The common perception is that corruption in the media refers to hanky-panky in the news media business. Therefore, private treaties, paid news, ad for edit deals is what has usually raised hackles. However, for some time now, there has been talk of rising corruption in the mainstream entertainment industry also. There is talk of film studios paying a bribe to sell their satellite rights to a TV company, of production firms paying off programming heads to get a show approved or extended. There has been talk of distribution executives in TV firms taking a cut on inflated carriage fee bills from multi-system operates or MSOs (the distributors of TV signals).
‘Reality Check Fraud, bribery and corruption in India’s M&E industry’, released earlier this month by EY, shows that the maximum instances of fraud happen in areas where acquisition of films, talent, rights or carriage fees are involved‘Reality Check Fraud, bribery and corruption in India’s M&E industry’, released earlier this month by EY, shows that the maximum instances of fraud happen in areas where acquisition of films, talent, rights or carriage fees are involved
Normally one would dismiss them as isolated incidents of individual corruption these happen in every industry. So the chances of there being a few bad ones in the Rs 83,000-crore media and entertainment are the same as those in IT or pharma. But, the gossip around bribes and bad deal-making has been rising of late. Recently, a well- known name in the media agency business was side-lined along with colleagues, following allegations of financial irregularity. This was when they were working on the account of one of the largest advertisers in India. And several managers have been caught over-invoicing their firms on programming, acquisition or talent costs.
So, when 56 per cent of the respondents in the EY report say that fraud has gone up in the last two years, it resonates.
‘Reality Check Fraud, bribery and corruption in India’s M&E industry’ was released earlier this month by EY. It uses online interviews with 45 senior people to track fraud in the media and entertainment industry. The most common type of frauds are the ones where acquisition of any sort rights, talent, or access is involved. (See chart) The report uses real-life case studies, without naming names.
There are several arguments against the research. One, the sample is too small to arrive at any conclusions. Also, EY has one of the largest media and entertainment practices in India. And its strong point is risk advisory. The report, then, will lead to more business for EY. Besides, corruption in media buying has been known for a long time almost every media brand complains that it has bribed a planner or buyer at some point to ensure that its brand is included in a plan.
Maybe. But it has come at a time when talk about unethical practices has been going up in an industry that is otherwise a happy place buzzing with employment opportunities and creative prowess. The loss of profits or cost inflation due to fraud is estimated between 5-25 per cent by the EY report. That is a big number in an industry where costs have been rising heavily every year. Could the industry then have performed better, but did not because of corruption?
For investors who have not seen decent returns in the business, this must be a terrible revelation. More so, when you know that this is a largely, private industry. The people involved are well-paid. Why on earth, then, does it happen? And if greed and poor moral fibre are the answers, then all it says is that the media and entertainment industry is a reflection of India, in general. Our corruption ranking after all is one of the worst in the world!