The government asked all departments, agencies, public sector undertakings, corporations and organisations to stop releasing advertisements and notifications to Sakshi as the Central Bureau of Investigation (CBI) has filed a chargesheet against the media house.
An order to this effect was released Wednesday night by the general administration department.
The move came two days after the CBI froze the bank accounts of Jagati Publications, which publishes the Telugu daily, Indira Television, which runs the 24-hour news channel, and Janani Infrastructure firm.
Eleven current accounts of these companies that together had Rs.10.31 crore and fixed deposits of Rs.103 crore were seized by the CBI as part of the investigation into the alleged illegal assets of Jaganmohan Reddy, the son of late chief minister Y.S. Rajasekhara Reddy.
The companies owned by the Kadapa MP have already challenged the CBI action. They alleged that the freezing of accounts had virtually paralysed the daily and the TV channel and put the future of 20,000 employees at stake.
The newspaper and channel were launched in 2008 when YSR, as Rajasekhara Reddy was popularly known, was the chief minister. A government order was also issued on April 24, 2008 permitting the commissioner information and public relations to issue advertisements to Sakshi while relaxing certain conditions.
Jagan has already described the CBI action as a conspiracy against him and an attack on the freedom of press.
The management of Sakshi said the freezing of bank accounts would badly affect its functioning.
It pays a monthly salary of Rs.8 crore to its employees and incurs Rs.35 crore a month as operational expenditure, Rs.20 crore a month on newsprint and Rs.7 crore on administrative overheads.
The freezing of bank accounts has come under flak from journalist unions. They staged protests in different parts of the state and submitted a memorandum to Governor E.S.L. Narasimhan seeking his intervention.
The Indian Newspaper Society (INS) has also condemned the CBI action saying this could lead to abrupt stoppage of the newspaper and render over 10,000 employees jobless.
The CBI, which booked Jagan and 72 others last year following direction from the Andhra Pradesh High Court, has filed three chargesheets against him, his companies, close aides and firms that invested in his businesses.
While taking cognisance of the first chargesheet, the CBI court has issued summons to Jagan and 12 others to appear in the court on May 28.
The investigating agency claims that the investments into Sakshi and other companies owned by the MP were made in return for the favours doled out to the investors by YSR on quid-pro-quo basis.
The freezing of bank accounts and stoppage of government advertisements came at a time when ruling Congress, the Telugu Desam Party (TDP) and YSR Congress are gearing up for June 12 by-elections to the Nellore Lok Sabha and 18 assembly seats.