Illustration by Ramandeep Kaur/ThePrint
Illustration by Ramandeep Kaur/ThePrint
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Mumbai/New Delhi: Projecting a revenue growth that is more than double the market growth rate, charging advertising rates 126 per cent higher than the closest peer, valuing shares at an exponentially high rate and artificially increasing share value — these are some of the alleged reasons why ARG Outlier Media Private Limited, which owns Republic TV, is under the Mumbai Police’s scanner.

The Mumbai Police is probing ARG Outlier for suspected financial irregularities in connection with its investigation into alleged manipulation of Television Rating Points (TRPs).

An interim forensic audit report of the probe, which is part of the Mumbai Police’s supplementary chargesheet in the case filed on 11 January, has detailed how ARG Outlier allegedly valued its shares at an exorbitant rate by projecting ambitious advertising income in future years even before the launch of its channel.

The report, a copy of which is with ThePrint, also stated how Republic TV had the highest viewership right since the first month of its launch, and that the “charging of such a high advertising rate by the Republic Media network and the fluctuations in viewership as compared to others creates suspicion that it is involved in manipulating TRPs”.

“The alleged manipulation of TRPs by ARG had resulted in increasing the advertising revenues, increasing the valuation of shares and attracting investors,” the interim forensic report said.

The 56-page report, prepared by auditing firm Sarath & Associates, also said a detailed financial analysis is still in progress and more such financial irregularities, if any, are required to be further scrutinised.

ThePrint reached Joint Commissioner of Police (Crime) Milind Bharambe and Assistant Commissioner of Police (Crime Branch) Shashank Sandbhor, who is probing the TRP case, for comment via calls and texts but there was no response until the time of publishing this report.

Republic TV founder and editor-in-chief Arnab Goswami also did not respond to ThePrint’s calls and texts.


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‘Exponentially high share value’

According to the interim forensic audit report, ARG Outlier had allegedly valued its Compulsory Convertible Non-Cumulative Participatory Preference Shares (CCPPS) at an “exponentially high premium” even before it launched its channel, Republic TV, in May 2017, based on projected higher revenue for future years.

CCPPS are those that have to be converted to ordinary shares after a pre-determined date.

ARG considered a 29 per cent jump in revenue year-on-year even as the industry growth according to the valuation report was pegged at just 13.1 per cent, the audit report said.

The CCPPS were first valued in November 2016 and then again in November 2018 — before the launch of ARG Outlier’s Hindi channel — at 150 per cent of the value two years ago.

ARG Outlier issued these CCPPS to four private investors and raised Rs 27.5 crore. Existing investors exited at 300 per cent rise in their investments in August 2019 based on these valuations, though the expected market return from the investments, the valuation report showed, was 15.6 per cent, according to the audit report.

“ARG Outlier had valued its shares at these prices based on the higher projections of revenues and profit margins year over year. However, till 2018-19, the company was making a cash loss as per their audited balance sheets. TRP manipulations had helped ARG Outlier to charge increased advertisement rates from advertising agencies and increase its revenue in a short period of three years of its channel launch,” the forensic audit said.

The audit analysed advertising rates for India TV, Zee News, CNN-IBN and Republic TV for 2017 and 2018 to show that Republic has consistently had one of the highest rates in the industry since its launch.

Similarly, a proposal of a private firm on the Republic Media Network in October 2019 said the net rate charged for the channel’s prime time 9 pm to 11 pm was Rs 27,200. The closest competitor was India Today at Rs 12,000. The report didn’t clarify if these rates were calculated on a 10-second basis, as is the standard practice.


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‘Round tripping of funds’

ARG Outlier allegedly also artificially increased its share value by routing funds to repurchase its own shares at a higher value, the audit said. In November 2016, ARG Outlier allotted CCPPS to its holding company, SARG Media Holding Pvt. Ltd and Asianet News Media and Entertainment Pvt. Ltd.

In November 2019 and January 2020, SARG Media purchased 5,658 CCPPS issued by its own subsidiary from Asianet News paying a price 300 per cent higher.

Republic TV editor-in-chief Arnab Goswami and his wife Samyabrata Goswami are co-founders and promoters in SARG Media, and own 93 per cent of the shares.

“These transactions raises suspicious over the genuineness of such value of the CCPS, its valuations which are based on the very high growth levels of ARG Outlier require to be further investigated (sic),” the audit report said.

The audit also flagged possible round tripping of shares, which refers to a series of transactions between companies to boost the revenue of the firm involved, but don’t fetch any real economic benefit to either company.

