ITV

Tag: GST

  • GST: TV prod biz bemoans lack of clarity and increased paperwork

    MUMBAI: Minister of information and broadcasting M Venkaiah Naidu, writing for a business newspaper, opined: “At the midnight of June 30, India will make a tryst with history by heralding the much-awaited GST regime and turning a new leaf in the annals of the country’s taxation system.”

    “There might be some teething problems initially, but, in the long run, GST will help both the traders and consumers as it will cut down red tape — there will be no inspector raj, harassment by taxmen or check posts at borders. The officers will have no discretionary powers. It will ensure transparency, reduce inflation, bring down prices, improve ease of doing business, create a level-playing field, increase tax compliance and help achieve higher economic growth.”

    The aim of the Goods and Services Tax (GST) — one nation, one tax — may be lofty, but clearly many segments of the media business don’t seem to agree with Naidu’s optimism — at least in the short term. And, television and film production houses are one such category.

    Executives at production houses feel accounting and operational processes would definitely escalate, thus needing more staff in a largely insecure business environ, although most are hopeful that irritants would iron out in the long run.

    “Accounting and operational processes would increase to a large extent. I am sure we would learn, adjust and settle down in the new system,” said Swastik Production producer Rahul Kumar Tewary. Although, he feels there wouldn’t be much impact on the television industry owing to a new indirect taxation regime that GST seeks to usher in, he explained, “The producers will claim additional tax from the broadcasters who, in turn, will recover it from the advertisers.”

    In fact, a uniform tax system will help the largely unorganised industry become organized and, according to Tewary, it will “benefit the content makers and producers” who will get more input credits under GST as there will be no distinction between service tax, entertainment tax and VAT. However, the paperwork will definitely increase. Neela Telefilms director Asit Modi admitted paperwork will be a “big problem”, especially when shooting outdoors as then production houses will have to file “three (tax) returns in a month.” His worry is compounded by the fact that more paper work would warrant employing more human resources in the presently financially insecure production business.

    Still & Still Media Collective founder Amritpal Bindra pointed out some big impacts of GST. Dubbing increased tax filings a “clerical impact” of GST, he said, “Administrative hassle in the beginning will lead to a simplified tax structure substituting multiple taxation in the long run.”

    Pointing out that high taxation (28 per cent) on movie tickets priced over Rs. 100 would be a challenge for the industry, Bindra explained teething pains as paving the way for “transparency, unique management, discipline and good corporate governance in the industry.”

    The reason for his relaxed attitude towards GST? “We have been trying to pay more people through cheque and also insisting on raising relevant invoices so that our partners could pay taxes in their individual capacities. Unlike the norm of 90-120 days payment cycle in the industry, we make sure the vendor is paid within 30 days after raising an invoice,” Bindra explained.

    Some executives are approaching the new system differently. Contiloe Pictures COO Anup Vijai is looking at the new tax regime in two parts — commercial and compliance. “There is a cost perspective and the other is process compliance,” he remarked, “We are a production house that is subjected to service tax. When we raise an invoice for a TV channel, we add service tax separately. We believe that GST would lead to reduction in costs, but are unclear on the process of filing the new tax.”

    Some other production house leaders complained about the new tax regime, nevertheless. Hats Off Production founder JD Majethia said that more funds would get blocked as they would have to pay the actors in advance and, according to him, things such as makeup, food and vanity van, covered under GST, would become expensive.

    “Under GST, the cost of food provided to actors could be set off, which is good. But, if we ordered from hotels (outdoor catering), it may be dearer under the new regime,” Majethia said. He expected the situation to be prevalent for a couple of years, but hoped GST would boost economy.

    Another production house executive chided the government for “poor marketing” of the new tax system. Paperback Films co-producer Pradeep Kumar found GST to be beneficial, but was unhappy about its marketing and lack of a thorough awareness and literacy drive about GST.

