The private treaties business, or ad-for-equity swaps, pioneered in India by Bennett, Coleman & Co, has now morphed into a full-fledged business model. A mutual fund, the Morpheus Media Fund, has been launched by Ozone Capital Advisors. Morpheus will offer advertisement space to companies that wish to advertise but don’t have the budgets — it will take equity in these firms. Morpheus will, in turn, buy advertisement space in newspapers and other media such as television and radio; but instead of paying in cash, it will give its shares to these media organisations. After a few years, as the firms Morpheus holds shares in begin to do well, everyone will make a profit.
A further twist to the story is that the matter has caused concern to the Indian Newspaper Society, an association of newspaper publishers. INS President Hormusji N Cama has written to members and asked for their comments. Except, Cama’s not so worried about the moral aspect of ads-for-equity and the likely misuse of it to do favourable coverage of companies. Cama has written to members to say, “…the proposal …seeks to buy advertising space in newspapers and pay for the space not in cash but in some sort of equity, more like a mutual fund. If we allow this trend to gather roots, we will end up with diminishing cash flows and there is no guarantee that the equity offered will be encashable on due dates.” The matter will be discussed in the INS executive committee meeting in early January.