Who killed the private media?

Who’s the hangman?

The World Press Freedom report is out. Bhutan’s position has improved significantly to 80 from 94 from last year. Bhutan’s overall position has also improved during my tenure in government, from 92 to 80.

So I’m happy.

But I’m not happy about the state of our private media. In the two years leading up to the start of parliamentary democracy, private media thrived and continued to grow for a few more years. At one time, we had 11 private newspapers!

Then, gradually, private newspapers started shutting down. Bhutan Observer was the first to fold. They were followed by Druk Neytshuel, Bhutan Youth, Druk Melong and Druk Yoedzer in quick order.

So today we have only six private newspapers: Bhutan Times, Bhutan Today, Business Bhutan, The Journalist, Gyalchi Sarshog and The Bhutanese. Of these, Bhutan Times, a mighty paper during its heyday a decade ago, has been reduced to a sorry shadow of its former self. And The Journalist, Gaychi Sarshog and Bhutan Today are doing even worse – they are barely surviving.

So who killed the private media? The culprit is Kuensel.

Kuensel, a state-owned enterprise, has used its deep pockets, endless resources and strong connections to the government to drive private newspapers out of business. And they are continuing to do so.

The irony is that Kuensel recently ran an editorial, pointing out that the problem with state enterprises is that, they benefit from “favorable treatment” in the form of “subsidies preferential regulatory treatment and even state-backed guarantees”. The editorial went on to suggest that government should not engage in businesses that the private sector is capable of providing.

I agree with Kuensel, notwithstanding the SOEs I defended in my previous post.

But I wonder if Kuensel would be ready to practice what they preach. I wonder if they would be willing to let go of the unfair advantages and privileges that they themselves enjoy as a state enterprise. I wonder if they would be willing to heed their own advice to provide a level playing ground for their private counterparts.

If they are, then good, let’s get cracking – there’s a lot of work to do. If they are not, then they would reek of hypocrisy, a hypocrisy of the highest order that emanates from outright arrogance.

Kuensel profits immensely as a state enterprise. This gives them an insurmountable advantage over private newspapers … and over printing presses, photo studios, publishing houses, Dzongkha translators, stationery shops and IT vendors.

Here’s how Kuensel profits as a state enterprise (most of the information is from the Royal Securities Exchange website):

  • 51% of the company is owned by the government. And that is not counting other government agencies, like the NPPF, that also own chunks of the company.
  • The land they sit on belongs to the government. Kuensel is the only newspaper enjoying government land on lease.
  • Their branch in Kanglung was established with subsidies from the government, including for, but not limited to, land, building and expensive printing equipment.
  • Their vehicles are subsidized by the government, and carry government license plates giving them undue advantages during travel and when seeking access.
  • Their printing department is their biggest source of revenue earning them a whopping Nu 83 million in 2017. Their main printing press, a Heidelberg offset printing machine, was purchased by the government. Private printing presses cannot compete as they need to buy their own machines, and are subject to government procurement procedures which Kuensel can bypass.
  • Advertisements is their second biggest earner, bringing in revenue of Nu 77 million in 2017. Most of this is government advertisements. And the amount of advertisements that they get is not funny – open any of their papers, including yesterday’s, and you’ll see more announcements and advertisements than news stories!
  • Stationery is their third biggest earner, making Nu 34 million in 2017. Again, most of their customers are government offices who place direct orders.
  • Additionally, they made Nu 7.3 million in 2017 by providing services related to photos, dzongkha translation, book publication, retail sales and IT. All these services are in direct competition with private businesses.
  • Kuensel’s total income for 2017 was Nu 214 million, of which Nu 77 million was paid as remuneration and benefits for their employees. Even so, at the end of the year they had Nu 47 million in their bank and had receivables totaling Nu 116 million.

This is gigantic, considering that their competition in the private sector are living from hand to mouth at best. In reality, most of them are in the deep red. And left unchecked, Kuensel will drive more private newspapers out of business.

So how to bell this cat?

First BICMA must ensure a level playing field. They must make sure that Kuensel does not continue to enjoy undue support and privileges from the government that undermine the growth of the private media.

Next, a special audit must be carried out, not by outside firms as has been the practice, but by the Royal Audit Authority. The special audit must go beyond the financials to cover the performance of the company and its effect on the private sector.

After the audit, the government must give serious thought to pulling out of Kuensel. At the very least, they must ensure that Kuensel stops competing with private businesses by providing services in the areas of printing, stationery, photography, translation, retail and IT. Instead, they should be required to stick to their core mandate of reporting news. More importantly, the government should distribute their advertisements among all newspapers, and more equitably, to address their own concerns regarding state-owned enterprises, if for nothing else.

As for me, I know that I should have done a lot more to improve the media landscape, especially in the private sector, during my tenure in the government. I regret that I could not and did not. That said, I will continue to support a free and fair media.

So I offer my services to the private media if they feel that they are unfairly constrained by Kuensel. I will take their case up with BICMA, the government, lawmakers, and, if needed, with the judiciary.

Similarly, I offer my services to private businesses if they feel that Kuensel is receiving and taking undue advantage. I will take up their case with the government and, if needed, the judiciary.

And I offer my services to Kuensel employees if they feel that there are corrupt practices in their organization. I will protect their identity, but will take up their cases with the Anticorruption Commission.

In 2010 I posed a question. It turns out that several readers guessed the identity of the hooded hangman. But the same scenario continues to unfold today, with Kuensel as both the unknown hangman and the one applauding the death of private newspapers.

We need to join hands to rein in Kuensel. Otherwise, the killing spree of private newspapers will continue.