You’d probably make more money in a fixed deposit than a news channel

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Wait. No one watches the news? Then why are there so many news channels. The writer of a new book on the industry explains the real reason these channels are launched.

As a genre, news attracts just about 7 percent of viewership in India and one-fifth of television advertising.Yet, almost half of over 800 licensed TV channels in the country are news channels, and one-third of these beam 24-hour news.This is a bizarrely high ratio compared to other countries. Especially so when everyone in the industry agrees that news channels have turned into financial black holes and enjoy a negligible market share. Yet, more and more news channels keep getting launched and more and more money keeps getting pumped into them. Why?

The hard truth is that hardly any news channel in India makes money. With the exception of a handful of channels, most news channels have never made any money across their whole life cycles. Financially, the business of TV news is so broken that if you were to invest your money in a fixed deposit, you would probably make more money than if you invested it in a news channel. As filmmaker Prakash Jha, who started Maurya TV in Bihar, told an interviewer, “I was crazy to have entered the media business. It was the love for my state that inspired me to launch the channel. But I am bleeding right now. My revenues don’t even cover one-third of the cost of running it.”Jha himself fought an election in 2009, of course, and Maurya TV was eventually sold. In early 2014, Zee Media relaunched it as Zee Purvaiya in Bihar and Jharkhand.

Three kinds of people have invested substantially in news television in the past decade: politicians, real estate, chit fund and money market companies and large corporations. This trend is now so pervasive that these three categories of owners now have deep stakes in the majority of the news TV business in most Indian states. My research shows that between them such companies make up over 80 percent of the news TV business in Andhra, Karnataka and Odisha and around 60-70 percent in Punjab, Maharashtra West Bengal, Tamil Nadu and the north-east. A decade ago, only a handful of states like Tamil Nadu had channels like Sun TV or Jaya TV, which were basically set up as propaganda arms of rival political parties. Now, this is the norm across India.

The first lot, politicians, got into the business for obvious reasons, mainly to gain a fixed platform to relay their messages to voters. In Andhra Pradesh, only two or three of the fourteen news channels are not controlled by politicians or their proxies. The growth in news channels is not being driven by companies looking to create new platforms for objective, serious coverage but by power players looking to spread their own propaganda and their own views. From Sakshi TV of Jagan Reddy of the YSR Congress to Captain TV of the Tamil actor Vijaykanth, it is now almost an unwritten rule in politics for new entrants to announce their arrival by first launching their own TV channel.

By itself, this should not necessarily be a problem. Politicians have as much of a right to free speech as everyone else and, in theory at least, each propaganda voice should cancel each opposing voice out. The trouble is twofold. First, it completely loads the democratic field in favor of those political players with access to big under-the-table funding and drives out less wealthy players. Second, the easy money that politicians have brought into the game has completely distorted the market and is virtually driving out all serious, neutral players out of it. In a market where virtually no one made money anyway, the arrival of new rivals abuzz with wads of fresh cash and no need to meet bottom lines can only squeeze out genuine players or force them to make dubious alliances to survive.

This partly explains some the alliances made by Zee and this is also why many serious institutional investors, with no political axe to grind, are now reluctant to invest in the news business. Some of those that did invest are getting out.

As one such investor, who had invested heavily in the news TV business in Andhra, told a newspaper reporter: “What began as an opportunity has become a liability. There are too many news channels in the market, mostly run in an unprofessional manner by owners who have interests beyond media.”And there is, of course, the obvious question of what happens to news when “politicians convert the newsroom into their party office”, as one news editor put it?

