[nukkad] NEWS FOR SALE

hi

though long, i have posted the following as do not have the link. an 
enlightening read.

- pravin

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NEWS FOR SALE
 
*The Times group forges unusual alliances with companies which serve the 
interests of everybody - except those of readers and consumers. Sucheta Dalal 
throws new light on this unique "business strategy" * If you are an investor 
who depends on India's largest-selling economic newspaper for unbiased news, 
then you must know and understand the concept of "private treaties" (PT). 

Since the Times of India (TOI) far outsells every other English newspaper and 
The Economic Times is by far the market leader in the economic news category, 
the concept is of universal interest, especially for MoneyLIFE readers. 
Although PTs sound like agreements between two sovereign nations, they are, in 
fact, pacts between the Times of India group and approximately 100-odd 
companies, under which TOI buys shares of small and fast-growing companies. The 
list is expanding rapidly. 

In an article for India-Seminar on 'The changing Indian media scene', TN Ninan, 
editor of Business Standard, described PTs as "basically the transfer of shares 
in return for advertising." He said, Bennett Coleman & Co, which owns the Times 
of India group of publications, "invests in usually mid-rung companies that are 
keen to jump into the big league but are perhaps without the big bucks to spend 
on marketing. The share purchase money is immediately taken back against the 
promise of guaranteed advertising in Bennett publications - to build the 
investee company's brand(s). Part of the deal is even said to be editorial 
coverage, though this remains unconfirmed." Ninan goes on to say, "If true, by 
definition, this will have to be positive coverage" because "the brands have to 
be built up, so that the shares bought by Bennett gain in value and can be 
sold." Well, reports of guaranteed editorial coverage are no longer 
"unconfirmed", as Ninan put it. 

MoneyLIFE has in its possession a document to prove that journalists are being 
designated as "champions" for PT clients to tailor editorial coverage to 
enhance the value of these companies and TOI's investment. An e-mail by The 
Economic Times editor, Rahul Joshi (dated 29 November 2007 ), says, "At ET, we 
are carving out a separate team to look into the needs of Private Treaty 
clients. Every large centre will have a senior editorial person to interface 
with Treaty clients. In turn, the senior edit person will be responsible, along 
with the existing team, for edit delivery. 

This team will have regional champions along with one or two reporters for help 
– but more importantly, they will liaise with REs (Resident Editors) and help 
in integrating the content into the different sections of the paper. In this 
way, we will be able to incorporate PT into the editorial mainstream, rather 
than it looking like a series of press releases appearing in vanilla form in 
the paper." He then goes on to name the PT "champions" for each region, who 
will "advise" the regional editorial chief to carry 'stories' about PT clients. 
He also designates "trouble shooters" in each region, probably to ensure that 
no PT client is offended with negative coverage. While this kind of support for 
advertisers in the editorial pages is extraordinary anywhere in the world, it 
is important to remember that there is nothing clandestine about what TOI is 
doing. The PT arrangement, along with all the "benefits" that would accrue to 
those who sign up, along with testimonials from successful PT customers such as 
Nirmal Jain of India Infoline and others is on two group websites. These are 
www.privatetreaties.com and timesprivatetreaties.com. 

In the past two years, TOI has invested over $500 million in 114-odd companies 
in diverse businesses. It is a private equity firm. TOI claims that when these 
companies are mentioned editorially, its investment in them is mentioned. 
Indeed, one occasionally notes such a mention, but how many investors 
understand what PT stands for or the relationship that is implied? Moreover, 
while such a disclaimer may work when a press release is published, will it be 
followed when journalist "champions" work hard to "integrate the content" to 
ensure that it does not look like "vanilla" press releases? 

Typically, the Times group buys a 5%-10% stake in mid-sized companies that are 
planning to go public or looking for private equity. The investment can vary 
from Rs10 crore to Rs100 crore. The company agrees to invest an equal amount in 
advertising in Times publications over a three-to-five-year period at a steep 
discount to the normal advertising rates. Most companies that sign PTs are 
those planning public issues, selling expensive realty projects or looking for 
private equity. All of them are looking for publicity and an assurance of 
positive editorial coverage. 

For the Times, it is usually a double bonanza: significant capital appreciation 
and tax-free income (since there is no long-term capital gains tax) – on the 
other hand, advertising revenue is fully taxed. Investors must know the exact 
list of Times PT clients (which is available on their website for easy 
reference) because you are least likely to hear any bad news about these 
companies. 

They include -- Deccan Aviation, Sobha Builders, India Infoline, Emaar MGF, 
Celebrity Fashion Ltd, The Home Store, Amity Education, Media Video Ltd, Vishal 
Retail Pvt Ltd, Zicom, Ezeegol.com< http://ezeegol.com/>, Avesthagen, 
Bartronics Ltd, Paramount Airways, Almondz, Archies, Future Group, Thyrocare, 
Raja Rani Travels, Sahara One, Percept Pictures, etc. It offers "advertising 
support, branding support and corporate image development." 

PT's vision is stated as follows: 

We dare to go where no one has dreamt of venturing before. 

We seek advertising clients that no one wants. 

We look for value that no one sees. 

We co-create wealth that no one imagines. 

All this is fine from the business perspective of the Times. Where does the 
group's "win-win relationship" with PT customers leave the readers/investors? 
They clearly do not figure in the equation at all. The group indeed tests the 
limits in what passes off as news, but in the cut-throat fight for the 
advertising buck, what exactly is an "advertising client that no one wants"? 
Surely, not India Infoline? The PT website lists every press release issued on 
behalf of PT clients. The headlines alone reveal the slant. 

For instance - 'Skyscrapers all set to change Noida skyline' (TOI), 'Milk & 
Honey Towns' (ET), 'Companies rake in big moolah serving NRIs',   'Sai Info 
to come up with 18 e-malls by March', 'Airline mergers is bad news for 
consumers' (for Paramount Airlines), 'What you get is exactly what you have 
paid for' (for Gitanjali), 'Parajia has ability to swing big deals' (for India 
Infoline), 'Gitanjali Lifestyle to ride high on luxury', 'Reason to Smile' (for 
GTL, earlier Global Telesystems), 'Pantaloons rolls out the red carpet to woo 
the last minute Durga Puja shopper in Kolkata', 'Bajaj bros resume legal battle 
over empire' (this one for Bajaj Hindusthan is particularly interesting) and 
finally check this one for Osian -- 'India's brush with soccer is all set for a 
change. History is being re-written on a new canvas and the view looks 
optimistic'. 

This unique "win-win" situation indeed works wonderfully well in a monster bull 
run. While companies and the publishing group are the real winners, the 
investors are losing nothing at the moment. But remember this is a two-year-old 
concept and the implications of tearing down every shred of the wall between 
editorial, advertising and PR will be evident only when things look less sunny 
for the markets and the economy.



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