Wednesday, June 29, 2005
FII Investment in Indian Media: The Trickle that Precedes the Flood?
As a recent article (below) in the International Herald Tribune explains, the Independent Group of newspapers in the UK has acquired a 26% stake in the company publishing Dainik Jagran, India's largest national (Hindi) daily. This follows the recent announcement by the Government of India permitting foriegn investment by FIIs, including NRIs, in domestic media companies (albeit with the existing cap of 26%)- see blogpost.
Indian newspapers are likely to be duly concerned by this development, as it marks the entry of foreign market power into a sector where the creeping influence of commercial interests has been steadily eroding editorial values and quality journalism for almost a decade now. The latest evidence of this process is the Times of India offering even editorial space for a price, to the highest bidders.
What then, might a serious publishing house, such as The Hindu, do to stand up to this challenge? An initial reaction might be to consider opposing this move. The basis of such opposition would be the view that news publication ought to enjoy a 'privileged position' among all other sectors, given that the 'product' is about more than commercial interests; it is about upholding and increasing the strength of democratic institutions (see blogpost). However, this is unlikely to yield any results given that the liberalisation of all sectors of the Indian economy has been steady, like a march to a drumbeat. And given the observation above regarding ToI-induced 'commercial creep' (no pun intended) it was only a matter of time until this happened to the newspaper 'industry' as well. And in another sense, there is some validity to the claim that the government represents the people of India, and hence do its decisions represent the people's preferences (Democracy 101!).
Thus it may well be advisable for those news houses unwilling to yield to commercial crassness to find fellow newsmen and women in foreign lands of a similar dispostition and get into talks with them. A good candidate for The Hindu might be The Guardian in England, another stalwart that has refused to stand down in the face of murderous Murdoch. In a world where advertising profit margins are shrinking and the internet and other digital media are making many news providers redundant, the USP of the newspapers of tomorrow may anyway be to provide succinct yet interesting news analysis. In the path towards such a future, a strategy of cooperation with foreign news media that upholds the values of truth-telling, credibility and authenticity, justice and humaneness is perhaps the best The Hindu could ever find in these troubled times.
IHT Article: Media market lures foreign money
The Indian market is "the new theater of strategic investment," the chief executive of Independent News & Media, Tony O'Reilly, declared last month after the Indian government had approved his bid to buy a stake in one of the nation's leading newspaper groups.
His company, the owner of the British newspapers The Independent and Independent on Sunday and of The Belfast Telegraph, paid $34 million for a 26 percent stake in Jagran Prakashan, a Hindi-language daily publisher and television broadcaster.
O'Reilly's confidence is echoed in other foreign investment in the Indian media industry. The government's recent loosening of foreign investment rules in print and current affairs media has attracted a number of outsiders into India who are eager to capitalize on this growth.
"There has been a huge broadening in the market, both from strategic players and from private equity funds," said Anindya Roychowdhury, associate director of KPMG. "The economy is doing very well, and there is a lot of international excitement about the country. The feel-good factor is back in India."
Sunir Khetarpal at the Mumbai-based investment bank YesBank said that in the past 18 months, foreign interests had invested about $300 million in the Indian media industry, and he forecast a further $250 million in the near future.
"Things are looking brighter and brighter every month," he said. "Every announcement by the government in the last two years has been to deregulate the sector, making it more favorable to foreign investors."
In May, Reuters entered into an agreement with Bennett, Coleman & Co., publisher of The Times of India newspaper, taking a 26 percent stake in a planned English-language TV news channel, which is expected to start this year.
Since foreign investment of up to 26 percent was permitted in 2002, several big international players have come into the Indian newspaper market, attracted by the country's flourishing consumer spending, rising advertising revenue and the large potential readership among the one-billion strong population.
Last June, Pearson's Financial Times paid $3 million for almost 14 percent of Business Standard, the country's second-largest business daily newspaper. Dow Jones last year started its own partnership with Bennett, Coleman to print The Asian Wall Street Journal; and Henderson Private Capital's Asia Fund, a private equity fund, recently bought a $20 million stake in The Hindustan Times.
