Analysis

The business of news

By Sukumar Muralidharan

18 October 2016

How the editorial and factual veracity of news is being threatened.
The business of news

Illustration: Marcin Bondarowicz

Practice is never quite perfect, but certain fine distinctions in principle have been embedded in the identity of the news media as part of its compact with the public. Over the last quarter century, these distinctions have gradually been effaced, often by stealth, and almost always without penalties. Today, the greatest rewards are assured to those who profess least respect for once honoured media conventions.

Ownership interests in the Indian media, as against the public news dissemination function, were already unfettered by the early-1990s, when economic policy underwent a radical transformation. The quarter century beginning 1991, when India entered into a policy of economic liberalisation and integration with the global economy, generated its own dynamics in terms of the journalistic function. Technological changes, typified by the explosion of cable, satellite television and the internet, were the most visible face of this new dynamic.

Beginning immediately after the first phase of the US-led war against Iraq in 1991 – when a cable news network, till then the butt of jokes, became the storied purveyor of global news around an unrelenting 24-hour cycle – satellite broadcasts began to breach the zealously guarded government monopoly over the airwaves. As private television channels began to open the breach wider and the government remained paralysed by indecision, there were forecasts of an imminent demise of print as a medium, since advertising was expected to migrate in droves to the more widely diffused medium of television. But traditional sectors defied predictions about their imminent demise: newspaper circulation and readership continued to increase, though with significant differences from earlier phases of growth.

FACT AND FICTION
Articles on Freedom of Expression
This article is from our final issue ‘Fact and Fiction’. The quarterly issue has articles on freedom of expression and collection of fiction from the Southasia. Other articles on freedom of expression include: 

Of Eco and Echoes – Salil Tripathi

Freeing the fourth state – Tisaranee Gunasekara

Whose media is it anyway? – Neha Dixit

The state of surveillance – Sana Saleem

Web of Control – Sarah Eleazar

Chronicle of a death not foretold – Aunohita Mojumdar

The journalism profession saw a steady erosion of professional rights beginning with the evisceration of the statutory wage determination process, and the progressive transformation of the terms of employment from tenured appointment to short-term contracts. This was accompanied by the removal of restrictions on unfair competition in the media industry and disappearance of all social controls. One of the key ingredients of the public image of journalists through early years of India’s independence – that they had the public pulse and were professionally committed to giving a voice to all – was no longer sustainable in the context of the strong assertion of ownership rights over the press.

The global financial crash of 2008 was occasion for many of these tensions to surge to the surface. For the first time in close to two decades, the media industry had to face serious questions about sustainability. In December 2008, one of the newspapers that uncharacteristically chooses to turn the gaze inwards, the multi-edition financial daily Mint, reported that “the most lucrative advertising has fallen by the wayside and huge discounting has started happening in print and on television as media houses try to mop up any ad revenues they can”.

An unforeseen consequence cropped up from commercial strategies the media industry had adopted through the boom-years. It was not uncommon for media companies – following the lead of the biggest among them – to swap advertising for equity. Media companies would add the equity of particular enterprises to their investment portfolios by swapping these with free ad space, which would help build brands and boost stock market valuations. In a context of booming stock values, this would work out to the mutual benefit of both: a win-win game riding on a buoyant stock market, assisted on its way by hyped up media coverage.

When the stock market crashed following the 2008 economic downturn, media companies were left with massively diminished portfolios, though without being spared the obligation to meet free ad space commitments. The industry’s quandary was put in stark terms by another of those rare news reports: many media companies were “stuck with no-cash ad deals stemming from their equity deals with companies even as the value of those investments… plunged”. Several among the media companies cancelled or indefinitely postponed new launches and expansion plans.

Trade-offs

In March 2009, the editor of the Indian Express, Shekhar Gupta, addressed a memorandum to all colleagues, saying that profitability had vanished in the entire media industry over the preceding six months and that indeed, there seemed “no end” to the crisis. It was a call to severe austerities by one who was renowned for being among the most avid celebrants of the cult of material success. After paying homage to the sales team of the newspaper, Gupta called for “sacrifices”, which he assured the flock, would be borne most intensely at the higher editorial and managerial tiers.

