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#NAMA: The impact of IT Rules 2021 on investment and operations of independent media

Key takeaways

  • Investors are waiting and watching, as they weigh in on whether investing into the media space is worth the trouble or not
  • The Intermediary Rules are going to be of concern to editors because it will impact the way reporters are actually reporting news due to the vagueness of the terms in what can be construed as a violation of the Digital Media Ethics Code
  • The oversight mechanism of the grievance redressal system is not free from the executive’s influence and hence is not an independent authority
  • As per the scheme of the grievance redressal, the government can pass ex parte orders against media organisations
  • Foreign media publications having a physical presence or conducting systematic business activities in India will also be hit by the Rules

The new Information Technology (IT) Rules, 2021 mandate digital news publishers to notify the government of their operations; set up and participate in self-regulatory organisations; apply a complaints redressal mechanism; and follow legally binding ethics codes which have only been applicable to print and TV news so far. 

In a panel discussion held by MediaNama on the impact of IT Rules, 2021 on news organizations, experts shared their views on how the IT Rules, 2021 will impact news in India, and what it means for digital media organisations. The panellists included Abhinandan Sekhri (Newslaundry), Kawaljit Singh Bedi (NDTV), Koreel Lahiri (Media Development Investment Fund), Manu Sebastian (Live Law) and Neha Chaudhari (Ikigai Law).

Webnyay and Centre for Internet & Society were our community partners and the discussion was supported by Google. We cover the relevant discussion on the impact of the IT Rules, 2021 on investment and operations of independent media from the first half of the session here.  All quotes have been edited for clarity and brevity.

Impact on investment and operations of independent media 

Investors are weighing their returns against all the trouble of investing in media. Lahiri noted that things are indeed very challenging and funding has in fact dried up. 

“And forget foreign funding, but within the country, there are very few people who are going to touch news per se as an investment opportunity, simply because it comes with so much baggage attached to it; most investors, unless you are a very, very highly mission-oriented investor, are not going to touch it with a barge pole also which brings me to what is likely to happen.” — Koreel Lahiri

Shift towards some kind of proxy investment. Those who were perhaps interested in this space are going to play some kind of a proxy investment. Lahiri clarifies further, based on the consumption of content by the media organisation’s audience, investors will explore alternative content that the audience are likely to consume, for their potential investments. So, people will make a trade-off between whether they want news or just impactful and meaningful content, Lahiri conceded. 

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Innovative structuring to subvert 26% FDI limit. Lahiri’s view is that innovative structuring will happen in news organisations which have already received investments, and that they need to get restructured to come under the 26% limit as per the new FDI Regulations. Investors will be going forward with structuring on setting up outsourced structures at arm’s-length, so as not to violate the FDI norms. He admitted that it is easier said than done because one could always argue that  even in such setups, if the sum and substance of the entire work being done is within the country and is news within the country then the question could arise that all of this was just a facade. 

Lahiri said that he will look at other green pursuits that are emerging which might be equally impactful, adding that “We are still doing investments but we are not doing investments in hard core news kind of a space, and this goes across the board.”

An end to exits for digital media? Lahiri said that it doesn’t have to be so. Legal minds can be put together and figure out ways to exit but it is a challenging atmosphere. 

Does the recent VCCircle sale have something to do with the new guidelines? Sekhri admitted that there was hesitancy amongst entrepreneurs and investors in wanting to stay in this space, let alone invest here. 

Editors’ accountability under the new Rules. Sekhri pointed out that the new Rules are going to be of concern to editors because it will impact the way reporters are actually reporting news due to vagueness of the terms in what can be construed as a violation of the Code. He contemplated the consequences of the surge of complaints the governmental department will have to deal with. There are over 300 licensed news channels in different languages in the country, which means the Ministry will deal with thousands each day. Sekhri wondered if there would be any application of mind, or if it is going to be arbitrary. 

Massive compliances burdens 

The estimate in terms of the grievances that you might receive. Bedi stated “The only benchmark we see right now is from the feedback mail we get and what we see on Twitter, which runs into hundreds of messages per day, if not thousands.” He fears a one-to-one system of addressing formal complaints, as ‘even 20-30 complaints a day will bring down the whole system’. 

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Freedom of speech is at risk. But compliance is a small problem compared to how the rules will come in the way of letting the press do its job itself, and threaten freedom of speech, pointed out Bedi. “I think the paperwork, how to handle this will become a smaller problem if you start getting dictats, which say, you cannot cover it or this coverage is not okay, or take down these articles or videos,” he said.

Additional mechanism or an adjunctive mechanism for grievance redressal? Sekhri argued “Right now. There is someone who decides if something is defamatory – they are called the Courts of India. There is this whole misconception that digital doesn’t come under any rules, as if we are the Island of Kailasa. We come under the same rules that the whole country comes under. There are defamation laws – we deal with them.” 

This kind of an adjudicative mechanism is meant to reduce the burden on courts. Sebastian asserts “But adjudicatory mechanisms should be independent from the executive’s influence. Every adjudicatory mechanism should be independent from the executive, that is a fundamental principle.” But Sebastian argued that here, since the executive – the government itself is acting as the adjudicating authority, you don’t have an independent agency to adjudicate the issue.” Further exploring the consequences, he added that another foreseeable issue which can arise is that there could be certain media agencies or media platforms, which are aligned with the government or maybe there could be certain portals, which the government itself is promoting. “They may even eliminate the competitors and promote the pro executive and pro-establishment media platforms.”

Complying with the government’s mechanism for registration and grievance redressal. You can challenge a policy saying it violates your constitutional rights. But until that happens, you comply.” Sekhri argued. He said that most members of DIGIPUB News India Foundation are complying under protest. 