India's entertainment industry has never been subject to the same regulations as the print and news sectors, and big multinational companies like News Corp. have had a strong presence since the early 1990s. With soaring box office revenue, smaller foreign investors are racing now to buy into the growing multiplex theater business.
Indian newspapers are likely to be duly concerned by this development, as it marks the entry of foreign market power into a sector where the creeping influence of commercial interests has been steadily eroding editorial values and quality journalism for almost a decade now. The latest evidence of this process is the Times of India offering even editorial space for a price, to the highest bidders.
What then, might a serious publishing house, such as The Hindu, do to stand up to this challenge? An initial reaction might be to consider opposing this move. The basis of such opposition would be the view that news publication ought to enjoy a 'privileged position' among all other sectors, given that the 'product' is about more than commercial interests; it is about upholding and increasing the strength of democratic institutions (see blogpost). However, this is unlikely to yield any results given that the liberalisation of all sectors of the Indian economy has been steady, like a march to a drumbeat. And given the observation above regarding ToI-induced 'commercial creep' (no pun intended) it was only a matter of time until this happened to the newspaper 'industry' as well. And in another sense, there is some validity to the claim that the government represents the people of India, and hence do its decisions represent the people's preferences (Democracy 101!).
Thus it may well be advisable for those news houses unwilling to yield to commercial crassness to find fellow newsmen and women in foreign lands of a similar dispostition and get into talks with them. A good candidate for The Hindu might be The Guardian in England, another stalwart that has refused to stand down in the face of murderous Murdoch. In a world where advertising profit margins are shrinking and the internet and other digital media are making many news providers redundant, the USP of the newspapers of tomorrow may anyway be to provide succinct yet interesting news analysis. In the path towards such a future, a strategy of cooperation with foreign news media that upholds the values of truth-telling, credibility and authenticity, justice and humaneness is perhaps the best The Hindu could ever find in these troubled times.
IHT Article: Media market lures foreign money
The Indian market is "the new theater of strategic investment," the chief executive of Independent News & Media, Tony O'Reilly, declared last month after the Indian government had approved his bid to buy a stake in one of the nation's leading newspaper groups.
His company, the owner of the British newspapers The Independent and Independent on Sunday and of The Belfast Telegraph, paid $34 million for a 26 percent stake in Jagran Prakashan, a Hindi-language daily publisher and television broadcaster.
O'Reilly's confidence is echoed in other foreign investment in the Indian media industry. The government's recent loosening of foreign investment rules in print and current affairs media has attracted a number of outsiders into India who are eager to capitalize on this growth.
"There has been a huge broadening in the market, both from strategic players and from private equity funds," said Anindya Roychowdhury, associate director of KPMG. "The economy is doing very well, and there is a lot of international excitement about the country. The feel-good factor is back in India."
Sunir Khetarpal at the Mumbai-based investment bank YesBank said that in the past 18 months, foreign interests had invested about $300 million in the Indian media industry, and he forecast a further $250 million in the near future.
"Things are looking brighter and brighter every month," he said. "Every announcement by the government in the last two years has been to deregulate the sector, making it more favorable to foreign investors."
In May, Reuters entered into an agreement with Bennett, Coleman & Co., publisher of The Times of India newspaper, taking a 26 percent stake in a planned English-language TV news channel, which is expected to start this year.
Since foreign investment of up to 26 percent was permitted in 2002, several big international players have come into the Indian newspaper market, attracted by the country's flourishing consumer spending, rising advertising revenue and the large potential readership among the one-billion strong population.
Last June, Pearson's Financial Times paid $3 million for almost 14 percent of Business Standard, the country's second-largest business daily newspaper. Dow Jones last year started its own partnership with Bennett, Coleman to print The Asian Wall Street Journal; and Henderson Private Capital's Asia Fund, a private equity fund, recently bought a $20 million stake in The Hindustan Times.
India's entertainment industry has never been subject to the same regulations as the print and news sectors, and big multinational companies like News Corp. have had a strong presence since the early 1990s. With soaring box office revenue, smaller foreign investors are racing now to buy into the growing multiplex theater business.
# posted by Narayan Lakshman @ 4:44 AM 
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