Despite Gupta’s dark forebodings, the weeks that followed seemed to bring an elevation in the mood. Early in April 2009, he was telling a website of media news that the crisis that hit his newspaper was only akin to a “tsunami” whereas the paper was programmed to “survive a nuclear war”. It was another matter that the stimulus for the recovery in industry fortunes came after a fairly undignified procession in February that year, by some among the Indian media’s more notable figures to the doorsteps of the Ministry of Information and Broadcasting (I&B). The special pleading for a way out of economic misery, was of course, grossly at variance with the robust free enterprise doctrine that these media enterprises were known to advocate as firmly held editorial philosophy.

A week after Gupta and other notables of the print media industry made their pathway to the doorsteps of the government, the I&B Minister announced an increase in the rate paid on government advertising by about 25 percent. He also managed, despite the fiscal stringency, to persuade his cabinet colleague in the Finance Ministry, to eliminate the customs duty on newsprint. Since parliamentary general elections were widely expected within two months, the timing of the Minister’s announcement seemed a transparent concession to the power of the print media.

Aside from these specific measures, the surge in advertising expenses during the national general elections of 2009 contributed in some measure to a short-term stimulus for the media industry’s fortunes. And then, a government that had earned an unexpectedly sweeping mandate introduced strong budgetary measures to boost the flagging momentum of the economy. Things started looking a great deal more upbeat for the Indian media, but by the latter half of 2011 the stimuli were beginning to fade.

One notable exception was Bennett Coleman and Company Ltd (BCCL), India’s largest media company, best known by its marquee title, the Times of India (TOI). Since the early-1990s, BCCL has galloped ahead of the competition and gained profitability by unabashedly embracing the new idiom of newspaper management: revenue driven, advertisement oriented and increasingly disdainful of older editorial verities.

BCCL vice-chairman Vineet Jain, put it with surpassing clarity in a conversation that Ken Auletta of the New Yorker reported in an October 2012 article. While crediting big brother Samir Jain for working the magic, Jain explained the logic of BCCL’s rapid transformation into India’s dominant media entity with brutal simplicity. “We are not in the newspaper business, we are in the advertising business,” he said, confidently stating what seemed a self-evident truth. To define himself as being in the “news” business would be to limit innovative capacity; and to be “editorially minded” was a sure-fire formula for making “all the wrong decisions”.

Vineet Jain backpedalled after these remarks earned him the wrong kind of public attention, but there was neither a retraction nor any recognition of the subtleties of the advertisement-editorial chemistry. The ad business was vital to newspaper bottom-lines, he explained, and there was no diminution in BCCL’s commitment to promoting the news function.

The media trades in information in two main guises – news and advertisement – which differ in that one comes with the claim of factual veracity, while “truth value” is dispensable for the other. This distinction means that advertising is not covered by constitutional guarantees of free speech, a finding underlined as far back as 1959 by India’s Supreme Court in the matter of Hamdard Dawakhana. At issue was a law prohibiting advertising that promised magical cures and encouraged self-medication for certain ailments. Summing up its reasons for declining to hold the law in violation of constitutional guarantees, the Supreme Court said that when speech (or printed matter), “takes the form of a commercial advertisement which has an element of trade or commerce it no longer falls within the concept of freedom of speech”. The object with advertising speech was “not propagation of ideas – social, political or economic”, or the “furtherance of literature or human thought”, which were how “the essential concept of the freedom of speech” could be defined.

Vineet Jain’s impulsive admission of partiality for advertising and his disdain for editorial matters, was a self-inflicted strategic setback, since the constitutional principle of freedom of speech has always been the weapon of choice for the media industry in facing down inconvenient regulatory measures.

The stratagem has fetched mixed results. The newspaper industry – or at least the bigger players – successfully defeated a 1950s regulatory measure to restrain larger entities from leveraging superior ad revenues to pressure smaller publications through predatory pricing. Both the government and the big newspapers claimed to be defending free speech, but the latter won the argument. A later effort to impose newsprint rationing – again to ostensibly protect smaller newspapers – was defeated in a constitutional challenge in 1972, on the grounds that it violated free speech. The supposed rationale of protecting smaller players in a context of acute scarcity, won little sympathy from the Supreme Court.