    “GST may hurt because there will be a penalty for delayed or missed payment of GST,” he said, adding, “We would have to ensure that vendors and caterers, etc raised invoices by the end of every month so that we are in a position to do the taxation process in the next ten days.” He also described a surge in tax from 10 to 15 per cent as “tax terrorism”, saying that GST may simplify taxation in the long run, but an increase in the quantum is a “liability”.

    Whoever said `no pain, no gain’ probably had GST in mind and for the media industry and production business, in particular, it seems to be quite true. The long-term simplification of a multiple taxation regime brings along pains in the form of short-term uncertainties as India is still largely a cash-economy and formal invoices and a process-driven system a rarity.

    ALSO READ:

    http://www.indiantelevision.com/regulators/ib-ministry/gst-benefits-come-with-daunting-compliance-increased-paperwork-say-sector-stakeholders-170628

    http://www.indiantelevision.com/dth/dth-operator/under-gst-taxes-on-cable-dth-entertainment-services-to-come-down-170523

  • GST benefits come with ‘daunting’ compliance & increased paperwork, say sector stakeholders

    MUMBAI: Even as the government has been attempting to convince the industry and the average tax-paper that the goods and services tax (GST) being implemented from 1 July 2017 will help not only in curbing price rise and simplifying taxation procedures, the broadcast and entertainment industry has shown mixed reaction and fears that it may, in fact, lead to more problems and paperwork — at least in the short to medium term.

    In a survey conducted by indiantelevision.com , industry pundits have questioned the increased paperwork and complex compliance that is opposed to the ease of doing business.

    Multi-system Operator GTPL COO Shaji Mathews, admitting that overall taxes related to the media and broadcast industry will come down under GST, said, “The paper work (to become GST-compliant) has increased because you need to register in every state you are operating in.” In the cable industry, the service tax has been 15 per cent. The set-top box (STB) and other equipment related to cable were in a higher tax bracket, 28 per cent earlier, which has now been reduced to 18 per cent.

    Mathews added: “The industry has a very positive approach to the government, but a similar approach is needed from the other side. As far as the consumers are concerned, GST will apparently make their payouts a little higher because the tax rate is up from 15 to 18 per cent.”

    He further said: “With GST coming, it was widely accepted that all other taxes, including entertainment tax, will get subsumed in GST. The implementation of GST was expected to give the industry a uniform pricing and clarity to all stakeholders regarding taxation. There are states where the entertainment tax is not levied by the states but by the local bodies. In these states, there is neither uniformity nor clarity.”

    However, he hoped that as long as everything was system-driven it will ultimately help better compliance and better settlement of tax returns for the cable and broadcast industry. “In the long run, we all are bought by the GST concept. However, there may be problems in the beginning. So we are being patient and are hoping that over a period of time this will definitely be beneficial and everything will fall into place,” Mathews added.

    He concluded: “All the paperwork will not lead to loss of revenue but we think that these investments are worth doing and as an industry we need to contribute to the implementation of the concept.”

    Echoing similar sentiments, Reliance Broadcast Network Limited CFO Asheesh Chatterjee said “the billing software and the entire radio industry are grappling with how the billing is supposed to emanate” because most radio stations operate across multiple states and , hence, compliance is a “challenge.”

    “From our perspective the entire compliance mechanism requires rigorous exercise from all the registrations done across the multiple states and vendors who also need to be GST registered across the space. The radio industry is much smaller, but the compliance load for the industry is much bigger. GST is for the highly automated streams where you have big teams, which are already in place because of the larger scale. But mid size firms do not have that type of automation level and suddenly you are grappling with the time driven agenda of compliance where there is no way out of it,” Chatterjee highlighted the pains of mid-size companies.

    When asked how the GST will benefit broadcasters, he commented, “It will be initially negative for the broadcasters, but may become beneficial later.” But, Chatterjee maintained that it was not easy to be GST-compliant and added, “It is not simple at all. All software, from your billing software to your traffic software, needs higher degree of customization to be ready.”

    Questioned whether the paperwork and filings with the government agencies would increase as compared to the previous set up of multiple taxes, he responded by saying though in the long run the GST regime may be beneficial, smaller organizations, which do not have a high level of automation, will find it “more difficult” to be ready in the short term.