Importantly, it is not just about owning networks. One of the least analyzed ways through which politicians control the news is by controlling cable operators. States like Chhattisgarh and Punjab have evolved their own model where television is controlled by the ruling party through its own private TV networks, as well as a cartelization of the cable industry. In Chhattisgarh, for example, broadcast journalists encountered a very peculiar kind of censorship during the run-up to the state’s first election in 2003. Every time any of the news channels broadcast a news item that was even mildly critical of then chief minister Ajit Jogi, it was blanked from the air. Chhattisgarh viewers watching that particular broadcast would suddenly find their television sets going blank and the transmission would return only fifteen minutes or so after the offending news story was over. This unannounced censorship would happen only within the territorial boundaries of Chhattisgarh and television viewers in the rest of India did not encounter this problem at all. This was because supporters of the chief minister had set up a statewide private television network, Akash TV, that bought over, or took control of, cable distribution networks across Chhattisgarh and this provided an easy mechanism for controlling the broadcast of national news channels within the state’s borders. The national networks could be turned off each time their news reportage did not suit the ruling establishment. It was an ingenious form of censorship: it wasn’t officially announced, it technically did not come from the state and there was nothing any of the channels could do about it.The uses, or misuses, of Akash Television became an important part of the BJP’s electoral campaign against Jogi in 2003 and within hours of his losing power on 4 December, its television studios were taken over by a triumphant crowd of the party’s supporters.

Similarly, in Punjab, the first thing that the Badal family did on first returning to power in 2007 was to start their own PTC television network (owned through a complex web of companies) and take over control of cable companies which distributed television. In August 2007, the Cable Operators Federation of India complained to the Ministry of Information and Broadcasting of physical threats and arrests of cable operators in the state. Like Jogi in Chhattisgarh, Sukhbir Singh Badal, president of the Shiromani Akali Dal denied the charges but the parallels were undeniable.

Before the Akalis came to power, the Congress chief minister Amarinder Singh, had patronized the Punjab Today channel. Within hours of his losing the election in 2007, this channel went into oblivion and many cable operators in the state were forced to replace it with the new Akali-friendly channel PTC on their prime frequencies. Detractors complained that any channel that broadcast anti-Badal stories would be blanked off. As one cable operator from Patiala said after being released from prison on charges of violence, “This is state terror being used against us and the police are being used freely and scores of false cases are being filed.”

By mid-2013, things had reached such a pass that when the managing editor of the Punjab news channel Day and Night News resigned; he did so after publicly blaming his channel’s financial problems on a “powerful political entity in Punjab”, which aimed at snuffing out “fair and free journalism”. In a speech to his employees on YouTube, he sarcastically congratulated the politicians and “a group of news and entertainment channels… behind the cartel that controls the cable network in Punjab” for succeeding in driving them out. In his view, Day and Night News failed financially because the dominant cable company in the state, Fastway, which controlled 85 percent of subscribers, had been “abusing its dominance to deny us access to the Punjab market”.This was not just an empty accusation; it was also upheld by the Competition Commission of India, which a year earlier had imposed a hefty fine on the cable network for denying access to Day and Night News.Yet, the end result was that the news channel was driven to the ground.

Power and television were intrinsically combined in this Punjab model. The PTC network became popular not just by forcing cable operators to relay it, but by getting the rights to broadcast live daily gurbani from the Golden Temple overnight. These rights had been sold to another channel, ETC Punjabi, for eleven years but were transferred in deal with PTC overnight once the Akali Dal came to power. Along with this, despite being so new, PTC received a large amount of state advertising – Rs 78 lakh in its first year of operations – from a government controlled by the Badal family. Badal has denied allegations of favoritism but other channels seem to have got similar amounts only over five years. The Competition Commission of India ultimately registered a case against the cartelization, calling it an “unfair trade practice”. Similarly, there were over twenty cases being examined by TDSAT and TRAI.Yet, Congress accusations against the Akalis of cable control sound hollow, as they had done precisely the same thing when in power.

India is not the only country where television censorship has been practised indirectly through control of cable distribution networks. It is widely documented that during the path-breaking civil rights movements of the 1960s in the American South, most of the local press and television stations did not report the news of protests against racism accurately because of their owners’ opposition to racial desegregation. They would often completely ignore coverage of the civil rights movement and sometimes black out – citing technical problems – telecasts by the national networks that focused on the issue. The best example is that of the local television station WLBT in Jackson which would occasionally interrupt the NBC’s national flagship news program, The Huntley Brinkley Report, when it was covering civil rights. Sometimes, prior to news reports on the Today Show, a WLBT announcer would warn, “What you are about to see is an example of biased, managed Northern news. Be sure to stay tuned at seven twenty-five to hear your local newscast” – which naturally would either not include the undesirable news about the civil rights protests or slant it with its own bias.

