Big media has become bigger: Media Diversity and Reliance’s takeover of Network 18
The following article is written by Smarika Kumar and was first published on Kafila.
Big media has become bigger. The takeover of Network 18 by Reliance has consolidated news media in the country like nothing before. The Reliance-Network18 combination is, in fact, not exactly new. It was actually executed a couple of years ago in a very telling, roundabout fashion when Reliance lent money to Network18 through a trust called IMT, among other things, to buy all of its media properties. As a result of Network18’s debt, Reliance could then dictate to it the terms of repayment, which were agreed between the two entities in the form of debentures convertible to shares.
The resulting combination brings TV channels like CNBC-TV18, CNBC Awaaz, CNN-IBN, IBN7, IBN-Lokmat, ETV-Rajasthan, ETV-Bihar, ETV-Uttar Pradesh, ETV-Urdu, ETV-Marathi, ETV-Bangla, ETV-Gujarati, ETV-Kannada, ETV-Oriya, ETV-Telegu, ETV-2, Colors, MTV, VH1 and Nick; web content properties such as moneycontrol.com, ibnlive.com, and firstpost.com; as well as magazines like Forbes India under a single umbrella of ownership and control. (For a complete list of media properties held by Reliance currently, scroll to the end of this article.)
What does it mean?
It means, big media has become more powerful, and therefore, more dangerous. By further undermining pluralism in media, the takeover raises serious questions for the freedom of expression and for the freedom to receive information in India. Consolidated control of media means fewer platforms to air a distinct point of view: If all media channels are held by one entity, one will hear the same kind of news and content on all of them. Differing viewpoints of the same event will not be visible or audible simply because there will not be a platform which allows their broadcasting. We will never get to hear the other side of the story. These invisible and inaudible interests will then be neglected, boycotted, portrayed only in colours in which owners of consolidated media see them.
What does all this imply for our everyday lives? Reliance is a corporate giant with its activities covering everything from defence, spectrum and telecom to gas and retail. In the run-up to the last elections, the way in which Reliance conducts its business has also been a topic of political discussion in the public sphere. The Aam Aadmi Party has raised charges of “crony capitalism” against Reliance concerning its activities regarding gas pricing. This is compounded by Reliance’s consistent history of going after anyone who raises questions about its business ethics with vigour. Case in point Paranjoy Guha Thakurta whom Reliance has sued for Rs. 100 crore on defamation charges for critically analysing Reliance’s gas business in his book Gas Wars. Reliance has also sought to remove the book from bookstands by sending legal notices to Amazon and Flipkart for selling the book. In the 1980s, Reliance sought to ban The Polyster Prince, a biography of Dhirubhai Ambani, in India. A sincerely disturbing news article reported recently how Reliance is already interfering with editorial content, IBN journalists have been directed by the now pro-Reliance management to cover news about itself and about Aam Aadmi Party: less coverage for itself, less coverage for Aam Aadmi Party. Which means we are more unlikely receive an unbiased coverage of differing social, economic and political voices across the country. We are more unlikely to have information which will enable us to make informed political choices. And we are more likely to blindly resent, oppose and treat as unreasonable enemies, people who stand different from what the big man’s media is endorsing. Loss of pluralism in media always has implications beyond the media itself. As Chimamanda Ngozi points out, there are many dangers of a single story.
What does Indian law say about media pluralism?
Recognising the importance of pluralism in media, some 18 years ago, the Supreme Court declared plurality of voices in media to be an integral part of the Right to Freedom of Speech and Expression enshrined in our Constitution. In Ministry of Information and Broadcasting v. Cricket Association of Bengal and Anr., it observed:
“…One-sided information, disinformation, misinformation and non-information all equally create an uninformed citizenry which makes democracy a farce when medium of information is monopolised either by a partisan central authority or by private individuals or oligarchic organisations… Hence to have a representative central agency to ensure the viewers’ right to be informed adequately and truthfully is a part of the right of the viewers under Article 19(1)(a).”
This logically means that any effort to erode the plurality of voices in media will be a direct violation of Article 19(1)(a) of the Constitution which ensures right of viewers to receive information, apart from protecting their freedom of speech and expression. In other words, pluralism in media is a Fundamental Right of Indian citizens.