    As to whether the sector will benefit from GST, he explained that if the country’s economy does well, it would benefit everybody, maintaining “in the short term it has pains.”

    Responding to whether getting GST-compliant will lead to loss of man-hours and revenue, Chatterjee admitted that it will lead to “lot of man-hour loss,” but added that compliance, in the long term, would have a cascading effect on the revenues that would increase as systems are properly put in place.

    Republic TV group chief financial officer S Sundaram was more candid when he said, “There is no option. We will know whether we can address all key compliances as and when the process comes into operation.”

    Still, he admitted getting GST-compliant is “not simple” and companies will have to see whether the multiple and online process is helpful.

    While making a point on the impact of GST on broadcasters, he said it was “too early” to judge whether this will benefit the broadcasters or not.

    When asked if paperwork has increased to be GST-ready, Sundaram replied that “numerically it looks daunting” but the actual difficulty can only be fathomed when the filing process begins, adding that GST is a new initiative that has its positives and negatives — while multiple taxes have got subsumed in the new structure, the GST rates have the “potential to confuse” and the robustness of the underlying IT process needs to pass scrutiny.

    However, DDB Mudra Group ED and DDB Mudra West managing partner Rajiv Sabnis was more optimistic saying “most advertisers GST touches are going to have a favourable impact.” According to him, major beneficiaries of the new tax regime would be sectors of retail and FMCG, while e-commerce may get negatively impacted.

    Still, Sabnis also admitted that prima facie GST “looks very simple, but is highly complex” as far as compliance goes. Reason? Vendors have to be registered prior to the 30 June 2017 deadline and many clients do not want to be registered as vendors as they will not get the benefit of the input credit (a technical jargon for offsetting payment of extra taxes). “So there is a complex mechanism of registering vendors,” he explained.

    As to whether GST has increased the paperwork and the filing processes, Sabnis said, “Paperwork has definitely increased for national clients. For example, the Tourism Ministry suggests that all 29 states be charged separately, which means 29 different invoices will have to be raised for one 30-second spot (of advertisement). In that sense, compliance is complex. I think it is a learning curve and if some new complexities arise in future, I am sure the government will find solutions to ease the GST pains.”

    According to Sabnis, in the long run GST would prove to be beneficial to advertising setups as his as it has a high degree of exposure to retail and retail will be benefitting the most from the GST.

    But, that is in the long run. In the short term, broadcasters are bracing for a revenue hit courtesy the GST imposition. A leading GEC CEO was recently heard telling another rival, that his network was girding up its loins for the impact of the new tax.

    “First there was demonetisation which hit our revenues, because advertisers immediately slammed the brakes on spends,” he says. “Now there is GST. While large advertisers such as Levers, Procter & Gamble may continue to spend despite the plethora of paperwork and confusion, smaller ones which do not have their systems in place, may not be that eager. They would want to understand how things will move going forward – paperwork, compliance etc – while observing for a couple of months. I expect July-mid-August to be lean months, especially for the news and smaller TV channels which are dependent on smaller advertisers. Things should ease up after that.”

    That’s a view echoed by the CEO of an advertising network. He expects an advertising flood to hit television channels by end-August. That should provide them with some relief.

    Clearly, 2017 has been a bit of a bumpy ride.

  • GST on set-top boxes & optic fibre down to 18%

    GST on set-top boxes & optic fibre down to 18%

    NEW DELHI: The Goods and Services Tax (GST) for set top boxes has been reduced to 18 per cent from the previously announced 28 per cent.

    Similarly, the GST Council also reduced the tax on coaxial cables and optical fibre to 18 per cent from the hitherto 28 per cent in both cases.

    Finance Minister Arun Jaitley said: “After considering recommendations of fitment committee, rates are being reduced in the case of 66 items.” 

    Jaitley is also the chairman of the GST Council. He said that there were 133 representations and these were considered.