In September 2019, it said, Asianet News transferred Rs 2.28 crore to Goswami, who transferred Rs 2.18 crore to SARG Holding. In October 2019, SARG Holdings transferred Rs 2.19 crore received from Goswami to Asianet.

Republic versus Times Now

According to a complaint by consumer insights firm Hansa Research Group Pvt. Ltd, confidential data from 10 ‘panel homes’, where bar-o-meters to record viewership are installed, were leaked by their relationship managers.

The Mumbai Police’s investigation so far has alleged that television channels such as Republic TV, Box Cinema, Fakt Marathi, Wow Channel, News Nation and Maha Movies bribed panel homes through agents.

The audit report claimed, three of the ten panel homes have confessed to the Mumbai Police about having received money for viewing Republic TV. It noted that suspected manipulation of TRPs by bribing even two panels results in a significant surge in advertising revenue.

The report, however, added that the auditing firm could not verify the use of cash to manipulate Republic TRPs and this needs further investigation by the Mumbai Police.

The firm analysed the viewership data and advertising rates for major channels from 2017-2020 and noted that the viewership of Republic TV and Times Now was three times more than that of other channels.

“The viewership of all the channels was ranging in decimals, while the viewership of Republic TV and Times Now was ranging within 1 to 4.50. Such a huge fluctuation in the viewership creates suspicious on the existence of TRP manipulations… (sic),” the audit report said.

As part of the investigation, the Mumbai Police in a letter dated 21 December 2020 requested the Broadcast Audience Research Council (BARC) to provide data for Times Now as well as Republic TV from 2016 to 2018, saying “there are reasons to believe that the data published was different from data received specifically with respect to television channels Times Now and Republic”.

The notice also said there are also reasons to believe that manipulation of data and internal process would have resulted in financial implications — direct or indirect.

While the raw outlier data shows Times Now has higher impressions, Republic TV had higher impressions after “data cleaning”.


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Times Now alleges tampering to favour Republic

In a statement on 22 January, the Times Network, which runs Times Now, said it had suspected large scale manipulation after the launch of Republic TV in 2017 and had observed “significant abnormalities” in the market-wise ratings of that channel indicating “ground level tampering or deliberate intervention at the raw data level to favour them”.

The company said it complained to BARC repeatedly for two years, without any resolution.

“As per BARC’s Forensic Audit of July 2020, as well as the multiple email and WhatsApp chats of that period, which has been accessed by Mumbai Police, it is now clear that Times Now’s TRPs were indeed manually reduced by BARC officials headed by Partho Dasgupta and Romil Ramgarhia before publishing, with the intention to give undue advantage to Republic TV in the English News Genre and thereby fraudulently declare Republic TV as No.1, even when Times Now was consistently higher by a large margin and was the undisputed leader of the Genre,” the company said in its statement.

It added that the Times Network has suffered losses due to BARC’s “unacceptable and unpardonable act”, and is contemplating all possible legal actions against the organisation.

ThePrint reached BARC spokesperson seeking to know what is data cleaning and if BARC had indulged in a “data cleaning” practice in the past before publishing data.

A BARC spokesperson declined to comment and said: “As the matter is a subject of an ongoing investigation by the various law enforcement agencies, we are constrained to respond to your enquiries.”

An industry source said, “Removal of ‘outliers’ is a process for sure, but there was no clarity over whether it was done manually or was automated in this case of Republic TV and Times Now.”

BARC India’s outlier policy was meant keeping a check on any unjustified spike in the viewership of any channel, which was to feature in the “landing pages” of certain distributors.

A second industry source from a news channel said, “It (cleaning up of outliers) does indicate some manipulation, if it was done manually.”


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VIEW COMMENTS

3 COMMENTS

  1. The Mumbai’s police lack of any knowledge of finance is glaringly visible, ‘Overvalued shares’, ‘expensive ads’.. (:

  2. What do you expect ? The fraudster has to support lies of Govt and their disinformation. he knew no on is going to check his accounts and fraudulent dealings . The connivance of the Govt in all his activities would slowly emerge.

  3. There’s a concerted campaign by rented journalist to ignore the fact that PRANNAY ROY has been stopped by courts to go abroad due to investigation into financial irregularities and NIDHI RAZDAN was out of the country under fake job in Harvard.

    Is there a connection to hush up matters of financial irregularities by avoiding the investigation by going abroad and dealing with shell companies Prannay Roy is accused of.

    THE CHAPPAI is very silent about it. Complicit I don’t know.

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