Economics & Corporate Law

Media Cross-Ownership: Does Competition Law Suffice?

Dhawal M

MediaOwnership picture (1)

The new IT Rules for OTT platforms have started a conversation on media freedom. How free from undue influence do you think TV and print media is? This article examines the issue of media cross-ownership juxtaposed against the limitations of existing competition law and its associated regulatory framework.

Introduction

India has witnessed corporate influence over government functioning in the form of the issues around the Farm Laws. The recent polarization has made it a largely binary debate between the supporters of the laws who call them liberal free market policies and the protestors who call them corporate appeasement leading to economic inequality and ruin. In such moments of political upsets, the media, protected by the Right to Freedom of Speech and Expression, supposedly guarantees citizens a plurality of views. But what should a polity do when the major news outlets are owned by the very subjects of this public discussion? For example, Network18 is owned by Reliance India Limited, a company alleged by farm law protestors to have vested interests in the implementation of the laws. Moreover, NDTV, a channel known to strike out against these laws is partially owned by politicians from CPI(M), a political party ideologically opposed to the laws.

As the country discusses the overregulation of OTT through recently notified laws, it is important to focus on how traditional media (referring to TV & print) suffers from censorship and bias due to absence of ownership regulation. This article shall first establish what cross-ownership is and then discuss how competition law in its current form is inadequate to address media cross-ownership. For the purpose of this article, media shall refer to ones dealing with current affairs and news dissemination. 


Media Cross-Ownership

Media cross-ownership is defined as the market structure where the same entity owns media companies/subsidiaries across different forms like TV, print and radio (horizontal); or, where the same entity owns different levels of media production and dissemination, i.e., both the media-houses and the Direct-To-Home (DTH) and other distributary/broadcast services (vertical). Horizontal cross-ownership restricts plurality of views and leads to market concentration on account of the same entity occupying multiple spaces. Vertical cross-ownership may lead to unfair practices with DTH providers favouring certain channels over others. The media departs from keeping a check on the government and voicing people’s concerns, and becomes a propaganda tool at the hands of its corporate owners who fund such widespread model of ownership. This is why modern liberal democracies such as the USA, the UK, Canada, and Australia have legislations regulating and prohibiting media cross-ownership.  In India, the Broadcasting Bill, 1997 and the Broadcasting Services Regulation Bill, 2006, were proposed but never enacted. Further, the Telecom Regulatory Authority of India (TRAI) has released two recommendatory consultation papers on the issue. These proposed legislations and recommendations sought to prohibit advertising agencies, political parties, religious organizations and publicly funded bodies from receiving media licenses, in addition to addressing the issue of cross-ownership.

Along with a lack of political will, these legislations and recommendations faced opposition on two major grounds concerning competition law: first, such provisions are not required as the current market situation is not anti-competitive; second, the Competition Act, 2002, (the Act) and the supporting legislations are well equipped to deal with any aberration that may arise. 


Myth of a Competitive Media Market

The first of these arguments, that the market is not anti-competitive, is contingent on two things: either, the market is competitive as it has a plurality of players; or, trade practices in the market do not restrict competition.

India has more than 17,000 newspapers across languages, and more than 400 news channels. Moreover, the Indian market is distinct from western democracies on account of having multiple language specific markets for media. This suggests that the market is fairly diverse with an adequate number of players and might even hint at perfect competition. On the contrary, readership data submits that across language specific markets, the top 4 newspapers capture more than 50% of the market share and readership share. Sometimes, the same entity owns the leading publications in multiple languages. The Broadcast Audience Research Council (BARC) does not publish comprehensive viewership data and due to the recent scandal has even put on hold the weekly ratings for news channels specifically. In the face of these limitations, one is forced to consider multiple weekly ratings from the past which show that the top rated (most viewed) news channels remained fairly consistent and that the top 4 news channels captured more than 50% of the market share. Thus, consumer data from both the newspaper and TV markets conclusively burst the bubble of a ‘competitive’ market with multiple players. The Indian news industry is an oligopoly with a highly concentrated audience share. While in some industries, 3-4 players might seem ideal, it is important to note that democracy is based on pluralism and that the media is the fourth pillar of democracy; a market with just 4 influential players is unlikely to promote a plurality of views. 