    Other items relating to the electronics and the media and entertainment industry in which GST was reduced are: 

    public://gst.jpg

  • Maharashtra CM supports film industry’s demand for 18% GST

    NEW DELHI: Maharashtra chief minister Devendra Fadnavis has assured the film industry that he will support the demand to lower the GST rate to 18% in the forthcoming GST Council meeting. At the same time, the state government also agreed to rationalise any additional entertainment tax likely to be imposed by the local bodies in the GST regime.

    Fadnavis was speaking during the consultation meeting held by the information and broadcasting ministry chaired by minister M Venkaiah Naidu with the film industry earlier this week in Mumbai.

    Fadnavis announced that the present licensing regime in the state will be removed and the model law for cinema licensing will be introduced within 60 days. He was referring to points made on Cinema licensing for new screens as well as modification of existing screens. He announced that the Single Window facilitation cell has been formed in the state for shooting of films, Television programmes and other audio-visual mediums.

    The meeting was held at the instance of the Film and Television Producers Guild of India to raise industry’s concerns on the adverse impact of the proposed GST rate of 28%. The industry representatives deliberated on various challenges and opportunities for the film industry including recommendations of the Shyam Benegal Committee for changes in the film certification process, taxation, scarcity of Cinema Screens and Piracy.

    On the issue of piracy, both the central and state governments completely endorsed the industry’s views on an immediate need to amend existing laws such as Information Technology, Cinematograph, and Copyright Acts to protect the legitimate rights of copyright owners.

    The film industry complimented the chief minister on the formation of Maharashtra Intellectual Property Crime Unit (‘MIPCU’) as an initiative to enforce strong anti-piracy measures.

    Guild President Siddharth Roy Kapur said: “A rate of 18% GST or lower on cinema tickets would be in line with global taxation norms for the film sector and would go a long way in ensuring the long-term health of the industry. The film industry is identified as a priority sector in many countries around the world and therefore not only are the tax rates on films usually lower than the national average, but in many countries the industry is also provided numerous incentives to drive growth and employment in the sector. I do hope our Central and State governments will look at the Indian film industry through a similar lens in the future.”

    He added: “I am delighted by the response from both the Maharashtra State and the Central Government in the meeting, with both the Union Minister for Information & Broadcasting and the Chief Minister of Maharashtra strongly supporting and endorsing our suggestions on various matters of concern, from GST to piracy to screen density. We are hopeful that their actions in the future will provide the much-needed impetus the Indian film industry needs, to realize its vast untapped potential.”

  • Lower deferred tax asset & demonetisation lower Dish TV numbers

    BENGALURU: The largest DTH operator in India in terms of subscriber numbers – Dish TV Limited (Dish TV) reported less than one-sixth profit after tax (PAT) for the year ended 31 March 2017 (FY-17, current year) as compared to the previous year. The company reported PAT of Rs 1,092.8 million for FY-17 as compared to PAT of Rs 6,924.2 million in fiscal 2016. Dish TV has shown deferred tax asset for FY-17 at Rs 740.3 million as compared to Rs 4,360 million in FY-17. The company’s assets and liabilities statement for FY-17 shows deferred tax asset of Rs 5,100.3 million – the sum of the deferred tax asset for both years.

    In its earnings release, Dish TV says that demonetisation outdid a good monsoon as well as thriving economic conditions of the last year. Consumer spending remained a challenge from the latter half to the fourth quarter. The initial growth momentum that could have catapulted the DTH industry to the next level in terms of subscriber additions, took a temporary but prolonged hit. The DTH industry slightly de-grew in terms of new acquisitions during the fiscal despite coming closer to the implementation of digitisation. Dish TV saw subscribers conserving cash for bigger necessities right from the time demonetisation was announced in November up to the end of the fiscal.

    Dish TV managing director Jawahar Goel said, “Fiscal 2017 threw up unprecedented challenges but the Dish TV team took things in its stride. We minimized the impact of demonetisation while focusing on a long-term advantage in the form of recharges through online modes. Despite the odds, Dish TV managed to increase its reach and subscriber base.”

    The company reported 1,029 thousand net subscriber additions during the year to take its subscriber base to 15.5 million.

