Trai’s crossholding norms may lead to restructuring in TAM

Soma Das
Posted: Friday, Aug 01, 2008 at 2347 hrs IST
Updated: Friday, Aug 01, 2008 at 2347 hrs IST

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New Delhi, Jul 31: In the event of the Telecom Regulatory Authority of India’s (Trai’s) recommendation on crossholding in TRP business getting a nod from the government, the largest rating agency in the country by market share, TAM Media Research Ltd, may have to look at restructuring its ownership pattern. Trai, in its recent recommendation on TRP, has held that there should be no crossholding between the rating agencies and the broadcasters, advertisers and the advertising agencies.

Further, to curb monopolies and foster healthy competition among rating agencies, Trai has also inserted a clause among its recommendations that no single company/ legal person, either directly, or through its associates, shall have substantial equity (more than 10%) holding in more than one rating agency. This is in tandem with the regulatory framework in the telecom space, where a service provider is not allowed to hold over 10 % stake in a competing company within a circle.

The present ownership structure of TAM Media Research Ltd comprises a 50-50 joint venture between AC Nielsen and IMRB International. If the first recommendation gets the approval without any modification by the ministry of information and broadcasting (I&B), TAM Media Research would have to recast its equity structure as IMRB International is a market research wing of J Walter Thompson (JWT)—a leading advertising agency in the country, one of the stakeholders and a client of rating agencies. JWT belongs to the Kantar Group, a part of WPP Group (the largest advertising group in the world). The other partner, AC Nielsen group, provides television audience measurement services in 42 countries worldwide and other related services, including consumer-related and business media-related services.

In other jurisdictions, rating agencies are involved in providing a range of media and other services like services relating to media, consumer, business services, and technology, health care etc, noted Trai. The regulator has also recommended that the ownership pattern of rating agencies, including foreign investments, joint ventures, associates in the agency, be reported to the government on an annual basis and changes, if any, be reported immediately.

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