Mumbai: Continuing to blur the distinction between its news and sponsored content offerings, India’s largest media group by revenue, Bennett, Coleman and Co. Ltd (BCCL), is now entering the public relations (PR) business in partnership with Mumbai-based PR consultancy and advertisi-ng?group,?Adfactors?PR?Pvt.?Ltd.
The new entity, Tatva Public Relations Pvt. Ltd, will be a 33-67% joint venture, with the Adfactors group holding the majority stake. Tatva will manage and build the public image of firms in which BCCL holds equity stakes, people familiar with the development said.
Tatva Public Relations, incorporated with an authorized capital of Rs1 crore, is expected to start functioning from fiscal 2009, beginning April.
BCCL’s executive president Bhaskar Das and finance director Ganapathy Subramaniam declined to comment on the latest business venture, while chief executive Ravi Dhariwal wasn’t immediately available for comment.
Subramaniam is one of the directors of Tatva Public Relations. The other director is Madan Bahal, managing director of Adfactors. Bahal, too, declined to comment citing confidentiality reasons.
According to a memorandum of association signed between the two partners and filed with the Registrar of Companies, the objective of Tatva is “to carry on the business of consultancy in India and abroad in the field of public relations and…to manage and build up public image and reputation of firms, bodies corporate, autonomous corporations and multinational conglomerates, international governments, state and Central governments and other institutions and of any other person, Indian or foreign.”
BCCL, which is closely held, publishes The Times of India, The Economic Times, Navbharat Times, and also owns Internet, television, radio, magazine brands, as well as a host of other related businesses.
It has been a lightning rod, at least in Indian journalism circles, for its mingling of news and paid-for content, though some of its practices, such as forming equity partnerships, are increasingly being copied by other, relatively smaller firms in India.
BCCL started picking up equity stakes in companies in 2004 through its arm, Private Treaties. The deals are similar to private equity deals, but typically, without any direct monetary transactions between two parties. Instead, it involves taking an equity stake in a publicly traded or private company for promoting the “partner” through long-term advertising and other publicity deals using BCCL’s many media vehicles.
The value of BCCL’s equity stake through private treaties in 36 publicly traded companies on the Bombay Stock Exchange, according to the shareholding pattern disclosed at end-September, amounts to Rs1,547 crore, calculated on Friday’s closing price of these stocks. The company owns stakes in scores of closely held companies as described in a 15 January Mint story.
Some industry experts say BCCL’s latest move will heavily blur the internationally respected, well-defined boundary between journalism and PR. “I’ve never heard of anything like this happening globally,” said Meenakshi Madhvani, managing partner of Spatial Access Media Solutions Pvt. Ltd, a Mumbai-based media audit company that measures efficiencies of media agencies and value for clients.
“In other countries, public relations and media are kept far apart for credibility reasons. The Times group has been known to turn convention on its head; you never know where editorial ends and marketing-led content takes off. I believe that the Times would do almost anything to make big bucks,” she added.
Others caution that the credibility of big newspaper brands could take a hit, if BCCL also runs a PR business.
“The moment you link the two (news media and PR), it raises concerns,” said Leo Burnett India Pvt. Ltd’s chairman Arvind Sharma. “We have been hearing about unhealthy influences on the editorial for long. I think a media house owning a PR agency may not have short-term impact. But in the long run, it will erode credibility of the media house.”
BCCL carries significant news and advertising clout in India because its offerings tend to be market leaders in terms of their reach. It is unclear what policies, if any, the company, which has typically brushed off criticism of its journalistic practices, will have in place within its newsrooms on how to deal with public relations pitches from its own agency.
Meanwhile, not everyone in India’s publishing and public relations industry is being critical of a media house formally embracing public relations.
Maheshwar Peri, president and publisher of the Rajan Raheja group-promoted Outlook Publishing (India) Pvt. Ltd, which publishes Outlook, Outlook Money and other magazines on business, travel and lifestyle, says the move formalizes what already happens in the industry. “It’s one of the worst kept secrets of the media business,” says Peri. “Some people do it openly, some (media firms) behind closed doors.”
Even Spatial Access’ Madhvani concedes it makes sense for BCCL to own a PR agency that will look after the interests of its private equity partners. “It is difficult to get rival newspapers to give coverage to BCCL associates (portfolio firms),” she claims. “It would help them break through the resistance posed by other newspapers.”
Adds Sunil Gautam, managing director of Mumbai-based PR firm Hanmer and Partners Communications Pvt. Ltd: “This will help companies that come under Times private treaties, improve their image.”
The Adfactors group, set up in 1981, owns Adfactors Advertising, India’s No. 1 financial advertising agency and one of the top PR consultancy firms, Adfactors.
The other arms of the group are the Chlorophyll Brand and Communications Consultancy, Raka Advertising and Prana Public Relations.
Tatva Public Relations, according to people familiar with the plans, will be run by professionals. Adfactors has started the hunt for chief executive officer of the new venture.
“Tatva Public Relations will have a captive client base—those firms in which BCCL has picked up stakes,” said one person who didn’t want to be identified. “Noneof them currently is Adfactors’ client even though the agency has worked with some of them for one-off deals such as managing their initial public offers.”
One recent example of this is how Adfactors managed the failed public offering of developer Emaar MGF Land Ltd, in which BCCL picked up minority stake prior to the public issue before it opened and was then abandoned by the company on tepid investor demand.
The same person also said besides Adfactors’ expertise in this field, what will attract the “captive clients” to the new PR outfit is “cost-efficient” servicing, for strategic reasons. “It will also help Adfactors increase its market share as it can now offer multiple choices to corporate clients.”
Mint is published by HT Media Ltd, which competes with BCCL in English and Hindi newspapers as well as in FM radio.