Disclose stake in companies being reported: SEBI to media

Mumbai, Aug 27 (PTI) Concerned over media groups entering
into private treaties for stake in listed companies in lieu of
promoting their brands, market regulator Securities and
Exchange Board of India on Friday made it a must for
disclosure of such treaties.
Besides such disclosure on their websites, SEBI also made
it mandatory for the media houses to disclose in news reports
their stakes in a company being reported.
Stating that absence of appropriate and adequate
disclosure by media may not be in the interest of investors
and financial markets, SEBI said in a statement, "There are
prescribed norms of journalistic conduct that require
journalist to disclose any interest that they may have in the
company about which they are reporting.
"However, there are no equivalent requirements in the case
of media companies holding a stake in the company which is
being reported or covered."
"Therefore, the SEBI took up the issue with Press Council
of India (PCI), expressing its concerns on practice of many
media groups entering into agreements, such as 'private
treaties', with company.
"Typically, such arrangements are with companies which are
listed or which proposes to come out with public offering.
These in general, entail a company giving stake in it in
return for media coverage through advertisements, news
reports, advertorials etc in the print or electronic media,"
the market regulator said.
It felt that such arrangements might give rise to
"conflict of interest" and may, therefore, result in dilution
of independence of press. This may consequently compromise the
nature, quality and content of news, editorials relating to
such companies.
"Needless to say, biased and motivated dissemination of
information, guided by commercial considerations can
potentially mislead investors in the securities market. Such
journalism would not be in the interest of securities market."
Stating that PCI at its meeting on February 22 had
accepted the suggestions of SEBI, the statement said that the
media houses would also have to disclose mandatorily the
arrangements under which they have a nominee on the board of
company, any management control or other details about any
potential conflict of interest for media groups.
The PCI, in a statement earlier this month, had listed
out SEBI's suggestions saying that the market regulator had
expressed its concerns over Private Treaties entered into by
many media houses with companies already listed in stock
market or planning to come out with public offer.
Subsequently, PCI had issued guidelines to media houses
about such disclosures. PTI