Effective December 1st, Sun TV has increased its card rates by 5%, passing on the imposition of service tax by the govt. on to the advertisers.
Our readers would remember we carried a story on 23rd December about the broadcasters planning to make a representation to the I&B ministry to revoke the order.
Sun TV, which enjoys a near monopoly status in south India hasn’t waited for the outcome of the talks. They have gone ahead and passed on the service tax to the advertisers. Most of the advertisers too have accepted the hike since they feel that there is no option, given the status Sun TV enjoys in South India.
Ms Anita Nayyar, VP, Media Services at Mudra feels that increase in the rates will hit the budgets of advertisers and in all likelihood lead to budgets on the channel being slashed by 5%. Ms Nayyar refused to comment when asked whether she saw other broadcasters following suit, probably not wanting to give them ideas on increasing the rates.
Other advertisers have a strong view though. Mr. Nitin Jain, Associate VP and Media Services Director, HTA, Delhi, feels that it is unfair on the part of the broadcasters to pass on the hike to the advertisers. He says “Since the govt. has imposed the taxes on the broadcasters and not the advertisers, they should pay for it.” Mr. Jain, who buys for Pepsi and other large advertisers, also mentioned that they have refused to accept the hike. “Since we are going to get the same ratings for the programmes, why should we be made to pay extra,” he added.
Though Sun TV has initiated this move, it remains to be seen whether other broadcasters will follow suit. But that won’t be easy given the cut throat competition in the market and the fact that other channels do not enjoy the luxury of operating in a near monopoly market as Sun TV.