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Do news websites in India need government approvals? Newslaundry.com files for FDI approval

(with inputs from NT Balanarayan)

Update: Newslaundry filed for an FIPB approval because the RBI asked them to, in order to allow a transfer of shares to DML. Co-founder Abhinandan Sekhri has sent MediaNama a statement:

‘Newslaundry filed FIPB because we got a letter dated February 6, 2013 from the Reserve Bank of India saying “You are advised to obtain FIPB approval for the same.” The “same” being the subject of the letter which was “Submission of form FCGPR” regarding our company giving 6.25% stake to Singapore based Digital Media Laboratory (DML) who own the same amount (6.25%) in the production house (Small Screen) that incubated Newslaundry. Since the new company News Laundry Media Pvt Ltd had to be formed we had to (in the spirit of fairness) transfer an equal amount of stake to DML.

We went to North Block and met with officials (Dy Secy) from the Ministry of Finance since we were of the understanding that as a web only platform we didn’t need FIPB. The official at the MoF checked and told us that we did in fact need FIPB clearance before transfer of any shares to DML could be permitted.’

Earlier: News Laundry Media Private Limited, which operates the website Newslaundry.com has sought an approval from India’s Foreign Investment Promotion Board (FIPB), to sell stake to Singapore based Digital Media Laboratory Pte Ltd. It is not clear exactly how much money is being raised, and how much stake is being sold.

This is probably unprecedented, because as far as I understand, traditional (Print, TV, radio) news businesses in India need to register with the Registrar of Newspapers for India, and seek permission for raising funding. However, online news businesses (such as ours) have operated without any such requirement, in the absence of a policy on online media. The Indian government hasn’t yet taken a decision on allowing this investment, but the very fact that it now has to take a decision related to Newslaundry, probably means that a policy will have to be finalized, and a precedence created.

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News media is governed by a 26% FDI limit that the government has placed on foreign direct investment in news media.

We’ve written to Newslaundry for an explanation of why they filed for FIPB approval.

Websites can apply for accredition, but who needs it?

The ministry of Information & Broadcasting does have accredition for online publications, but accredition isn’t necessary for operations. Frankly, you only need accredition for access to government events, and even those aren’t always necessary. The idea of an official “Press Card” is archaic. The conditions specified for accredition:

1) The general terms and conditions prescribed for the representatives of print and visual media will also be applicable in case of online editors, correspondents, camerapersons.
2) A news site / portal means a website which has at least 1/3rd of its visible content related to news & current affairs originally reported by its own correspondents
3) The publications on behalf of which accreditation has already been given will accommodate their online journalists within their existing quota.
4) The site should have paid subscribers. However, it should not be insisted on the subscribers right now but some preference will be given to the news sites having subscribers.
5) Online news agencies will be governed as per the existing rules prescribed for news agencies.
6) The site should have a minimum annual revenue of either Rs.20 lakhs from its news portions only OR Rs.2.5 crores from the entire website including its news portion.
7) The site should be updated regularly and at least 6 times daily.
8) The news portal should be observing the laws of the land in terms of content, service, promotions, finances and any other aspect of functioning.
9) The news site should have been functioning for at least one year.
10) The domain name of the site should be registered for at least the next 5 years from the date of application.
11) The site should have at least 10,000 page views per day of its news-portion.
12) The issue of determining the authenticity of the site may be decided in consultation with VSNL in case of any doubt.
13) In the event of a website/portal found involved in any activity perceived as cyber crime now or in future, all accreditations given to representatives of that website/portal will be withdrawn at the discretion of the DG (M&C).

Possible Implications

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– In future, publications that want to set up online-only operations in India may have to file for an RNI registration.
– Fund raising from international investors, or an acquisition of an online Indian operation by a foreign publication, will probably require FIPB approval. Also, acquisition of stake might be limited to the same limits imposed for other forms of news media.

MediaNama’s Take (please see the note below)

We do not believe that media businesses should be regulated: it gives the state inordinate power over publications, via their ability to cancel a publication’s RNI registration without offering any significant protection, which would otherwise not be granted under existing law. This development raises new questions:

– What’s an online media business? The Internet is a space for free expression, and how does one determine whether a news blog is a news media business or not? What of a personal blog (say, India Uncut) that becomes an important source of news and perspective?
– How does this impact aggregators? Will aggregators (like Webmeme, HackerStreet India or the now defunct Desi Pundit) require registration?
– What about international news businesses setting up an online business in India? How will this impact Quartz India, which currently operates through Scroll.in, or media businesses being set up on a build-operate-and-transfer model? Both the Guardian and the Huffington Post have something new to look into, before setting up their Indian operations.
– No exits: Exits become more complicated too, and full exits, except to Indian media entities, may not be possible.
– Additional costs: Processes such as registration with the RNI could involve additional costs: MediaNama was set up in two weeks, paying around Rs 500 for the domain name and Rs 500 per month for hosting. Our biggest expense was the registration of a private limited company.

What this essentially does is, encourage media businesses to consider setting up business in the US, and run operations in India like a back-office or a bureau. At the same time, it is difficult to argue for a different set of rules should apply for offline and online news.

1. For the purpose of this post, you would be advised to view MediaNama as an interested party, because this development can impact us.
2. Please consult a lawyer and a Chartered Accountant in order to understand this better. This is based on our limited understanding of the laws governing media in India.

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Written By

Founder @ MediaNama. TED Fellow. Asia21 Fellow @ Asia Society. Co-founder SaveTheInternet.in and Internet Freedom Foundation. Advisory board @ CyberBRICS

MediaNama’s mission is to help build a digital ecosystem which is open, fair, global and competitive.



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