SEBI seeks full disclosure on media's private treaties

The Securities and Exchange Board of India on Friday made it mandatory for media houses to make complete disclosure of its stakes in the corporate sector entities.

Not only must the details be revealed on their websites, they must also disclose in news reports their stakes in the companies being written about, the market regulator said.

According to a press notification by SEBI, agreements between media houses and corporate houses may give rise to conflict of interest, and may therefore result in dilution of the independence of the press. "This may consequently compromise the nature, quality and content of the news / editorials relating to such companies."

It added, "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 the securities market."

SEBI had earlier taken up this issue with the Press Council of India. The PCI, chaired by justice G N Ray, agreed to comply with its directives, which it said were valid.

Private treaties are agreements under which a media house picks up an equity stake in a company in return for media coverage through advertisements, news reports, or advertorials in print or TV. Typically, such arrangements are entered into with companies that are listed or which propose to come out with public offerings.