    Dish TV reported operating revenues of Rs. 30,144 million in FY-17, up 4.2 percent as compared to Rs 28,941 million in the previous year. Subscription revenues of Rs. 27,696 million in the current year were 4.1 per higher than the Rs 26,617 million in the previous year.

    Dish TV EBITDA declined 5.1 percent in the current year to Rs. 9,728 million (margin at 32.3 percent) from Rs 10,249 million (38.5 percent margin) in FY-16.

    Dish TV’s total expenditure in FY-17 increased 9.2 percent to Rs 20,415 million from Rs  18,692 million in the previous year. Cost of goods and services in fiscal 2017 increased 9.5 percent to Rs 14,371 million from Rs `13,122 million in FY-16. Employee Benefit Expense in FY-17 increased 9.5 percent to Rs 1,465 million from Rs 1,229 million. Sales & Distribution Expenses increased 9.6 percent in FY-17 to Rs 3,108 million from Rs 2,836 million in the previous year. Other expenses declined 2.3 percent to Rs 1,470 million from Rs 1,505 million. Finance costs increased 7.3 percent in FY-17 to Rs 2,239 million from Rs 2,087 million.

    Company speak:

    Goel, said, “Revenue growth in the current fiscal is largely going to be a function of subscriber additions and Phase 4 of digitisation should have a material role to play in that. The proposed amalgamation (with Videocon d2h) will further help create scale in the highly-fragmented TV distribution landscape in India while creating significant synergies through the combination.”

    On technological developments, Goel, revealed, “We understand that digital will be an important part of our growth in the future and we are excited about our portfolio of products lined up for launch in the coming quarters. Dish TV’s new HTML 5 based middleware with a card less box and a new chip set is already in advanced stages of testing and would hit the market soon.”

    DTH services will be subject to 18 percent GST rate as soon as the new indirect tax regime is implemented in the country. On the new GST regime, Goel said, “What should be significant in addition to our ability to pass on the uniform tax to subscribers would be the ease of doing day-to-day business and the associated savings in administration, litigation as well as compliance costs that should result from a simpler tax regime. Unlike the current Entertainment Tax and VAT regime, where different rules are used to determine tax in different regions, GST would be a single tax that should be practical and convenient to pass-on to the consumer.”

  • Under GST, taxes on cable, DTH & entertainment services to come down

    NEW DELHI: Taxation on entertainment, cable and DTH services shall come down under the Goods and Services Tax regime as the entertainment tax levied by states has been subsumed in the GST, the Indian government said today.

    The Finance Ministry in a statement said services by way of admission to entertainment events or cinematography films in cinema theatres will attract 28 per cent GST with effect from July 1. Currently, states impose entertainment tax of up to 100 per cent in respect of exhibition of cinematography films in theatres/cinema halls.

    The GST Council has finalized 18 per cent tax rate on cable TV and DTH services.
    Currently, these services attract an entertainment tax in states in the range of 10-30 per cent over and above the service tax levy of 15 per cent.

    Under the GST regime, hardware equipment for both radio and television transmission and reception is expected to rise.
    The rates on services by way of admission to entertainment events or cinematography films in cinema theatres is 28 per cent under the GST as compared to some states which have been charging as high as 100 per cent until now.

    Thus, taxes on entertainments and amusements (covered by the erstwhile entry 62 of State List of the Constitution) have been subsumed under GST except to the extent of taxes on entertainments and amusements levied by a panchayat (village administration) or a municipality.

    The rate of GST approved by GST Council on access to circus, theatre, Indian classical dance including folk dance and drama is 18 per cent ad valorem. Further, the GST Council has approved an exemption up to a consideration for admission of Rs 250 per person. These services currently attract entertainment tax levied by the States.

    Thus, entertainment services will be lower under GST. In addition to the benefit of lower headline rates of GST, the service providers shall be eligible for full input tax credits (ITC) of GST paid in respect of inputs and input services. Presently, such service providers are not eligible to avail of input credits in respect of VAT paid on domestically procured capital goods & inputs or of Special Additional Duty (SAD) paid on imported capital goods and inputs. Thus, while GST is a value added tax, entertainment tax, presently levied by the States is like a turnover tax.

