Tarun Katial Chief Executive Officer, RBNL( Reliance Broadcast Network,) shares his expectations from the Union Budget for the radio and broadcast sectors on an optimistic yet cautious note. Katial also feels that FDI should be at par with TV up to 100 per cent, for non news radio channels, and is hopeful that the new government will in the first 100 days, spur some action and quick decision-making on pending issues of Phase III.
What are your expectations in the radio sector from the upcoming Budget?
On the radio side, we are hoping that the Phase III policy and its actualisation happens with the Budget, and some of the key drivers to the Phase III policy will get resolved, such as Phase III terms and conditions, specifically the FDI policy for Phase III, the TRAI regulation on the migration from Phase II to Phase III. Radio is the only industry which pays every share to the government, it’s subject to service tax unlike print or outdoor. So we are hoping that the government will look at service tax positively. We are also hoping that once we are going into phase three some custom duty relaxation on capex to be made for installation of new radio stations.
What are the expectations in the broadcast sector?
We are hoping that the government will continue to push on digitisation. There is obviously the need for set top boxes. Hopefully the taxation law will encourage more set top boxes coming in. If the next or the last stage of digitisation has to happen then the country needs to have sufficient stock of set top boxes.
The broadcast sector has had an extremely turbulent last year, any other expectations from the budget?
TV and radio are both related to how the economy will shape up because they are largely advertising-funded. While there may be direct linkages to the Budget in terms of what the sector could get with respect to duty and taxes, etc. The bigger linkage to the budget will be on the economy and the push in the economy, the push in investments, the push in various sectors which are key to advertising in the country such as auto, consumer durables and FMCG and how they shape up and how demand shapes up post the Budget. This will actually define advertising-linked sectors like TV and radio more.
So holistically what remains to be seen is that will the Budget spur some growth for demand in the economy? Is it a growth-linked Budget or is it a cost-linked Budget? If it’s a growth-linked Budget, we are hoping that all policies will spur the growth in the economy, in which case the game is going to be really different in both TV and radio. We will then see how increasingly advertising and led sectors will come back.
From your observation of the new government and Narendra Modi’s leadership, what is your opinion on how the Budget will be?
It’s really going to be a balanced view with focus on removing roadblocks to decision-making. A lot of what we are looking to do in TV and radio broadcast industry is more linked to more efficient and quicker decision-making. The Phase III of radio has been pending for the last five years on the government’s desk. In the first 100 days, hopefully the new government will spur some action and quick and effective decision-making on these issues.
What do you think of TRAI’s proposal of increasing FDI in FM radio to 49 per cent?
FDI should be looked at in two ways; news and non-news. Non-news FDI should be at par with TV up to 100 per cent. It’s only fair. Radio as a sector is far more controlled by the government than TV. While in radio, it’s still 20 per cent. I think at the non news side it should go up to 100 per cent, at the news side as per the recommendation it can be up to 49 per cent. There has to be parity between sectors, why should radio not have parity with TV is my question.
The government is yet to announce accepting the Phase III auctions recommendations. How is this delay affecting your preparations for the auctions?
The Phase II to Phase III migration will be the key to the success of Phase III auctions. The government does understand that. We are very hopeful that the government will do the needful before we get into the auctions.
Ban on news broadcast on FM is likely to be lifted, what opportunities does it create for private FM channels?
News will do two things. For the consumers rather than just radio players, it is a great opportunity to be more informed and aware through a medium that is easily accessible to them today. From a radio broadcaster’s perspective, every broadcaster looks to enrich their content and to build reach. News is a key part of that for radio broadcasters anywhere in the world. It will help bring in newer audiences to radio, bring a certain amount of credibility and seriousness to the medium and in the long term enable building different formats. Eventually, you could bring content differentiation in radio by doing 100 per cent talk in the news station which is quite a common format in the west. So it will allow content differentiation as more and more frequencies open up, people move away from doing just music radio to doing full talk radio, which is one of the bigger formats in the west.