It was time to rejoice for many in the print media. Finally, the print media was set to enjoy the fruit of liberalisation, despite stiff opposition from some of the big publication houses and political quarters. Completely taken by surprise by the sudden announcement, media planners and even foreign newspapers with India interest wondered what triggered the move now. Particularly as a foreign journalTimehad just created a stir with its controversial story on Prime Minister A B Vajpayee.
Brushing off the impact of the Time story as insignificant, Information and Broadcasting Minister Sushma Swaraj said: Its too small a thing to have any influence on government policies. Point taken. Ms Swaraj, who had way back in 2000 indicated that the government may consider foreign investment in print media, had been able to deliver at last. The opposition from the parliamentary standing committee headed by Somnath Chatterjee, examining the issue, notwithstanding.
News and current affairs publications can have up to 26 per cent foreign direct investment (FDI), and non-news and non-current affairs journals have been allowed 74 per cent foreign investment. Foreign institutional investors (FIIs) would not be able to invest in listed companies, which are involved in publication of news and current affairs. Therefore, two listed companiesGujarat Samachar and Mid-Day Multimediawhich are in the business of news will not be able to attract portfolio investment. FIIs can, however, invest in non-news and non-current affairs publications.
Concerns and safeguards:
Even as the Cabinet has cleared the I&B ministry proposal on foreign investment in the print media, Congress and Left parties are opposed to the move. Their concern: Foreign powers may take over the reigns in the newspaper business, thereby influencing the readers minds as per their needs. This is despite foreign investment being allowed in most sectors including television broadcasting and Internet businesses, and the overall easy access to any material from the foreign press through the Net.
Anyway, the fears regarding FDI in print are somewhat unfounded as the government has brought in adequate safeguards to ensure that the management and editorial control remain in Indian hands. For that, the government has done a few things, in the case of news and current affairs publications. One, the Indian shareholding should not be dispersed. Two, a single largest Indian shareholder must hold stakes significantly higher than 26 per cent. Also, if the shareholding pattern is to be changed, prior permission of the I&B ministry will be necessary. There wont be any room for post-disclosure.
To ensure that editorial control does not go to foreigners, at least three fourths of board of directors must be resident Indians. Also, all key editorial posts, including the chief editor, must be resident Indians.
Finally, all the applicants credentials would be verified by the Home Ministry. To plug all loopholes, the Foreign Investment & Promotion Board (FIPB) route has been barred for investors entering the news and current affairs business. As FIPB is considered a fast-track clearance route, which may sometimes overlook things, only investors in non-news and non-current affairs publications can take that route.
With all those checks and balances in place, lets look at the positives of having foreign investment in the print media. As a media pundit pointed out, foreign investment in the print media could be one of the biggest things after the software boom. Higher remuneration for journalists is only part of the story that is about to unfold.
Heres a listing of all the advantages that FDI in print can bring. First, the Indian print media world would have access to foreign funds. This would have a direct bearing on the quality of newspapers and journals. With international technology coming in, Indian papers and mags will not only be of superior quality, but also be more efficient. According to global management consultant Dr Raja Shastri, who has international media houses as his clients, better technology would also result in an impetus for the existing players to improve their systems and quality.
Also, as managing director of Current Opinion and Future Trends Praveen Kumar points out, once foreign investment flows into the Indian print media, the number two and number three in the market would have a better chance to compete with the top player.
Among other things, foreign investment is expected to bring in a sound mechanism to evaluate readership, thereby having a major impact on advertising.
Besides, a focus on human resources, almost missing in Indian print media, would come into play once foreign players come to the Indian scene. HR practices would include appraisal system, training and development programmes.
Not only that, smaller vernacular press is expected to get a fresh lease of life by tying up with international media houses, it is felt. On the final count, as Exchange4Media managing director Anurag Batra put it, FDI in the print would be beneficial for everyone in the industry. While media owners would have access to more funds and technology, journalists would learn from the best practices and get better remuneration. Above all, it would lead to knowledge creation, he said.
The new market dynamics are set to shape up latest within one year. According to Dr Shastri, at least one global player would come to India latest by March 2003. Without naming any publications, Dr Shastri said talks for tie-ups between global and Indian media houses would begin soon. Meanwhile, a pink daily has already announced its intention of a tie-up with a leading UK-based newspaper. Others too are in the pipeline.
But a cautious official in a foreign journal mentioned that the media slump around the world has had a major impact on the advertising pie. All news organisations have been squeezed to such an extent that there isnt much elbow room now, he said. Keeping in mind this scenario, huge movements are not expected immediately, he added.
Besides everything else, this announcement is expected to do a world of good to students and the scientific community. Allowing 74 per cent foreign investment in non-news and non-current affairs publications is being looked at as a major boost to this section of the media. One of the immediate goodies coming to students as a result of this decision: access to international publications at a much cheaper cost.
So, its a win-win situation for everyone who has anything to do with the print media. And at a time when its no-holds barred as far as knowledge is concerned, the government decision on foreign investment in the print media is more than welcome.