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Budget 2014: Broadcasters expect change in taxation policies, push to digitisation

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Budget 2014: Broadcasters expect change in taxation policies, push to digitisation

With just a couple of hours to go before Finance Minister Arun Jaitley presents the first Union Budget of the newly-formed Government led by Prime Minister Narendra Modi, expectations are running high on the promise of bringing the economy back on track.

The television broadcast industry has been more hopeful about and filled with expectations of the Budget paving the way for growth in the industry. We spoke to a cross-section of experts from the broadcast industry to find out some of the roadblocks that the industry experts the Union Budget 2014 to address.  

Speaking on the need for the implementation of a single tax system for direct-to-home (DTH) operators Harit Nagpal, CEO, Tata Sky said, “The entertainment tax in states ranges from zero to 33 per cent (the case in Uttar Pradesh) and on a net basis we pay 11 per cent entertainment tax per year. This brings the total tax outgo to 34 per cent. In the recommendation to the information and broadcasting ministry, we have suggested we should be made to pay taxes (either) to the state or the Centre. Paying to both does not make sense”. This dual taxation policy is what is eating away at a minimum of 33 per cent of the revenues of DTH operators, leaving very little profits for DTH operators.

While very optimistic about the Budget, Monica Tata, Managing Director, HBO added that she would wait instead of giving into speculation at this stage. “Across the industry there have been some indications made about certain tax rebates that might come through. But you know this is all speculation and I will just leave it to the fact the there is an optimistic expectation out of the Budget for the industry and I hope that we don’t get disappointed. We are quite optimistic about the budget and our recent interaction with the Minister (of Information and Broadcast Prakesh Javadekar). Optimistically, the Minister has been saying things which will seemingly go in the right direction for the industry. The first two phases (DAS) have been successfully implemented, but the three and four phase has a deadline been put, so we will see how that goes. But I think that it will happen by the end of the year for sure, if not then maybe by the early part of next year,” she added. 

Apart from a change in taxation policies, the television broadcast industry is looking more towards the implementation of key digitisation related policies with turbulence still prevailing within the industry.

“It is to do with the implementations which have been pending policies, it has more to do with the packaging, more to do with DAS 3 implementation, so it has more to do with that part of governance than the budget really impacting us. It has more do with what has been discussed with this industry for the longest time. There are deadlines set for everything. For example even (Narendra) Modiji has said that there has to be a deadline for the round three of radio licenses. We have got a deadline of October 14 for Phase 3 of DAS, and packaging I am hoping will be very soon implemented into the DAS market. So there is where we will look into the upswing of revenues,” said Shantanu Gangane, Associate Business Head, Movies Now.

Looking at the future of the television broadcast industry Shivi Chopra, Business Head – Marketing and Pulse, Bloomberg TV India, expects the budget to provide a push to digital platforms. “The digital medium is one of the key vehicles for the broadcast industry to keep in touch with its consumers on a 24x7 basis. In today’s fast paced life people expect to get information with minimal delay and this makes the role of digital platforms very important for a broadcaster. Having said that, there are serious issues where bandwidth and speed are extremely poor in India making it difficult for a large percentage of people to access a broadcast product on the go. As a marketer, I am hoping that the forthcoming budget supports the growth of the digital media. This will mean genuine hi-speed networks, low access cost and better connectivity, reduced taxes for service providers.”    

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