The case for politicians is simple enough. Yet, it is the capture of news television by big corporates and businesses as well as the real estate and chit fund kinds of financiers that complicates the picture far more. Their dominance of the news space and the influence it gives them tells us a great deal about the new power structures of India.

Again, it is important to stress that there is nothing abnormal about businesses owning the news: somebody always pays the bills and business houses and news have always been intertwined the world over. Within India itself, some of the biggest newspapers have always been owned by industrial barons with deep pockets and multiple interests in other sectors – the Birlas with Hindustan Times, the Jains with The Times of India, the Goenkas with The Indian Express and so on. What is striking is the kind of businesses that have recently been getting into TV news in India and their similarities.
The first kind comprises companies with interests in real estate: construction, housing development, hotels, infrastructure. A large number of them also run chit funds and collective investment schemes.These are businesses which require either a great deal of political patronage, as anything to do with land in India does, and also generate a great deal of black money. “Ab to builder chala rahe hainews channels”, builders are running news channels now, observes Arun Jaitley, now Union finance and information and broadcasting minister in the Modi government. This has serious implications for what the channels actually show. As Jaitley explained to me in an interview before his party came back to power in Delhi: “The economic model of news channels is still not adequate. Therefore – barring a few channels, or some channels which have a very large regional base, and a handful of national channels – news channels per se are not a profitable business. In fact most of them are making losses. That compulsion is pushing the concept of paid news and some recent cases are far more disturbing than even paid news.”

For many of these channels, the boundaries with politics are often so porous that they are almost impossible to map. “A news channel is a useful asset. It brings influence and access, and opens doors in politics and in government,” says one senior television manager. “A news channel is relatively cheap to launch, can further your business interests and also give you bragging rights.”

With technology getting cheaper, it is possible to set up a very basic, small, functioning channel with capital expenditure of Rs 50-60 lakh (excluding licence fees), and run it on a bare shoestring budget of Rs 1.5-2.5 crore annually. Of course, serious news channels cost a great deal more to run, some more than thirty times as much. But these are the average running costs of many functional local news channels in Punjab, for example. “It is that cheap,” says one channel head.

For many businessmen, the driving force seems to be ego as much as political influence. As one consultant who specializes in setting up these small regional channels told me, “Many of these investors have a keeda [literally, an insect; colloquially: an itch]. They are all dying with ego [sic]. It is not much money and they run a news channel like this for 2-3 years, finish their shauk [fad], then sell it forward to the next guy. It also brings them many other benefits in their business, like in real estate.”

The cost dynamics are entirely different in south India, where production values are generally higher and average capital expenditure on launching a news channel can be anything between Rs 10 crore to Rs 50 crore (not counting license fees) and average annual running costs are estimated to be well over Rs 20 crore. Much like the politicians, a lot of people invest in the news business because they see it as a tool for furthering their other interests.

As one senior executive who headed a TV channel launched by a real estate company told me: “Soon after I joined, there were elections in Uttar Pradesh. I was busy launching our channel in north India but found that my owner was doing all kinds of deals with candidates about coverage and a lot of money was flowing in without any accounting. They were even going to launch an IPO and I had to sign some papers. I showed them to my lawyer first, and he said, ‘If you don’t want to go to jail, don’t sign this.’ I resigned the next day.”


This is an excerpt from Behind a Billion Screens: What Television Tells us About Modern India by Nalin Mehta, published by HarperCollins. (312 pages, Rs 699.)

Nalin Mehta is an award-winning social historian, columnist and writer. He is currently associate professor, Shiv Nadar University; consulting editor, Times of India, and editor, South Asian History and Culture (Routledge). He tweets as @nalinmehta and his website is www.nalinmehta.in.





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