In this frequent recourse to the “free speech in peril” bogey, the newspaper industry encountered notable failure in one respect. In February 2014, the Supreme Court ruled, in a petition brought by the country’s biggest newspapers that the protection extended to wages and other working conditions in the industry was perfectly consistent with constitutional guarantees on fundamental rights. This ruling was expected to end a long campaign among India’s newspaper publishers against statutory wage scales determined in December 2010, but the churlish response of the industry suggested everything but that intent.

The day after the verdict, TOI fired off another salvo in its long campaign against a comprehensive wage revision for the industry. In an article that was curiously credited to its news network, the newspaper declared that the Supreme Court verdict would deal “large sections of the print media a grievous body blow and… financially weaken even the few strong companies that are left”. Aside from the substantive impact on newspaper profits, statutory wage fixation was an antiquated notion when there was broad consensus on leaving these “to market forces of demand and supply”.

The following month, the main industry lobby, the Indian Newspaper Society (INS), held a conference in Delhi, where the publisher of Kolkata-based The Statesman, a newspaper of hoary vintage ruined by a recent legacy of quirky management actions, said in reference to the wage fixation process, that it lacked “relevance” and threatened to drive many newspapers to “closure”.

These statements merely repeated the arguments the Supreme Court had rejected after due deliberation. The industry argued before the bench that the wage award and its enabling law – known in short-hand description as the Working Journalists’ Act (WJA) – breached the right to free speech and the assurance of equality before the law under articles 19 and 14 of the Indian Constitution. The WJA permitted the government, and agencies nominated by it, to intrude into the financial autonomy of newspapers, thus impeding their freedom and endangering the constitutional right to free speech. Moreover, it created a special category of rights for journalists and other newspaper employees.

A very similar set of arguments had been made before India’s highest judicial bench in 1957 when the first wage award under the WJA was announced. In a case decided in 1958, the Supreme Court held that working journalists as a class stood in need of specific measures of protection, which made it reasonable to grant them a distinct status under law. Granting journalists the protection they deserved did not amount to an abridgment of the rights of newspaper owners. Even if similar protections were denied to workers in other industries, it was not unreasonable for a state committed to social welfare, to start with legislation for one professional class. In substance, the February 2014 judgment relied upon the existing weight of precedent to dismiss the newspaper industry’s rehashed and rather jaded arguments.

The 1990s, when neo-liberalism became the reigning ethos of policy, was when the conflict between commercial and editorial interests sharpened in intensity. BCCL with Samir Jain leading the charge, was in the vanguard of effecting a radical transformation in the commercial aspects of the newspaper, while coercing the editorial function into the required mould. Earlier editorial priorities had to yield before the demands of fostering an ambience of entertainment and celebrity lifestyles, of providing a hospitable environment – a “feel good” ambience – for advertisers to display their wares.

It was not a confrontation that journalists were equipped to win, given their poor levels of organisation and dependence on official patronage for the defence of their interests. From then on, the editorial function was demoted in its importance to the newspaper. An explicit “cash for coverage” policy was introduced by the TOI under the title of “Medianet Initiative”, with the assurance to the reader that each article that was paid for would be explicitly identified. That may have been the practice for the initial few weeks, but soon enough all such acknowledgment disappeared. Alongside, the “private treaty” policy was introduced, involving a swap between company shares and advertising space in the newspaper.

Skewed shares

An analysis of the BCCL annual report for 2013-14 showed that among the directors and employees earning the highest compensation packages, five were members of the proprietary family. These five between them received over 55 per cent of the amount involved in compensation packages above the statutory threshold for listing in the annual report. Among the 76 employees listed as drawing compensation packages requiring mention in the annual report, only nine were journalists. The highest paid journalist, who held the designation “editorial director”, ranked eleventh in total value of remuneration. He was outranked by the three directors, a chief executive officer, an executive director, a chief operating officer, two directors of the advertising and circulation departments, and others with similar management responsibilities. Below him, among the journalists – and at a considerable distance – were a number of employees who were in charge of the financial daily of the group, the Economic Times, and a handful who discharged various functions in the business news channel.

This pecking order in pay affords the sense of a business philosophy sharply at variance with WJA priorities. That is one possible explanation for the obduracy with which the BCCL and other newspaper organisations have opposed a fair deal for journalists. In substantive terms though, their claims that financial ruin stared them in the face from implementing the mandated pay scales, have been repeated too often to be of any credence.

