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Publishing directions

Business Standard  |  New Delhi 

Like other business innovations thought up by India's largest publishing company "" Bennett, "" the "private treaties" route to building a new line of business is creative in conceptualisation (by swapping shares for advertising space), a winner in terms of pay-offs, multi-faceted in its character (there is an important tax angle because capital gains on shares, when they are taxed at all, get favoured treatment when compared to profits earned from selling advertising), and heedless of concerns about the integrity of the process. Like other innovations before this one, the initial response of the rest of the newspaper industry has been massively negative but after a respectable amount of time has elapsed, others are willing to follow suit. So it is that, as reported in this newspaper on Monday, at least three other newspapers (in English and Hindi) and a couple of TV channels have started a slippery slalom ride to profits that seeks to skirt the hard questions of journalistic ethics.
Readers might recall the fuss that was made a few years ago, when Bennett, (which publishes The Times of India and The Economic Times, among other titles) began charging for space, initially signalling such deals through an innocuous credit line to "Medianet" but subsequently dropping even that pretence. Once the fuss died down, others have followed suit though usually not as openly as the Times group "" though there is talk of rate cards being distributed stating the price for (say) a three-column picture, a higher price if the caption is to mention the company or brand name, and so on. It would seem that the unthinkable ceases to be so after some time and eventually becomes industry practice. It is as though the Times group is challenging the rest of the media on its commitment to its own stated convictions and conventions.
The "private treaties" can be defended in theory "" on the basis of the claim that journalists in the publications concerned are free to write what they want about any company, and are not duty-bound to sing the praises of the companies whose shares the publisher holds. The bitter truth is that this is hogwash ""the Chinese walls that used to separate and business departments in most newspapers have become porous, and in some cases have been demolished without ceremony. Evidence that has surfaced supports the view that journalists in the affected publications are being asked to play the piper's tune. So from a journalistic standpoint, there is nothing to be said in defence of space-for-shares barters. To the obvious question of what happens to readers' trust in a newspaper and the unbiased nature of its reports, the answer would appear to be that the big newspapers have entrenched positions in the market, which cannot easily be challenged; so they fear no risk of losing readers.
As for the business logic of such arrangements, the hard fact is that Indian newspapers have engaged in price wars over the years, to the point where most of the large newspapers are available virtually free or at nominal cost to readers. As a consequence, 90 per cent and more of a newspaper's revenue comes from advertising; from that, it is but a short step for a cynical publisher to conclude that if the advertiser is the one who is paying, then everything should be done to please the advertiser and thereby to bring in more revenue. If the reader complains, tough luck.

First Published: Wed, January 16 2008. 00:00 IST