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The rising stink in the media business-Vanita Kohli-Khandekar
-The Business Standard

An industry capable of bringing down governments has chosen to keep quiet about the creeping corruption in its own backyard

You can pay newspapers to get any kind of article published, ditto for news channels. You can fix TV ratings or readership numbers. You can even fix the box-office figures for your film. And if nothing works, you can always entice a media buyer with a cutback to put your paper or channel in the advertiser’s plan. These, increasingly, are the stories coming out of the Indian media and entertainment (M&E) industry. An outsider can be excused for thinking that the Rs 80,000-crore Indian M&E business is a hotbed of corruption. What really is happening?

The short answer: hyper-competition is testing our moral mettle and the industry is not looking good.

The long answer: the bad guys are getting away with it because the good guys, who form large chunks of this very efficient and competitive business, are keeping quiet.

The story: till 2004 or so, there was the odd quibble with readership numbers, freebies for media buyers or some form of paid news in small, local papers and cable TV channels. But nobody ever used the C-word. Now it is all over the place. What has changed since then is the level of competition.

More than 1,000 films vie for audience attention in a market where monetisation opportunities are limited. We have just 9,000-odd functional screens. More than 850 channels fight over Rs 33,000 crore of revenue. Over half of this is not available thanks to a leaky cable system. So while the lure of 700 million TV viewers, 350 million newspaper readers, et al brought in a rush of investment, going by returns, India has been a huge disappointment for media investors (see “The media’s new investors”, Business Standard, June 5, 2012). Their attention is now taken up by media firms in Brazil or Indonesia — generally twice as profitable as those in India.

It is not just fragmentation and poor policy support that has made Indian M&E firms a poor investment. There is another reason. In the high-growth years, many media companies failed to build processes and organisational structures. This is pinching them now; a time of slowing growth, hyper- competition, maturing audiences and thinning margins. This is when solid companies with management depth, diversified revenue streams and sticky media brands come out on top. There are very few of those.

Procter & Gamble and Hindustan Unilever (HUL), two of India’s oldest brand builders, probably faced worse challenges in the ’60s and ’70s. Yet they built organisations that have continued to deliver even as competition increased. How did they manage what many Indian M&E companies can’t seem to — build sustainable, profit-making businesses?

One of the big differences between consumer products and M&E is the use of metrics. In consumer products, market share or other metrics are used for internal planning, not for sales. If you buy a bar of soap, a large proportion of that money goes straight to HUL’s top line. It has no other source of revenue. So its efforts are geared to making you buy the soap.  

In the media, everything – readership, circulation, ratings – is used to lure advertisers, the primary source of revenue. Audiences or consumers are usually the metric that pull in the revenues, not the direct cause of revenues. Whether you really buy and read a newspaper makes no difference to a publisher as long as he can prove to the advertiser that you do that. Ditto for a TV show. It is easier, then, to fiddle with the metrics rather than go the long, hard route of actually getting you to read or watch something.  

That is what some media companies have done. Others found selling editorial space to be a better tool and yet others just cut to the chase by giving media buyers a cut on the deal. The most annoying thing is that these short cuts are not as pervasive as they seem. Only a handful of newspapers sell their editorial space. But an entire industry is tainted with the same brush.

Why does it happen? One reason is the general malaise. There is a sense of “Nothing will change in this country. So why bother to go the straight way?”

The main thing is that the good guys and industry bodies rarely speak out and take measures to nip bad practices. NDTV chose to go after Nielsen instead of naming and shaming the rivals who were fixing ratings. Whatever TAM’s faults, it is ultimately just a postman. The problems with the rating methodology have been known by everyone, on record, for over seven years. Why was nothing done about it?  

It would seem to be in the interest of advertisers to get together and tackle corruption in media buying, which is increasing at an alarming rate going by anecdotal evidence. They remain silent. The paid news scandal, in which several newspapers were caught taking money to write about candidates in the 2009 elections, was hardly covered by half-a-dozen newspapers. A report came out and nothing has happened since.

An industry capable of bringing down governments has chosen to keep quiet about the creeping corruption in its own backyard. Wasn’t it Edmund Burke who said, “Evil thrives because good men stand by and do nothing”?