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Unit 4: Capital Formation

Notes

Caselet To be Broadcasted or Not: The Ethical Issue

iquor producers spent heavily on advertising on the electronic media because of
the reach of satellite and cable TV. Though the broadcasters were bound by a
L30-year old advertising code which banned airing of advertisements that related to
or promoted cigarettes and tobacco products, liquor, wines and other intoxicants, the
telecast of such advertisements continued over the years. This was because the code was
only a code of conduct, not a legally enforcing code. Doordarshan, the state-owned TV
channel, was the only one that adhered to it. The broadcasters were also bound by the
Cable TV Act, 1995. But for broadcasters liquor segment is too attractive to be ignored. In
the first half of 1998, STAR reported revenues of ` 127.9 million from liquor advertisements
while Zee reported revenues of ` 40 million. The regional channels managed to get about
` 0.70 million in revenues.
Since liquor ads generated such high revenues, Doordarshan also planned to air such ads
in 2000. With pressure increasing from public interest groups to ban liquor advertisements,
the government had to make amendments to the Cable TV Act 1995. While the Indian
government could not take action on most of the channels for violating the codes, as they
did not uplink from India, the cable operators were punishable under Indian law. The I&B
Ministry also took steps to monitor the advertisements broadcast by these companies.
Due to the ban, liquor companies focused more on promotions for brand building. They
started sponsoring events that projected the ‘glamour’ of the brands, like track racing, car
rallies etc. For instance, MacDowell one of the leading liquor companies in India conducted
the Golf tournament, which became an annual event.
To promote their products, the liquor companies started Surrogate Advertising in which
they used other products carrying the Brand Name of their liquor. Like Bagpiper Soda,
McDowell mineral water, etc. Such advertisements or sponsorships help in brand building
and contribute to brand recall. The product shown in the advertisement is called the
‘surrogate.’ The sponsoring of sports/cultural/leisure events and activities using a liquor
brand name also falls in the category of surrogate advertising.

In late 2000, Members of the Indian Broadcasting Foundation (IBF) urged the government
to allow them to telecast socially responsible advertisements sponsored by liquor
companies. They requested permission to telecast such advertisements because the Indian
television industry’s revenues had reportedly decreased by about 7-11% (about ` 1 billion
per annum) after liquor and tobacco ads were banned. After more than six months, in
mid-2001, the I&B ministry accepted the recommendations of the broadcasters.

Because of some dispute, this decision was not formally announced. Over the issue of
hoardings of these ads at sports events being broadcast on television, the I&B Minister
Sushma Swaraj said, “We have sought the sports ministry’s comments on the issue and are
awaiting their response before announcing the norms. If a company makes a product
other than liquor (or tobacco), which has a turnover of ` 1 crore (` 10 million), then the
firm is entitled to use the same brand for that product.” She announced that a formal
decision would be made after the sports ministry’s comments were received.
In June 2002, the Information and Broadcasting (I&B) Ministry of India ordered leading
television (TV) broadcasters to ban the telecast of two surrogate ads of liquor brands,
Contd...

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