A business ideology that views news as commerce, rather than financial stress, is clearly the issue. The statutory conditions of employment that the WJA imposed were an irritant, since the new business philosophy of the newspaper industry was built on recruiting a limited number of editorial functionaries into the privileged strata, though in clear subordination to the advertising function, and creating a wide gulf with the drones who worked in editorial and news gathering departments. And as the trend of putting journalists on short-term contracts, of typically three years accelerated, conditions of employment would typically specify that they relinquish “voluntarily” all collective bargaining rights.

These transformations in editorial management occurred at just the time the advertising industry was going through a rapid phase of concentration, with four big conglomerates – WPP, Publicis, Interpublic and Omnicom – taking over corporate accounts that added up to well over 60 per cent of global advertising expenditure. If ever media freedom was discussed as an issue during this wave of mergers, it was in hushed and barely audible tones. This is unsurprising, since advertising has been among the most loosely monitored areas of global business. Vance Packard, the American journalist and social commentator who coined the phrase “the hidden persuader” in a classic 1958 book, was rewarded with the abiding animosity of the ad industry, which dismissed his work as an effort born in malice, to destroy the choices advertising opened up before the average consumer.

Especially corrosive of democratic processes in Packard’s opinion, was what he called the advertising “depth approach” which mined deep into the human psyche to exploit its deepest vulnerabilities. In the years that followed his work, the influence of the media over electoral outcomes rapidly increased, often with organised corporate power driving choices through unsubtle advertising.

The Federal Election Campaign Act of 1971 in the US sought to regulate the intrusion of money power into the election process, demanding disclosure of all campaign contributions, and in an amendment introduced in 1974, limiting these. This left a window open for unregulated “soft money” flowing into advertising that promoted a candidate’s cause or knocked down a rival. The abuses of this loophole over time became sufficiently corrosive of electoral integrity for the US Congress in 2002 to introduce amendments banning the use of corporate treasuries in election advertising, within a defined interval prior to polling date.

In 2010, the Supreme Court of the US (SCOTUS) in the case known as Citizens United, removed all fetters on political advertising, holding the very limited restriction introduced on corporate political advertising in close proximity to elections, contrary to the First Amendment guarantee of free speech. The decision itself is believed to have since had a deep impact on electoral competition, allowing nominally independent groups to actively play the field till the very eve of polling with saturation advertising.

Critiques of Citizens United have focused on the forced identity it creates between an individual, who is fully entitled to the US Constitution’s Bill of Rights, and a corporation, which has always had a distinct status. Efforts to reverse the judgment have expectedly focused on this among its various infirmities. But there is another criterion that SCOTUS used to arrive at its findings, that shines a harsh searchlight on a media model that has begun to mimic the corporate form and developed an inordinate dependence on advertising.

In one of three judgments written for the majority of five in a nine-member bench, Justice Anthony Kennedy held out the rationale that “political speech cannot be limited based on a speaker’s wealth”. It was irrelevant that “corporate funds may have little or no correlation” with public interest in the “corporation’s political ideas”, since “all speakers, including individuals and the media, use money amassed from the economic marketplace to fund their speech”. Restraining advertising on the basis of this argument could potentially lead to the dangerous conclusion that laws could be imposed that “ban political speech of media corporations”. Chief Justice John Roberts and Justice Antonin Scalia gave concurring judgements, playing upon the theme of editorial freedom being at risk, with an even greater degree of alarmism.

Justice John Paul Stevens pushed back in a strongly worded dissent that twice used the word “nonsense”. The distinction between individuals and corporations had been recognised and honoured in a number of cases over the years and in shedding this weight of precedent the court was rejecting “a century of history”. In arriving at its findings, the SCOTUS majority had consistently overstated the nature of the restrictions – “time, place and manner” specific – to make them sound like a complete suppression of corporate free speech.

For all the scope of his dissent though, Justice Stevens failed to head on challenge the majority’s conflation of advertising and editorial, merely passing it over with the remark that it was an “interesting and difficult” question. The importation of the news media into the argument over corporate free speech, was tacit recognition that basic distinctions of the craft were in process of obliteration. Part of the rationale for the news media being accorded a greater measure of constitutional protection than other corporations – which are indistinguishable in most systems of law – is its claim to disseminating information that bears the attribute of factual veracity. Editorials, similarly, are a contribution to the public discourse and a reflection of its concerns and temper. Advertising, especially in a matter of public and political consequence such as elections, represents a more narrow interest, of corporate directors often operating without the sanction of shareholders.

