Exclusive | Whats wrong with big corporate's investing in media companies?

Not long ago there were reports of Reliance Industries taking up an equity stake in TV18 Networks and very recently there has been news about the Aditya Birla group taking up a stake in TV Today of the India Today group. The question that everyone seems to raise is should a large corporate group as mentioned invest in a media company or rather own it.  A first answer that comes to mind is what’s wrong with investing in media companies?

 

From a perspective of investment in a business, there is nothing that stops a corporate from investing and owning media companies. It gives cash strapped broadcasters a new lease of life if the current owners can get that much needed funds by parting with equity stake. If it is a pure investment, it can be a better option than a total sell out for they will still be running the show and be able to do honest and unbiased news reporting, .

 

However the concern today is that it is not just a pure investment. Corporates tend to control media companies and in that case such an investment offers a much-much more leverage or influence than just profits. It enables large corporate to influence policy making and lobbying propaganda and even intensify the same by building public opinion.

 

The broadcasting business by its very nature is a money guzzler. It takes many years and a lot of investment in infrastructure before they start to generate positive revenue streams. It is to an extent true that with digitization, broadcasters’ revenue will grow with time. But for big corporate who are already earning in thousands of crores every year, an addition of a couple of hundred crores to their overall profit are nothing more than peanuts. Say for instance, what difference will an Rs 200 crores profit from broadcasting business make to RIL kitty which has profits in thousands of crores every year.

 

So it is more of a case to leverage. There is one another point of note. We all know how prestigious in society it is to be an owner of a media business. People sit and look up. It is also easier to deal with government agencies when crisis situations arise. Also having a media business in the fold acts for the corporate house’s benefit when trying for various permissions to venture into other sectors for it can be a deterrent for any government agencies it tries to delay or deny permissions.

 

We should not worry too much about plugs and story spins or stories being stage managed. That is already happening now as well. So if a viewer feels too much of that is happening or blowing your own trumpet is the case with a particular channel, he  or she can simply switch off the channel. With the fierce competition amongst channels, this is bound to be limited. On the other hand channels can be assured of successful corporate managements helping them out in turnaround and of good in-house advertising business from corporate owners or their flagship companies. On a constructive side then channels can help smaller businesses with economical advertising options on their channels – something in the nature of private treaties.

 

Whatever maybe the scenario and the related concerns, there is nothing wrong per se if corporate take media ownership and want  to own a mouthpiece.