The question which then arises is how can one ensure plurality of voices in media? In the above excerpt, the Supreme Court recognises the right to access content from “a representative central agency” or a public broadcaster, as an important aspect of Article 19(1)(a). But is access to public broadcasting enough to ensure media pluralism? The Supreme Court does not express an opinion on this question, and hence it remains an open one.
Two approaches to media pluralism
Across the world, plurality in media ownership has become a growing concern since the 1990s, when digital technologies used on large scales enabled the convergence of media. Laws and policies to ensure plurality in media ownership consequently have emerged in several countries, based on different philosophical understandings of pluralism in speech. These may be divided into two broad approaches to media pluralism:
(a) The Marketplace of Ideas Approach
The marketplace of ideas approach treats pluralism in speech as an outcome of lack of restraints on speech. This approach likens freedom of speech to the economic idea of a free market, to hold that like in a free market, nobody’s speech should be restricted. In other words, minimum restraints by the State leads to maximum freedom of expression for plural citizens. This libertarian approach was famously summarised by the American Supreme Court in Buckley v. Valeo, to first strike down campaign finance regulations: “the concept that government may restrict the speech of some [in] order to enhance the relative voice of others is wholly foreign to the First Amendment.”
No interference by the State in freedom of speech is the more traditional version of the Marketplace of Ideas Approach. A more tempered version may be found in the understanding that as long as a competitive, and not monopolistic marketplace of ideas is fostered, freedom of speech will be ensured.
(b) The Regulatory Approach
The Regulatory Approach recognises that in a marketplace, one person’s voice can be louder than another’s. Consequently, it focuses on fostering conditions in which different voices can be equally heard. This approach to plurality, would of course, mean that State regulation stands in place to ensure that each voice is equally heard. Justice Mathew in his dissenting opinion in Bennett Coleman v. Union of India endorsed this position, holding, “It is no use having a right to express your idea, unless you have got a medium for expressing it.”
It is interesting to contrast the two approaches because while one suggests that less regulation produces pluralism in media, the other suggests that pluralism in media can only be ensured by a certain amount of regulation. The two approaches then seem to work towards the same outcome via methods completely opposite to each other.
The question that has the ability to resolve this seeming paradox, is of course: Which approach is actually more efficient in producing pluralism in media?
So where does competition law step in?
The marketplace of ideas approach argues for promotion of low barriers to entry in the market for promotion of plurality. It says that plurality in media will be ensured if everyone is allowed equally easy entry into the media market. Equally easy entries into markets are the consequence of competition a la free markets, and therefore, competition law becomes the way to ensure plurality in media according to this approach. The resolution of the question, which approach is more efficient in producing pluralism in media, will then depend on whether competition law can ensure pluralism?
Competition law in India, in fact, did have an opportunity to intervene in the Reliance-Network18 combination. At the time of acquisition of Reliance’s media properties by Network18 in 2011, the Competition Commission of India was notified, so that it could scrutinise the acquisition on grounds of whether it creates an unhealthy undermining of competition in the media industry. Together, the acquisition would result in Network18 owning 13 TV news channels, 22 entertainment channels, 18 websites and 3 magazines in 11 languages. One would expect that such a large share of media ownership in the country would have sounded loud alarm bells on the desks of competition authorities. But apparently not, because it was easily approved being competitive enough.
In the Reliance-Network18 takeover order by the Competition Commission of India both horizontal and vertical consolidation in media were approved by approval of the combination.
Horizontal consolidation refers to consolidation of ownership at the same stage of media production: The consolidation of several TV channels under a single ownership umbrella would be an example. Vertical consolidation refers to consolidation of ownership at different stages of media production, for example, consolidation of ownership of a TV channel and a cable network which will deliver that TV channel to your home. The Reliance-Network18 combination resulted in single ownership of a number of TV channels—both national and regional; as well as in the single ownership of TV channels and Infotel, the Reliance-owned distributor on the 4G network.
Issues regarding Horizontal Consolidation
The Reliance-Network18 combination consolidated several TV channels like CNBC-TV18, CNBC Awaaz, CNN-IBN, IBN7, IBN-Lokmat, ETV-Rajasthan, ETV-Bihar, ETV-Uttar Pradesh, ETV-Urdu, ETV-Marathi, ETV-Bangla, ETV-Gujarati, ETV-Kannada, ETV-Oriya under the ownership of a single firm. Why was such large-scale consolidation not seen as a threat to competition in the Indian media market? It was because the Competition Commission of India (CCI) in its Order, distinguished the markets in which TV channels operated by Reliance and those operated by Network18 existed. It noted as follows:
“It is observed that the business of supply of television channels in India is featured by the presence of significant number of broadcasters operating across various genres targeting national and regional audience/viewership. The television channels operated by RIL Group primarily target regional audience/ viewership, whereas the television channels operated by Network18 Group are targeted towards the national audience/viewership except IBN-Lokmat.”
