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Corporate Governance, Self-Regulation and Oversight in the Media Space in India: Is Status Quo the Way Forward?

Corporate Governance, Self-Regulation and Oversight in the Media Space in India: Is Status Quo the Way Forward?
INTRODUCTION

When Nobel Laureate Amartya Sen said “…no substantial famine has ever occurred in any independent and democratic country with a relatively free press” he was only underscoring the absolute importance of an unfettered media in the democratization process of a nation. A free, independent and vigilant press ensures a responsive and transparent government, greater public awareness and according to many studies’ fewer instances of corruption. It highlights government overreach, rights violations by the state, financial scandals and obscurantism in societal practices.

MEDIA: THEN AND NOW

In 2015, the media and entertainment sector grew at 12.8% over 2014, while advertising grew at 14.7%. The snapshot of Indian Media Industry is as follows:

SELF REGULATION – DOES IT WORK FOR A BUSINESS

The Government of India has supported Media and Entertainment industry’s growth by taking various initiatives such as digitising the cable distribution increasing FDI limit to 100 per cent in cable and DTH satellite platforms, and granting industry status to the film industry. So, if we were to consider media as a business, would the current model of self-regulation actually work to make the media accountable to the public rather than its shareholders?

Whether it is because of the voluntary nature of the regulation, or the reluctance of editors to speak out against one another, the consequences of violating current codes do not serve as a deterrent to the rogue elements in journalism. And that would perhaps explain why several serious cases of impropriety such as election time paid news, the ethical issues around the Radia tapes or the publishing of mms pictures were not taken up by the Press Council for consideration.

What then is the way forward?
INDIA: SEPARATING BUSINESS INTERESTS FROM THE NEWSROOM – STATUS QUO THE ANSWER?

In India, the Ministry of Information and Broadcasting, consequent to the judgment of the Supreme Court in the Cricket Association of Bengal case delivered in 1995 has been examining the issue of introducing a legislation to regulate the operation of broadcasting services. Currently, apart from the Press Council, the Indian Broadcasting Foundation (IBF) and News Broadcasters Association (NBA) have established self-regulatory mechanisms with their own separate codes of conduct.

The NBA was set up in 2008 in the belief that interference by the government ‘however well – intentioned would imperil not just independent journalism but the very process of investigation itself’.

The IBF’s Broadcasting Consumers Complaint Committee (BCCC) too is a self-regulatory body with its power to punish. With the IBF’s stated mission being to ‘grow broadcasters’ revenue from US$ 8.3 billion in 2013 to US$ 835 billion by 2020 it is therefore difficult to see, from a public perception at least, how this body will be able to separate public interest from profit margins.

The discussions above concerning the prevalent scenario leave little doubt that status quo is not the way forward. Then, the next issue before us is – what is the way forward. Freedom of press and caution on over-regulation seeks to keep government away from media regulation but the fundamental rights of citizens enshrined in Art.19(1)(a) calls out on the government to ensure that media ownership and business freedom does not ride over the citizens rights and to maintain the basic structure of the Constitution of India. Is a balance therefore the right way forward, let’s see?

STRIKING A BALANCE

The Delhi High Court, in a landmark case relating to the Programme Code and Advertising Code and its interaction with the Cable Television Networks (Regulation) Act 1995 and The Cable Television Network Rules 1994, recommended that a statutory regulatory body be constituted consisting of persons of eminence with security of tenure ‘of a kind that would free them from government interference’.

A Draft Bill on media regulation following widespread stakeholder engagement pending before the Information & Broadcasting Ministry of the Government of India called the Maintenance Of Transparency and Code of Conduct and Prevention of Circulation, Publication or Broadcasting of Misleading Information by any Entity engaged in Circulation, Publication or Broadcasting of News (by any Medium) Bill, seeks to strike a balance – to make media regulation independent of both government and media ownership.

While enjoining media entities to self-regulate compulsorily (Chapter VII), the Bill suggests the establishment of an Authority which would be ‘a body corporate ….having perpetual succession and a common seal’ with the power to sue and be sued. This Authority. Most important of all, the Bill suggests that no serving editors be on the Board.

The Bill provides the Board with the power to take suo motu action as well as the power to impose a penalty for Code of Conduct violations as well as the violation of its own Transparency Disclosure Norms, thus already making it stronger than the afore mentioned self-regulatory bodies.

It further suggests the establishment of an Appellate Authority headed by a retired Supreme Court judge, a former Secretary in the Government of India and another member with the same powers as a civil court and recommends that appeals against their orders only to go to the Supreme Court of India.

In effect what the Bill recommends is an independent statutorily sanctioned body that receives government funds without being answerable to it, with strong processes in place and the power to penalize. A key issue that needs to be achieved is transparency of ownership of the media to check many ills in the news broadcasting segment including cross promotions, paid news, conflict of interests and similar, across different mediums.

The Disclosure Norms (for Transparency) in Schedule II of the Indian Bill are stringent in that they not only seek the disclosure and publication on the Authority’s website, information regarding ownership interests of management personnel, non-promoter directors and promoters in the entity as well as in equity and convertible debentures that might have a bearing on the corporate character of the entity, but also more importantly any ‘private treaties’ that an entity might have with another company that could lead to cross ownership and the concentration of power by one group over all aspects of news dissemination.

These Disclosure norms also seek to enforce the maintenance of a public disclosure file containing information about all agreements, arrangements, contracts or documents entered into by ‘an entity or its affiliates with any third party/parties necessary in the interest of the public’.

That status quo is not the way forward is a foregone conclusion. Does the remedy to the ills lie in a middle path of a statute/law focused on granting both citizen’s rights and followed by freedom of press by:

  • Instilling better corporate governance resulting from increased transparency as discussed above,
  • Encouraging self-regulation focussed on guaranteeing citizens rights to be given priority of media business rights
  • Followed by an institutional oversight wherever necessary.

About Author

Manoj Kumar

Dr. Manoj Kumar is the Founder of Hammurabi & Solomon & Visiting fellow with Observer Research Foundation, New Delhi.

Shweta Bharti

Shweta Bharti is a Senior Partner heading the Dispute Management practice at Hammurabi & Solomon Partners. She brings together a perfect blend of litigation strategy & business practices to meet the business needs of the clients and she has been recognized for providing an ideal combination of consistent high quality expertise derived from immense transactional experience and innovative thought in providing solutions to delicate transactional-legal needs.