On August 5,a former air hostess of MDLR airline Geetika Sharma committed suicide alleging harassment at the hands of Gopal Goyal Kanda,managing director of the airline and a minister in the Haryana government.
On July 24,a Supreme Court Bench headed by Chief Justice
S H Kapadia denied Kolkata-based Rose Valley Real Estates and Construction Ltd relief in an ongoing investigation against it by the Securities and Exchange Board of India (Sebi). The company,allegedly,has been raising funds from the public promising them land it doesnt own.
On July 23,the Central Bureau of Investigation arrested two directors of Noida-based Mahuaa Media Pvt Ltd for forging documents to secure bank loans. The company,allegedly,had taken bank loans in excess of Rs 1,700 crore and defaulted on a majority of them.
On July 21,the Odisha crime branch seized 25 bank accounts of Seashore Group following a report by the Financial Intelligence Unit (FIU) of the Union Ministry of Finance that found suspicious transactions,running into hundreds of crores of rupees,among the groups own companies. FIU suspects the group is into illegal money circulation business.
On July 20, a woman was molested by a group of men outside a bar in Guwahati and the incident was shot by a TV reporter and aired on his channel.
What binds these seemingly disparate events of the past one month is the business of TV news. India has,at present,more than 300 news channels and most of them belong to mainly three categories of direct or indirect investorsreal estate developers; companies running chit funds,money marketing (a pyramid scheme in which an investor is promised handsome returns that come not from any business,but from fresh investments raised from other investors) or collective investment schemes (money is collected from investors to fund a business); and politicians or their close aides.
All the entities mentioned above belong to one of these three categories. And they all own,directly or indirectly,at least one TV news channel. Seashore Group,Mahuaa Media and Rose Valley Group own and operate prominent news channels in several regions such as Uttar Pradesh,Bihar,Jharkhand,West Bengal,and the Northeast. MDLRs managing director Kanda owns Haryana News. The Guwahati molestation,it has been alleged,was staged at the behest of a reporter of a local channel News Live. The channel is owned by Riniki Sarma,who is wife of Assams health and education minister Himanta Biswa Sarma. News Live has been engaged in a bitter fight for market share with NE TV,another local channel,which,incidentally,is owned by a prominent Congress leader Matang Sinh. Sinh was union minister for parliamentary affairs during the Narasimha Rao government.
It has often been said that India is a unique broadcast market to have so many news channels. Srini Raju,founder of Peepul Capital,a private equity firm that manages a corpus of approximately $700 million,thought otherwise when he invested in Associated Broadcasting Company Ltd (ABCL) in 2004. ABCL began with launching a local news channel for Andhra Pradesh. The thought was that in terms of population,Andhra was as big as some of the developed countries so it deserved to have some channels dedicated to itself, he says.
About a fortnight ago,Raju exited ABCLthat,too,when it seemed to be doing well. It currently runs more than six channels in several states under the TV9 brand. 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, he says.
From two in 2004,Andhra today has close to 20 local news channels. And the state is not an exception. The much smaller Kerala has nine mainstream news channels. Tamil Nadu has 10 prominent channels and several other smaller operators. Assam has seven leading channels and about 10 peripheral players. Kolkata city alone has 10 channels and Odisha has more than half-a-dozen news channels. These do not include the hordes of news channels run by local cable operators.
Hindi markets such as Delhi,Haryana,Uttar Pradesh,Madhya Pradesh,Bihar,Jharkhand,Uttarakhand and Chhattisgarh,which were largely served by national news channels,now have more than a 100 news channels. And the rush continues.
A common link
There is an uncanny similarity in the manner in which groups that own TV news channels have prospered in the past one decade. Also striking are their almost similar pursuits. A majority of them,for instance,have a penchant for housing projects,hotels,resorts,and construction. In essence,they are real-estate developers. Tour and travel,agro and food processing,and education are some other areas of interest. A large number of them run chit funds,collective investment or money-marketing schemes.
And then,there are those who are in the business of politics. Allegations of criminal activities is another factor that clubs them together.
Kolkatas Rose Valley group,for instance,runs 24X7 news channels in West Bengal,Assam and Tripura under the News Time brand. Media,however,is not the groups primary business. Sebi has alleged the group has been raising funds from the public despite having been denied permission in 2003. According to Sebi,the company had grossed more than Rs 2,100 crore through collective investment schemes till March 2010 alone. This money was raised against the promise of plots for which it doesnt seem to have enough land. The group also runs hotels,resorts and has a construction business. It also claims to be an insurer and a manufacturer of garments and processed and packaged food. Journalists from Kolkata say the group enjoys political patronage thanks to its news channel which has aligned itself with the government of the day.