Apart from distinguishing markets on the basis of the kind of viewers targeted (regional or national), the CCI also distinguished the markets in which the said TV channels operated on the basis of genre of language. Accordingly, the CCI observed:
“The television channels operated by Network18 Group and RIL Group could be further distinguished from each other on the basis of genre and language. Both groups operate regional Marathi television channel whereas ETV-Marathi operated by RIL group is a Marathi general entertainment television channel. IBN7 of Network18 Group and ETV-UP, ETV-MP, ETV-Bihar and ETV-Rajasthan of RIL Group operate in Hindi news space which is characterised by the presence of other known channels like Aaj Tak, India TV, NDTV India, Star News and Zee News. Though both the groups operate Hindi news channel, IBN7 target national viewers/audience whereas the Hindi news channels of the RIL Group target regional viewers/audience. Moreover, the combined share of IBN7, ETV-UP, ETV-MP, ETV-Bihar and ETV-Rajasthan in the total viewership base for Hindi news channels is also not significant.”
Given that IBN7 alone has 14% of the Hindi news viewership market share, it is difficult to see how the combined share of IBN7, ETV-UP, ETV-MP, ETV-Bihar and ETV-Rajasthan would be “not significant.” Moreover CNBC-TV18 has a 56% viewership share in the business channel market, and CNN-IBN has a relative market share of 27.5% in the English news channel market. These figures are certainly not insignificant.
But it is through the process of distinguishing markets on the basis of language, genre and nature of viewership that the CCI comes to the conclusion that the viewership share held by each channel in its narrowly defined market is “not significant.” Consequently the CCI does not even see the need to comprehensively determine the relevant product and geographic market in respect of television channel supply to understand the dominance of these channels in their respective relevant markets. CCI forgoes an economic analysis of the TV channel market in India on the basis of some general remarks regarding Reliance and Network18 channels which lack empirical backing, to say:
“In view of the foregoing, the proposed combination is not likely to have adverse effect on competition in the business of supply of television channels in India and for the purpose of the present notice, specific determination of relevant product and geographic market in respect of supply of television channels in India is not necessary.”
Issues regarding Vertical Consolidation
Apart from horizontal consolidation, the Reliance-Network18 combination also integrated distribution networks with content, resulting in vertical consolidation. Under the combination, the ownership of Infotel, which proposes to launch broadband services including IPTV using 4G technologies is integrated with several national and regional channels as discussed above. An agreement between Infotel and Network18 Group also provided for Infotel’s preferential access to the programming and digital content of all the broadcasting channels and other content of the Network18 Group.
Competition laws are much harder to enforce in cases of vertical consolidation because products and services in different stages of media production (eg. news channels, and cable networks) can be easily distinguished as belonging to two different markets which are not substitutable with each other. However, the grant of preferential access to the distributor, Infotel to Network18 content is a potential spell for curbing of competition in the distributor market. This is because in such a case, other distributors may not be able to have equal access to Network18 content and thus, may not be able to compete on equal terms with Infotel.
The CCI foreclosed this argument by saying that Infotel’s preferential access does not give it an elevated position in the distribution market because of “the intrinsic open access characteristic of an ISP” and that firms on platforms apart from 4G will nevertheless be able to access Network18 content. It said:
“The agreement between Infotel and Network18 Group for Infotel’s preferential access to the programming and digital content of all the broadcasting channels and other content of the Network18 Group could be viewed in the context of the intrinsic open access characteristic of an ISP and the fact that players on other platforms will not lag behind, thereby providing competition.”
It is interesting that while the CCI distinguished markets of the TV channels owned by Reliance and Network18 while considering the issue of horizontal consolidation, it chose to treat the 4G and IPTV market covered by Infotel, and other distribution channels like cable, MSOs, and DTH as one single market to illustrate that access to Network18 content would still be available to all. Such seemingly arbitrary delineation of markets to justify the Reliance-Network18 combination is questionable.