However, it may be argued that an oligopolistic market structure does not automatically constitute a restrictive trade practice or abuse of market power, as was ruled by the Supreme Court in the TELCO case. The judgement mandates that the alleged restrictive trade practices should qualify the requirements of Section 2(o) of the Monopolies and Restrictive Trade Practices Act, 1969 (in pari materia with Section 3 read with Section 4 of the Competition Act) which prohibits acts that prevent, distort or restrict competition in any manner, and obstruct the flow of capital, and manipulate channels of delivery specifically. Vertical cross-ownership violates these prohibitions.

The TRAI recently notified guidelines mandating DTH and cable service providers to make available 200 channels at the Network Capacity Fee (NCF) of Rupees 130. This gives some free-to-air channels a competitive edge as customers no longer have to pay extra for them. However, the guidelines come with a caveat as they bestow the decision of choosing these channels on the DTH provider. Vertical cross-ownership influences this policy as well. Multiple media-houses have entered into Joint Ventures with broadcasting networks which has led to the formation of cartels. Such a partnership leads to the inclusion of news channels in a larger bouquet of channels carried by these broadcasting networks. This ensures that the cable service providers do not give the choice of not subscribing to certain channels to customers as they don’t want to lose out on the revenue from the large bouquet of channels provided by the broadcasting network. This ensures that channels outside the cartel are made easily disposable as it would cost more for customers to avail their subscription separately.  

India’s top 3 DTH providers have a stake in news channels as well. Tata Sky is partially owned by The Walt Disney Company which has its own range of investments across media-houses and projects. Dish TV’s Chairman and Managing Director Jawahar Goel is the brother of Dr. Subhash Chandra who heads the Essel Group which owns Zee Media. Sun Direct is part of the Sun Group which owns multiple channels and newspapers. Thus, these 3 media behemoths have an inherent conflict of interest while deciding what channels are provided under the NCF. The TRAI Guidelines and competition law have not been able to deal with such nuanced and multi-layered cross-ownership prevalent in the media industry.


CCI: An Adequate Regulator?

The second argument against cross-ownership places faith in the Competition Commission of India (CCI) to ensure fair competition and market plurality. The mandate of the Competition Act might be very similar to that of the proposed special cross-ownership laws insofar as it regulates anti-competitive agreements, abuse of a dominant position, and combinations – to prevent an appreciable adverse effect on competition (AAEC). However, the unique conditions of the media market impedes the successful enforcement of general competition law. The primary issue being the narrow definition of market used by the act and a similar interpretation of the same by the CCI.

The definitions of market in sub-sections (r), (s), and (t) of Section 2 of the Act fail to account for the overlap in different relevant media markets. Firstpresently, competition law views news media across different forms (print, TV, radio, etc.) as separate markets with limited inter-operability and interaction which is detrimental to the consumer interests on which it is founded: consumers often consume news through multiple sources to verify its veracity and appreciate multiple perspectives. Horizontal cross-ownership limits this choice. Second, vertical integration is often allowed by differentiating the markets: Network18’s takeover by Reliance was approved as Reliance’s assets in 4G and broadcasting services were identified as separate markets but this article has already demonstrated the implicit anti-competitiveness of the same, through the NCF. Third, news-media markets are linguistically differentiated which does not serve the purpose of media pluralism: a large part of the population is multilingual with its news consumption spread across different languages, with the same or a similar degree of substitutability not warranting a geographic/linguistic differentiation in the first place. 

Such differentiation of the market, accessed by the same customers availing the same news-media product – as different relevant, product, and geographic markets respectively, is counterintuitive to the CCI’s mandate. The law is ineffective in limiting such market differentiation, in its present form; this strengthens a case for differentiating the news-media market as a whole, regulated by a dedicated legal framework. Such a case is also supported by the very unique structure and role in the democratic process that news-media has, compared to other commercial enterprises which are regulated by the Act.


Conclusion

News media in India is an oligopolistic industry which has progressed to the level of cartelization. Efforts have been made in the past to regulate cross-ownership but minimal public engagement and a complete lack of political will have stalled them. In Indian Express Newspaper v Union of India, the Supreme Court held that the fundamental right to freedom of speech and expression also includes the liberty of press and the right to access all sources of information. Cross-ownership places undue influences on the freedom of press and it is abundantly clear that existing legislation has failed to deal with it. It also outlines a failure of the Competition Act and portrays how media needs to be regulated in a unique and separate manner. It must be kept in mind that cross-ownership regulation is not an end in itself, rather a means to achieve more media plurality. Any legislation so proposed must keep this in mind.


The author is a first year student at the National Law School of India University.