In recent weeks, in addition to attracting imitators, BCCL’s treaties have also received growing scrutiny following a magazine article by columnist Sucheta Dalal, who cited an internal email from Rahul Joshi, the editor of The Economic Times, which suggests journalists at BCCL are being asked to provide editorial coverage to treaty clients in a way that enhances “the value of these companies and ToI’s (Times of India’s) investment.”
Other editors, such as the well regarded T.N. Ninan, the editor of the Business Standard, have also previously raised the issue. Ninan wrote about it in the May 2006 edition of India Seminar, a monthly journal published from New Delhi, and, this week, his newspaper wrote a front-page story looking at other media companies, including Dainik Bhaskar and Jagran Prakashan, that are now following suit.
At play are some of the same ethical questions that have long been brushed aside by BCCL executives as just sour grapes from weaker rivals trying to raise issues that readers of Indian newspapers don’t care about:
Should a media company disclose its interest—in this case an ownership stake—in companies that are regularly featured on its news pages, to readers of these newspapers? Are media companies taking enough steps to insulate their news and opinion writing from growing business interests of the firm itself? And, in a market where newspapers are significantly subsidized by advertisers, does it matter whether such conflicts of interests are divulged or not to readers who have been reluctant to pay for what it costs, even if it is only in terms of paper and ink—to produce a daily newspaper?
With such treaties, there is also a lesser known issue of how they do help reduce—in a perfectly legal way—the government’s share of taxes from what has been a booming Indian advertising market, as an equity swap for advertising often results in far less taxes being paid on the firm’s revenues and profits.
Industry reaction, somewhat predictably, is divided along journalism and business fault lines.
“It (private treaties) is the most unethical business practice ever employed by a media company,” says Kundan R. Vyas, chief editor, Janmabhoomi Group of Newspapers, which publishes several language dailies and weeklies in Hindi and Gujarati. Vyas is also a member of the Press Council of India, a statutory and quasi-judicial body that acts as India’s press watchdog.
“It...goes to BCCL’s credit for having devised an ingenious way of building ad revenues,” maintains Ajay Upadhyay, director of MediaGuru, a media consulting firm working with broadcast companies. Still, he adds: “It’s important to make sure that you don’t pump up your ad revenues by lending your editorial space to them.”
Meanwhile, companies such as HT Media Ltd, which publishes the Hindustan Times as well as Mint, Network18 Ltd, which runs channels such as CNBC-TV18, CNN-IBN and IBN-7, as well as broadcaster NDTV Ltd, to name a few, have also set up “ad-for-equity” teams.
According to executives in HT Media and NDTV, each company has already signed some half-a-dozen deals in the past few months.