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TRAI’s cross-media restrictions for radio rating agencies could spell trouble for TAM

MUMBAI: The Telecom Regulatory Authority of India (TRAI) has recommended that radio broadcasters or advertising and media agencies should not be allowed to hold more than 10% stake in a radio measurement body.

The recommendations, if accepted by the Ministry of Information and Broadcasting (MIB), will mean that TAM Media Research, which also provides listenership data for FM radio, will be ineligible to operate as a radio rating agency.

The recommendations are part of a consultation paper issued by the authority in March titled ‘Issues related to Radio Audience Measurement and Ratings in India’.

TAM, which is a joint venture between media behemoth WPP’s Kantar Media and Nielsen India, has been forced out of TV viewership measurement due to similar cross-media holding guidelines imposed by the government. Kantar has challenged the MIB’s cross-media holdings in the Delhi High Court. The matter is currently sub judice.

Joint industry body Broadcast Audience Research Council (BARC) is currently providing data for TV channels. In fact, TAM has formed a meter management JV with BARC wherein all TAM meters will become part of the BARC system.

TRAI is of the view that cross-holding between rating agencies and their users may result in biased ratings. This may also open up possibility of distortions in the ratings.

The authority has recommended that no single company/legal entity, either directly or through its associates or inter-connected undertakings, should have substantial equity holding in more than one rating agency operating in the same area.

It has defined substantial equity as 10% or more of paid-up equity. Having a substantial equity holding in companies will constitute a cross-holding. The cross-holding restriction will also be applicable to individual promoters besides being applicable to legal entities.

A promoter company/member of the board of directors of the rating agency cannot have stakes in any broadcaster/advertiser/advertising agency either directly or through its associates or inter-connected undertakings.

TRAI has suggested that radio rating agencies be subjected to light touch regulation wherein broad contours of regulation will be specified in the form of guidelines based on the authority’s recommendations.

It also stated that the guidelines for rating agencies will be notified by the MIB. These guidelines will be applicable to every rating agency providing radio rating services in India, including the industry-led body undertaking this work.

The authority has not proposed any cap on the number of radio rating agencies operating in India by leaving it to the market forces.

An industry-led body on the lines of BARC India has been suggested for radio as well. The industry-led body, the authority suggested, should have equal representation with equal voting rights from the three associations, namely Association of Radio Operators for India (AROI), Indian Society of Advertisers (ISA) and Advertising Agencies Association of India (AAAI).

Since All India Radio (AIR) has a large geographical and population coverage and is not a member of AROI, representation of AIR should be ensured in the technical committee formed within the industry-led body for guiding and supervising various radio rating processes.

TRAI has also recommended that all rating agencies, including the existing rating agency (TAM Media Research), must obtain registration from the MIB. For this purpose, the MIB will have to publish detailed procedure for registration of rating agencies.

In case the industry-led body does the radio rating itself, it has to register itself as a rating agency with the MIB. In case industry-led body engages a rating agency for carrying out the rating work, such agency must be registered with the MIB.

The rating agency should be registered as a company under the Companies Act, 2013. In its memorandum of association (MoA) it should specify rating services or market research or similar activity as one of its main objects. The rating agency should not have in its MoA any activity leading to a conflict of interest, such as consultancy or any such advisory role, with its main objective of rating.

Any member of the board of directors of the radio rating company should not be in the business of advertising, media buying and radio broadcasting. The rating agency should have a minimum net worth of Rs 5 crore (Rs 50 million).

The rating agency, TRAI recommended, should put in place a methodology for radio audience measurement and rating process that conforms to the standards prescribed for the rating process and reflects consistent and internationally accepted rating standards. Further, the rating agency should submit detailed methodology to the MIB and also publish the same on its website.

The authority also stated that the rating agency should have an effective complaint redressal system in place to redress complaints of the users of radio ratings. The rating agency shall maintain records of all the complaints received along with their disposal. Details of the complaints and their disposal shall be displayed on the website of the rating agency.

It also stated that the rates for the rating services should be non-discriminatory and transparent, and the rate card for rating services should be published in the public domain by the rating agency. The data generated by the rating agency should be made available to all interested stakeholders in a transparent and equitable manner.

Use of such data will be governed by the terms & conditions specified by the agency providing rating data. The rating agency should publish the categories of data/reports available for use along with the terms & conditions on its website, TRAI said.

The rating agency must also set up an internal mechanism for ensuring that its internal processes and guidelines issued by the government are being followed. This should be conducted quarterly and the report placed on its website.

The rating agency must also get their rating process/system audited annually by a qualified independent auditor. The auditors of the rating agency should state in their report whether proper mechanisms and procedures exist for a credible rating system. The report of the independent auditor must be placed on the website of rating agency.

The rating agency should offer its systems/procedures/mechanisms for auditing by an Aaditor appointed by the government, or any of its authorised agency or TRAI, should such a need arise, the authority said.

In case of non-compliance with the guidelines, the MIB may decide a suitable penalty based on the number of instances of non-compliance.

TRAI has suggested that 12 months from the date of the MIB guidelines coming into force be provided to the existing rating agency to meet the guidelines prescribed by the government.

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