Has the Ministry met with the representatives of Digital News Publishers? They haven’t, Multiple representations have been sent to the Ministry but no response was received.

Is there a self-regulatory organization for digital publishers?  “DIGIPUB,” responded Sekhri. However, DIGIPUB is not registered with the government as per the mandate. 

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Impact on press freedom

Sebastian explained that the rules are formulated as an oversight mechanism by the government. If the complainant is not satisfied with the response from the media platform, it can be escalated to the government level. So there is an interdepartmental committee which is having oversight of the media contents of the functioning of the media organization.

As per the scheme when a complainant files a complaint with the grievance redressal officer of the media platform, you have to give an acknowledgement within 24 hours and the complaint has to be redressed within 15 days, and you have to give periodic reports to the government regarding the complaints and steps taken. “So, basically you are giving the government a peep into your functioning”, he commented. He added “In addition to this, the rules also give the governmental interdepartmental committee power to issue extraordinary, ex-parte orders for take down, directly on the first instance itself.”

More website censorship. Bedi observed that while the new rules come with a lot of details around how to raise and escalate a complaint, it gets negated by the fact that in extraordinary cases, the interdepartmental committee can take a suo moto call. This will lead to a lot of censorship.

No option for seeking recourse to protect content against takedown. As per the new IT Rules, Ministers can pass rulings without giving you a fair opportunity or hearing. “News, whether digital or broadcast, is very ephemeral”, Bedi explained. If you get a notification to take down anything, you would usually go to courts and the content will be available unless stopped by some court order. Now with these new Rules, you can just get a call or a notification from the Ministry asking you to take down some content immediately. 

Selective application. Sebastian pointed out that another issue with the government’s initiative on taking actions came to light in the government’s tardy response to the UPSC Jihad episode on Sudarshan. The episode was clearly violating the provisions of the Programme Code under the Press Council Act but no action was taken until after much nudging from the Supreme Court. 

Why didn’t cable industry resist regulation ?

Certain actionable terms in the Code of Ethics are highly subjective and open to interpretation. Bedi noted that the Code of Ethics under the Rules is very subjective. For example, you can’t do any programming which offends good taste or decency. But who is there to interpret what it means? If you are against the Code, anyone can file a complaint against you and then you go down these three levels that are escalating. 

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Loosely defined terms and parameters for take down, such as ‘public decency’ and ‘national security’. The Cable Television Network Rules have many vague points that can be used to ask you to take down content. But there the option exists to approach courts to settle the dispute. Now that the Rules have been extended to the digital medium, compliance has become difficult as unlike on Cable TV, everything is residing on digital media, Bedi argued.

“The compliances are saying that not only do you have to respond in 24 hours, you have to take a decision in 15 days, everything you do has to be put on a publicly displayed website. So you have to say that you got this complaint, what action was taken, what was your response. It just seems like a lot of paperwork.” – Kawaljit Singh Bedi.

Impact on foreign media presence

How might these rules affect the foreign media present here like the BBC, the New York Times and the Washington Post, as well as foreign publications that don’t have a physical business here but have freelancers and correspondents writing for them?

Chaudhari explained that there are two scenarios that play out here. One is, if your business has a physical presence in India, and the second thing says that the rules apply to you, if a publisher also conducts, ‘systematic business activity of making its content available in India’. She explained, “Systematic activity is very widely defined by its structured or organized activity which involves an element of planning method continuity or persistence.” The intent therefore is to apply these rules fairly widely. It’s not contingent on having a physical presence.

What’s the penalty here for them for not adhering with the Rules? Chaudhari said it comes down to two things. “There are two kinds of penalty. You go back to the Information Technology Act for penalties. One is you get penalized for not giving information when you should be giving information, in which case the penalty is Rs. 5000 for everyday that you don’t give information. And the second penalty is for non-compliance, which is the sort of residuary penalty wherever there has been no other penalty prescribed, which is a one-time Rs.25,000.” This sums up the penal consequences they will face from the government. 

Publishers serving international markets

Chaudhari explained that if you have a physical presence, i.e., if you have an office in India, or if you’re running a systematic business activity, then in any case, the Rules apply.  

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Scope for international legacy media to nominate a  local subsidiary, as a publisher for the purpose of compliance without infringing FDI Norms. They can’t in the sense that they need to have a local office if they’re servicing India and are conducting business in India, said Nikhil Pahwa, MediaNama’s editor and publisher. This means they will be restricted by the FDI norms. 

So does this mean that eventually foreign publications will be in violation of Indian law and therefore be blocked in India? Is that a possibility here? 

A divided stand between digital-only publishers and traditional news and print media with a digital presence. The Digital publishing industry is speaking in three different voices through DIGIPUB, DNPA, and other bodies. Sekhri’s view is that the way the regulations have been placed, there was an inevitability in conflict in broadcasts, print and digital. “So, you know, there is an inevitability that you may not have the same aligned interests. I think that is why you have several bodies.” he said.

The DNPA had put out a statement asking to be excluded from the purview of these regulations. Panelists were asked what was the consensus in the DNPA, in asking for it not to be regulated, instead of asking for these rules to be completely removed? 

Bedi said that while he doesn’t speak on behalf of DNPA, it’s a big body with traditional media companies of all sizes and agendas. The position taken by DNPA has always been that they have been in the news business for a long time, and have always come under all the applicable laws in India. So the DNPA’s view is that considering all this, its members should be kept out of the purview of the Rules. Bedi did agree that such a stand by DNPA sends a message that the traditional media is distancing itself from the stand taken by digital-only publishers. Stating where NDTV stands on this “All I can say is as part of NDTV that you know, we have consistently emphasized freedom of press in all four arms.” he conceded.

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