    Transmission and reception apparatus for both radio and television have been placed in the top category of 28 per cent of the four slabs of the GST. However, the rates may stabilize as taxes levied by states are subsumed in GST.

    Other items coming under the 28 per cent slab are: single loudspeakers, mounted in their enclosures, Audio-frequency electric amplifiers, Electric sound amplifier sets, Parts; Sound recording or reproducing apparatus; and Video recording or reproducing apparatus, whether or not incorporating a video tuner.

    Transmission equipment for radio or TV broadcasting reception apparatus or sound recording or reproducing apparatus; television cameras, digital cameras and video cameras recorders reception apparatus or sound recording or reproducing apparatus; television cameras, digital cameras and video cameras recorders also come under this slab.

    Monitors and projectors, not incorporating television reception apparatus, reception apparatus for television, whether or not incorporating radio-broadcast receiver or sound or video recording or reproducing apparatus also fall in this category.

    Meanwhile, BMR Advisors have said that the information technology sector needs to brace for increase in rates of tax under GST. However, effective planning of credits including on transition stock may aid the sector in mitigating this impact.

    In information technology, both imported and domestically produced mobile phones come in the 12 per cent slab.

    Shrink wrapped software product (on media) will attract tax rate of 18 per cent, as will Laptops, desktops, peripherals, parts, etc. Monitors and projectors (capable of connecting to ADP) will attract a rate of 28 per cent, while the majority of networking products will attract 18 per cent.

    Temporary transfer or permitting the use or enjoyment of any Intellectual Property will attract a GST of 12 per cent.
    In services, software services, that is development, design, programming, customization, adaptation, upgradation, enhancement, implementation of information technology software will attract 198 PER cent GST while Electronic supply of software will attract a tax of 12 per cent.

  • Subhash Chandra hails GST, seeks new tax system & ease of doing biz

    MUMBAI: Essel Group chairman and Rajya Sabha MP Dr. Subhash Chandra has welcomed the GST Bill while addressing the Upper House of the Parliament for the first time.

    Dr. Chandra is an independent RS member from Haryana. ZEE, as a brand today, has achieved a global recognition, reaching over a billion viewers in 171 countries.

    A compilation of his tweets on GST:

    Today, I gave my maiden speech in Rajya Sabha and participated in the GST Bill debate. 

    I congratulate the govt, Prime Minister Shri @narendramodi ji and FM Shri @arunjaitley ji for bringing this historic GST bill. Since independence we’ve been hearing from almost everyone that we need to work for welfare of common man and uplift the poor class, he said.

    2000 years ago, India’s contribution to the world GDP was 32%, which came down to 4.2% in 1950, when India’s share in world manufacturing went to as low as 1.7% & international trade during the British Raj fell from 20% to 1.4%, he added.

    We understand why this happened, because the British wanted to rule us for a longer time and take away our wealth, he said. But, 70 years after their exit, have our economic conditions improved at the same rate as that of global standards?

    GDP in 1950 – 4.2% – was reduced to 3.2% in 1980, and now in 2017 it has reached around 7.5%. Manufacturing in 1950 was 1.7%, 3.2% in 1980, in 2015 it was 4% while global trade was 1.3% = 1950, 0.5% = 1980 & now 1.7%.

    If we compare these statistics with the growth in India’s population, then we see that since 1950, India’s growth has been negative, he added.

    From 2000-2015 India earned income of 2.23 trillion dollars, of which 81% wealth went to 10% of the population & 19% to the rest 90%. Astonishingly, 58% wealth of the 154 lakh crore went to the top one per cent, which clearly shows that poor became poorer, and the rich became richer.

    GST is of course a great measure but it is just the first step, we need to do lot more to eradicate poverty from India.

    We need to reduce the tax structure that will further motivate people in paying the taxes and govt can then do away with penal provisions. 

