Photo: Indranl Bhoumik/Mint
Photo: Indranl Bhoumik/Mint

A surrogate media ownership

As media ownership gets more varied and colourful, it has become the one governance issue crying out for more transparency

Governance issues get a lot of airing at election time. But what’s the right season to focus on media governance? There isn’t one apparently. The media doesn’t think it is necessary to discuss it at all, and the current government is unenthusiastic about throwing its weight behind regulatory issues that the Telecom Regulatory Authority of India wishes to confront media houses on. Such as sticking to limits on advertising minutes per hour, or norms governing media ownership.

As media ownership gets more varied and colourful, it has become the one governance issue crying out for more transparency. Token rules exist for both the print media and television: there is a Form IV declaration that all publications are required to publish once a year. It stipulates naming all those individuals and companies holding more than 1% stake in the ownership of that publication. What it does not require to be declared is what percentage of stake those parties hold. So you cannot judge whether any of the declared owners has controlling shares.

Where television channels are concerned, the ministry of information and broadcasting requires declarations of ownership in its uplink and downlink permission guidelines. But these are for its own edification. There is no requirement of a public declaration in this regard on a channel’s website. It is only the listed media companies that have to make ownership details public. Neither set of requirements ask for groups of companies investing in a media house, rather than individual companies, to be disclosed.

The majority of media companies are unlisted, and while you can get their ownership details from the database of the Registrar of Companies, it is not easy. The penalty for not updating information is just a few hundred rupees, so they are often not updated.

Then we get to surrogate ownership. While there is a fair amount of that, nobody knows just how much. It is fascinating to look at the intricacy with which this is done in the latest case which has come to light. Journalist Paranjoy Guha Thakurta has reported the case in detail on the website I edit. It concerns Reliance Industries Ltd’s (RIL’s) group companies and their complex web of investments in the companies that launched the media group called 9X and the news channel called NewsX in 2006 and 2007 (see

Inspectors of the Serious Fraud Investigation Office (SFIO) of the ministry of corporate affairs apparently stumbled upon media-related investments that seemed fraudulent while conducting other investigations (the term they use in their report is “sham transactions") and set about unearthing intricate details of a deal, complete with flow charts, to establish how the original news media company floated by Peter Mukherjea and Indrani Mukherjea in 2006 was actually a front for RIL’s companies, and how the front end of the ownership changed later with the news media-related company acquiring another set of apparent owners in 2008-09.

SFIO is purportedly hands-off territory for the press. The gatekeepers are flummoxed when a journalist wants to sign in. But the media is not allowed here, they tell you. If even so the investigations were leaked, was it because of frustration? Dogged hard work has gone into establishing something that the government perhaps does not want to pursue at all, particularly in an election year.

According to the report of the investigators, which was submitted to the Supreme Court on 11 November by the Centre for Public Interest Litigation (CPIL), there is also a foreign direct investment (FDI) angle to the surrogacy. Entertainment company 9X had multinational investment firm New Silk Route as an investor. To have 9X and NewsX as linked companies would have violated the FDI restriction on foreign investment in news channels.

In its report, SFIO recommends prosecution of the directors of the various companies involved. Well-known journalists figure there. The covering letter of the detailed document lists four matters in which they have come up with charges after investigation. Three relate to media companies: the NewsX sale, the Eenadu sale, and a case relating to lobbyist Niira Radia’s company Neucom Consulting Pvt. Ltd, which was involved in providing media-related services. The papers relating to the Eenadu sale have not been made available by CPIL.

Once it was submitted in the Supreme Court, CPIL helpfully despatched the documents to several journalists on their list. Before this, they were leaked to two media houses that I know of; neither of those used them.

An earlier instance of surrogate ownership involved Eenadu and RIL, and came to light once the latter formally declared investment linkages with both Eenadu TV and Network18 in January 2012. After the central government blocked clearance of an FDI investment by Blackstone Group Lp in Eenadu, banker Nimesh Kampani stepped in with an investment of 1,200 crore in the company which publishes Eenadu, Ushodaya Enterprises Pvt. Ltd. This was in 2008. Later, with the January 2012 acquisition of the debt of Network18, it was widely reported that Kampani had fronted for RIL’s companies when he invested in Eenadu in 2008.

If one runs through the list of media companies ostensibly owned by politicians, hardly any of them have direct links with these individuals, going by information filed with the Registrar of Companies. Former Andhra Pradesh chief minister late Y.S.R. Reddy’s family is an exception. The investment is usually through front companies.

Here then is a media governance issue that is ripe for regulatory intervention. But the media is in no mood to make an issue of it, so the government of the day will probably look the other way and let SFIO cool its heels.

Sevanti Ninan is a media critic, author and editor of the media watch website She examines the larger issues related to the media in a fortnightly column.