The other justification for competition being preserved even after the combination provided by CCI was that the preferential access agreement with Infotel does not prevent Network18 from licensing its content to other network operators. The CCI stated:
“As per the details provided in the notice and the additional information provided by IMT, Infotel’s preferential access arrangement is stated to be on a non-exclusive basis and does not prevent Network18 Group from licensing its content to other network operators, providing internet access services through wire line or wireless network including 2G, 3G and 4G services. Further, Network18 Group also has agreements with various other telecom and value added service providers for making available its content to the subscribers.”
With regard to preferential access to web content produced by Network18, the CCI said:
“The proposed 4G wireless broadband internet services of Infotel could be used to access and view the web content and television channels operated by Network18 Group as well as other web content. Network18 Group operates various web portals that could be accessed through various internet access services through wire line or wireless network including those using 2G, 3G and 4G technologies.”
The argument that since the agreement for preferential treatment is non-exclusive, it would not affect competition in the market, fails to take into account that other distribution firms may have to pay more to access the same preferential treatment from Network18. Additionally, concerns regarding potential violations of net neutrality begin to emerge: Preferential distributors might provide access to Network 18 content on a faster track than other distributors, thus holding an undue advantage over other distribution firms, as well as the slowing down of content apart from Network18 on their own networks.
Overall, the CCI justified that the combination would not affect competition in the market by citing that the 4G ecosystem was young as of now, and that as more players emerge, any advantages arising from the vertical consolidation will be mitigated:
“It is observed that the market for broadband internet services through 4G technologies in India is at nascent stage and the players operating in 4G ecosystem are in the process of developing viable techno-commercial market and related ecosystem.
In view of the fact that there are other content providers, either existing or potential, who in time will be able to provide content through other ISPs, including players offering 4G services, and may even use new and more competitive models, the potential competition concerns, if any, that may arise from the vertical arrangement get mitigated. Moreover, for content providers it will be more desirable to have presence of various delivery platforms to access a larger market for increased revenue.”
On the basis of these arguments, the CCI observed that the Reliance-Network18 combination was unlikely to affect competition in India.
Is competition law efficient in ensuring media pluralism?
As we have seen, the CCI failed to prevent the Reliance-Network18 combination to ensure media pluralism. But can the failure of the CCI be equated to the failure of competition law? One obvious answer is yes, because the CCI is after all, a part of the competition law ecosystem. But one also might distinguish the two by arguing that CCI failed to apply competition law appropriately, and preserve adequate competition in the market in this case.
Many critics of this approach have however pointed out that competition, while, correlated with pluralism, does not cause or lead to pluralism. This is because the objective of competition law is to merely ensure that competition prevails in a given market, including media markets, but not to ensure that the plurality of voices also exists. Competition law, for example, only addresses the abuse of dominant positions, but does not prevent the creation of dominant positions themselves. Plurality in media, on the other hand, would depend on demolition of dominant voices in the media market altogether. The objectives of competition and plurality therefore may not always align.
In the Reliance-Network18 combination, this lack of alignment comes to the fore when the CCI uses language and nature of viewership to distinguish between different TV channel markets. While such distinction might make sense when trying to preserve competition in relevant markets, it becomes pretty unreasonable when trying to preserve plurality in a media market. Consider a person who speaks English and Kannada and watches news on CNN-IBN and ETV-Kannada. Suppose she gets x piece of news from CNN-IBN. She is sceptical about the veracity of this x. Maybe she thinks there are other perspectives to this x, which have not been covered by CNN-IBN. So she turns to ETV-Kannada to see if they have something different to say to x. In such a case, this person will be using ETV-Kannada to corroborate whatever she heard on CNN-IBN, even though each channel belongs to separate language markets.
The assumption in competition law that CNN-IBN and ETV-Kannada constitute separate markets becomes irrelevant when addressing questions of plurality of media. Because the same person is likely to consume both and get same information from each, such a scenario becomes problematic for media pluralism, but not for competition law.
That competition law is not efficient enough to preserve the plurality of media, therefore, needs to be recognised. TRAI has already come up with recommendations concerning prevention of undue concentration of media ownership. These and other such suggestions need to be urgently deliberated upon in the public sphere so that additional regulations on media ownership, to specifically protect plurality in media, may be placed.