The website of the Assam-based Jeevan Suraksha Group lists insurance,real estate,dairy and milk packaging,agro plantation,tour and travel,hotels and resorts and IT & software,among others,as businesses it is involved in. It also runs a TV news channel under the Prime News brand. The diversification came about in the past one decade. On August 8,the company,according to local media reports,was raided by Bongaigaon police on allegations of running a money circulation enterprise without the Reserve Bank of Indias permission.
The story of Bhubaneswar-based Seashore Group of companies is similar. The group is learnt to have built a varied portfolio of business across real estate,tour and travel,construction,insurance,food processing,transport,retail,and pharma sectors in the past 10 years. It also runs a prominent news channel STV in Odisha. Seashore is currently being investigated for suspicious transactions among its own group companies.
There are numerous clones of such business houses across the country (see chart). A news channel is a powerful weapon. It helps when you are in dispute-prone businesses such as real estate or chit funds. It helps in getting access to politicians,government officials and if one aligns it to a political party,the benefits could be manifold, says the vice-chairman of a leading news channel from Andhra Pradesh.
The refuge of politicians
Kartikeya Sharma rattles off the degrees he has earned from Oxford and Kings College in the UK to stress that hes qualified and competent to run a media business. He denies that the clout of his father Venod Sharma,a prominent Congress leader from Haryana who was once tipped to become the chief minister of the state,may have had a role to play in the hurried growth of his media enterprise that boasts of a Hindi newspaper (Aaj Samaj) and seven news channels under the India News brand. Piccadilly Group,of which he is the managing director,also recently bought the floundering English news channel NewsX. All this was put together in the past five years or so.
There is,however,a story about his father and Piccadillys entry into the media business. It is said that Sharma senior took a vow to launch his own newspaper and TV channel after he felt that it was media activism that led to his son Manu Sharmas conviction in the Jessica Lal murder case of 1999.
Politicians or their close aides launching news channels is not a new trend. It began in the early nineties with Kalanithi Marans Sun Network in Tamil Nadu. Today,it is a full-fledged phenomenon spread across almost all states. There has been a democratisation of the trend in the past decade, says Matang Sinh of NE News in jest. Earlier,it was big political leaders who would launch or lend support to media outfits. Now,even local leaders and small-time politicians are in the fray.
While insisting that it was his love for news that drove him into the media business,Piccadillys Kartikeya concedes that media has become as powerful as politics. And that explains its attraction.
Both (politics and TV channels) wield influence,both have clout, says Jagi Mangat Panda,promoter of Ortel Communications Ltd that runs news channel OTV in Odisha. Incidentally,Pandas husband Baijayant Panda is an MP from the Biju Janata Dal in Odisha.
A top executive of a channel owned by a prominent political leader in Tamil Nadu says having a news channel has become a compulsion for those with high stakes in politics. When all news channels are owned by ones political rivals or entities that are clearly aligned to them,it helps to have ones own platform.
I was crazy to have entered the media business, says film-maker Prakash Jha who launched Maurya TV,a news channel for Bihar and Jharkhand,around two-and-a-half years ago. It was the love for my state that inspired me to launch the channel. But I am bleeding right now. My revenues dont even cover one-third of the cost of running it, he says.
Launching a news channel isnt an expensive proposition. Till about 10 months ago,any Indian entity with a net-worth of Rs 3 crore could get a licence for a news channel. The limit was raised to Rs 20 crore in October 2011. It is still too small for those raking in money through various other businesses, says Surendra Nath,Vice Chairman,Shreya Broadcasting Ltd that runs Telugu news channel TV5. Technology has further lowered the entry barriers. Today,a news channel can be launched for anything between Rs 20 crore and Rs 45 crore.
Sustaining the business,however,is challenging. Most national news broadcasters such as NDTV and the Network18 group have balance-sheets saddled with losses. Advertising is the mainstay of news broadcasters as almost all of them are free-to-air,which means subscribers can watch them for free. According to estimates,TV news raised close to Rs 1,500 crore through national advertising in 2011. Only around 10 per cent of this went to regional channels. Local advertising,including local retailers as well as the state governments spends,varies from Rs 20 crore to Rs 200 crore per annum depending upon the market. Even Rs 200 crore is not enough to sustain dozens of channels in a market, says Jagdish Chandra,a former IAS officer who now heads Eenadu Groups channels in the North. Save a few big networks,all news channels in regional markets are bleeding, he says.
So why would shrewd businessmen and politicians bet their money on a losing horse? That isnt a difficult question to answer.