Was the US Supreme Court offering a vision of the future, when media corporations would become essentially indistinguishable from other entities that bore the corporate form, and advertising would merge seamlessly into editorial content? Was it a description of an already existing situation? Viewed another way, the SCOTUS’s difficulty in identifying the exact lines demarcating editorial and advertising content should be entirely pardonable, since it is a failing media corporations themselves have had for long.

Illustrations abound but perhaps none speaks more eloquently than the history of tobacco advertising and its relationship to the wilful suppression of news about the potentially fatal consequences of tobacco use. The evidence from the US media has been documented in vivid detail by Ben Bagdikian, a dean of critical media studies in the US, whose book, The Media Monopoly, went through eight editions and acquired new relevance with each.

Examples could be multiplied from every market where the media is organised on supposedly free market principles. A particularly egregious example from India, which came to light through the work of P Sainath in The Hindu, is related to coverage of the experience with genetically modified Bt Cotton in certain parts of the Vidarbha region of Maharashtra state.

In October 2008, TOI ran a half-page story on the massive benefits that the sowing of Bt cotton had brought to farmers in certain villages of Vidarbha. There were no suicides any more among distressed farmers, it noted: Bt Cotton had changed all that. Close to three years later, in August 2011, the TOI carried a story identical in every respect, down to the punctuation marks. The only difference was that in a discrete corner of the page, the supposed news report was identified as a “customer connect initiative”, or a paid advertisement.

Over the week that followed, the TOI carried no fewer than five half-page advertisements by Mahyco-Monsanto Biotech Ltd, a joint venture between a Maharashtra based seed company and the global biotechnology giant Monsanto. To be sure, other newspapers too benefited from this ad blitz proclaiming the merits of Bt cotton. The purpose of the intensive ad campaign was very clear: the parliament was then in session and Monsanto and its Indian joint venture were anxious to see legislation enabling a comprehensive new framework for genetically modified organisms in agriculture. In the event, the legislation was not tabled because parliament was wrapped up in various other matters. But the relevant point here is simply that the largest and most successful newspaper group in the country showed little hesitation in shedding ordinary journalistic scruple to lend the corporate advertiser a helping hand, taking the public discourse on a matter involving the social impact of an emerging new technology seriously off track.

These practices are by no means unique to the BCCL’s newspaper titles. They have indeed been the great unspoken reality of media functioning for years, even before the dawn of neoliberalism. Where BCCL deserves credit is in boldly celebrating the sins nobody dared confess to, as the true virtues of ‘smart media management’. That has led to the fetters being officially cast away by all media organisations. The BCCL example from then on came to be eagerly emulated by other players in the field.

Ministry of truth

Emerging alternatives would most likely depend heavily upon news distribution through the online space, since printing expenses would be a formidable barrier to entry. It would call for media subscriptions that are paid for, at least to an extent that meets news gathering and distribution costs. Internet carriage is obliged at least where users exist in sufficient numbers to assert their rights, to follow the principle of “net neutrality”, of ensuring non-discriminatory transport of all information irrespective of the identity of the source. The lines between carriage and content though are being blurred by the big information aggregators like Google and Facebook, which use their own fairly opaque algorithms to prioritise news flows. The vast data centres that these enterprises operate are rapidly filling up with user profiles assembled from the pattern of mouse clicks registered at various sites. These profiles are in turn the basis for targeted advertising that invites users to click through and generate a stream of revenue for the aggregator. User profiles and ad selections are ostensibly left entirely to impersonal algorithms, though both Google and Facebook have in recent times had to deal with eruptions of public concern over frequently unexplained intrusions into editorial choices. Their dominance at the top is by no means assured in a milieu that continues to be in rapid flux, but if there is anything today that could claim to be a global “ministry of truth”, it is these two online information aggregators.

Notions of neutrality and distanced objectivity in news gathering and dissemination were always vulnerable to the rude intrusion of reality. With the mainstream media now immersed in the culture of commercialism, these are notions that may find a new lease of life in the online space. But their survival and longevity in the new space is far from assured.

~ Sukumar Muralidharan is an independent writer based in New Delhi and was a fellow at the Indian Institute of Advanced Study, Shimla.

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