Data website, quoting top executives in the broadcast industry, is fairly revealing. Their primary concern is obviously that the proposed restrictions on cross-media holdings will affect not only fresh investments but also plans for expansion through acquisitions. According to the piece, "Cap on cross holdings has been vehemently opposed by the industry as this will have a direct impact on the growth of the industry as broadcasters are actively looking at growth through merger and acquisitions." The article suggested that several of the draft Bill's provisions relating to ownership are bound to have serious financial implications for the industry, hampering mergers and acquisitions, discouraging consolidation, causing fragmentation and necessitating the revision of existing as well as emerging structural patterns and financial arrangements.

From the industry's point of view such developments are clearly not welcome. However, in view of the primacy of the public interest in matters of media regulation in a democracy, the critical question is whether they would be good or bad for citizens and consumers. These are complicated issues which require careful study and analysis.

For example, the Voice & Data article points out that the media business requires large capital investments and involves long gestation periods, which already limit entry and sustainability. Industry experts quoted in the piece suggest that since the "arbitrary limits" included in the draft Bill "will make the media business commercially unsustainable for many," only a few dominant players with the financial muscle to stay the course will be able to survive. If that is indeed true, it would evidently defeat the very purpose of such restrictions. But only a thorough assessment by knowledgeable, independent experts can yield the information and insights necessary to determine whether or not such fears are well-founded.

Can competition regulation serve the purpose?

Similarly, India's media industry representatives claim that existing legislation, such as the Monopolies and Restrictive Trade Practices Act and the Competition Act (under which there is apparently a Competition Commission), can take care of the problems Section 12 seeks to address. This is another matter that requires closer examination: will trade and competition laws by themselves serve the purpose or should they be supplemented with a public interest test, as proposed by the Australian Press Council, or is even that not enough?

According to the Campaign for Press and Broadcasting Freedom, UK, "While competition regulation can successfully tackle economic competition between firms, it has widely acknowledged limitations as a means of regulating for pluralism and diversity. As the former EC Competition Commissioner Van Miert stated in 1997: "My personal opinion is that I am convinced of a need for European legislation on media concentration...We cannot use competition rules to govern democratic issues." Above all, competition regulation may tolerate monopoly or oligopoly provided that markets are economically contestable and so allow conditions that threaten pluralism. In contrast, the public policy concept underpinning anti-monopoly measures concerns the effects of concentration on the public interest rather than on competition. Communications regulation needs to be based on the recognition that media contribute to pluralism, diversity and quality of information and hence require a separate regulatory structure from that which governs other parts of the national and global economy."

Charting a media regulation path for India

The need for media regulation is beyond question. There is little doubt that ownership issues are legitimate concerns within media regulation. The question is how regulation is to be approached and implemented. And whether India wants to follow the North American example, letting things slide in the direction of deregulation and then trying to undo the damage, or the many examples in other parts of the world where regulators have tried to preserve media diversity and plurality – in the public interest -- without compromising on freedom of expression or the economic health of media organisations.

Considering the complexity and controversial nature of ownership issues, they clearly need to be studied more carefully, understood more fully and handled with more sensitivity than they have been so far. Most importantly, any restrictions on media ownership must be defensible on grounds of public interest, with particular reference to media diversity and plurality.

According to Mukul Sharma writing on Media and Governance in Seminar in 2002, "The trend towards increasing concentration of ownership and a decline in diversity cannot be stopped unless there is a national policy or some public action from below." Perhaps there is a third way: policy based on public consultation – prompted, if necessary, by citizen action.

The Broadcast Bill is not only short on evidence but, worse, it did not evolve through a process of consultation.

Regulatory decisions, which necessarily impact people and organisations, need to be based on evidence and take into account the views of those who have an interest in the outcome, which includes the general public. As Ofcom puts it, "Consultation plays an important part in achieving this. It allows those who could be affected by or concerned about a particular issue to give us their views before we decide on a course of action. Consultation is an essential part of regulatory accountability – the means by which those people and organisations affected by our decisions can judge what we do and why we do it."

Unfortunately, the Broadcast Bill is not only short on evidence but, worse, it did not evolve through a process of consultation.

In a recent press release issued by Free Press, a media reform organisation in the US, media scholar and activist Robert W McChesney expressed the hope that the culmination of the Dow Jones/Wall Street Journal deal is "the wake-up call Washington needs to start rolling back media consolidation...Murdoch's empire wouldn't exist if he hadn't been aided and abetted by Washington policymakers in Congress and at the FCC. Only by restoring public input in the policy-making process can we create the kind of diverse, accessible and independent media that journalism — and our democracy — so desperately needs."

Public input is precisely what has been missing through the long and winding history of media regulation in India. No wonder even the latest, 20th draft of legislation meant to regulate the broadcast sector has kicked up such a storm. This may be an opportune moment to change the course of that history, as India celebrates its Shashti Poorthy and stakes its claim to be a mature democracy.