New disclosure instruction to media houses

Media houses will now have to disclose any holdings they have in a company they report about.

A Securities and Exchange Board of India (Sebi) statement issued here today said the Press Council of India had (at Sebi’s request) asked its members to make disclosures in the news report/ article/ editorial relating to the company in which the media group holds such stake.

The members should also disclose the percentage of stake held by the groups in any company under such 'private treaties' on their websites. These are arrangements wherein they promote the company in exchange for a stake in it.

Bennett, Coleman & Company Ltd, one of the largest media groups in the country, already discloses the private treaties it has with companies on its website.

It has private treaties across 19 industry segments, with 135 companies. Other media groups like HT Media, NDTV, Dainik Bhaskar, Dainik Jagran and Mid-Day also have private treaties with companies.

Sebi said it had expressed its concerns to the PCI on the practice of media groups entering into private treaties with companies. "Typically, such arrangements are with companies which are listed or which proposes to come out with public offerings. These, in general, entail a company giving stake in it (shares, warrants, bonds etc) in return for media coverage through advertisements, news reports, advertorials etc in the print or electronic media," Sebi said.

Adding: "It was felt that such agreements may give rise to conflict of interest and may, therefore, result in dilution of the independence of press...biased and motivated dissemination of information, guided by commercial considerations can potentially mislead investors in the securities market."

In a meeting with the PCI in February this year, the market regulator had expressed its concerns on such brand building exercises of media groups. "Lack of appropriate and adequate disclosures may not be in the interest of investors and financial markets. There are prescribed norms of Journalistic Conduct that require journalists to disclose any interest that they may have in the company about which they are reporting. However, there are no equivalent requirements in the case of media companies holding a stake in the company which is being reported," Sebi had said.

The Press Council has also mandated that any other disclosure relating to agreements such as any nominee of the media group on the board of directors of the company, any management control or other details which may be required to be disclosed and which may be a potential conflict of interest for media group, should also be mandatorily disclosed.

The managing director of a leading TV network felt mere disclosures would not solve the issue of paid news. “Media groups have been taking cash for positive reporting about companies. Readers are not aware of these kind of deals. Also, a small statement at the end of an article in smaller fonts would hardly be of any use," he said, requesting not to be named.