    Due to lack of Ease of Doing Business in India, there is lot of indirect tax that is borne out of corruption, we should also address it. In the time to come, we need to think beyond GST, start a new taxation system & not just replicate the global ones.

  • FICCI-KPMG report: Rural India fuels digital consumption; FTA channels gain prominence

    MUMBAI: The ‘Bharat’ story strengthened with expansion of rural measurement in TV and 4G data price wars deepened digital consumption, which were spurred further by mobile Internet and smartphone penetration. While print and films segments were supported by growing demand from the regional markets, demonization affected advertising revenues even as consolidation in the Indian media and entertainment (M&E) industry gained momentum.

    These were amongst some of the key highlights of year 2016 as enumerated in the FICCI-KPMG Media & Entertainment Industry Report 2017 unveiled yesterday at FICCI Frames 2017.

    Amongst the other highlights were roll out of 4G services, government and private initiatives around public Wi-Fi, greater emphasis on broadband rollout by MSOs and wide ranging impact of government policies and initiatives that had inflicted some short-to-medium term damage (demonization and confusion over GST implementation) on the industry as growth in annual advertising spends got slashed by about 1.5-2.5 per cent. However the report said that the industry is expected to be a net beneficiary of GST, primarily due to availability of input credits across the board and subsuming of entertainment tax within the GST.

    According to the report, the Indian media and entertainment industry in 2016 was able to sustain a healthy growth on the back of strong economic fundamentals and steady growth in domestic consumption, coupled with growing contribution of rural markets across key segments.  These factors aided the industry to grow at 9.1 per cent on the back of advertising growth of 11.2 per cent, despite demonetization shaving off 150 to 250 basis points in terms of growth across all sub-segments at the end of the year.

    The big story in 2016 has been the evolution of FTA channels after expansion by BARC India of rural measurement in the television segment, coupled with the impact of the 4G rollout and the resulting price wars. Both these factors have resulted in media consumption penetrating deeper into India, resulting in a realignment of strategy by media companies and advertisers alike.

    Compared to 2016, the industry is projected to grow at a faster pace of 14 per cent over the period of 2017-21 with advertising revenues expected to increase at a CAGR of 15.3 per cent. The year 2017 is likely to witness a marginally slower rate of 13.1 per cent as the economy recovers from the lingering effects of demonetization and initial uncertainties arising from GST implementation.

    Commenting on the industry’s performance and way forward, FICCI M&E Committee chairman and chairman & CEO of Star India Uday Shankar said, “The industry has gulped down the bitter pill of demonetization trusting its long-term benefits and yet is set to bounce back to a steady growth, thanks to strong fundamentals.”

    He added that building solid infrastructure and continued government support will help the industry reach the “tremendous potential” it holds for employment and creating socio-economic value for the country, while a commitment towards a “quick transition to digitization” will ensure growth for all stakeholders.

    Girish Menon, director, media and entertainment, KPMG India, stated that 2016 was a “mixed bag” for the industry with digital media making its way to the centre stage rapidly from being just an additional medium. While it is compelling existing players to rethink their business models, he added, “The long-term factors driving the future growth are expected to remain positive with growing rural demand, increasing digital access and consumption and the expected culmination of the digitisation process of television distribution over the next two to three years.”

    Some of the key highlights of the FICCI-KPMG report are as follows:

    Television

    The TV industry clocked a slower growth in 2016 at 8.5 per cent, attributed to tepid growth of 7 per cent in subscription revenues and a lower than estimated 11 per cent growth in advertising revenues.

    A key theme in 2016 was the emergence of FTA channels as a key focus area following the expansion in rural measurement by BARC India and the resultant increased interest by both broadcasters and advertisers. Additionally, strong performance of sports properties and increased spending for the launch of 4G by telecom operators helped alleviate some of the pressure. The industry is expected to grow at a CAGR of 14.7 per cent over the next five years with advertising and subscription revenues projected to grow at 14.4 per cent and 14.8 per cent, respectively.

    The projections remain robust due to strong economic fundamentals, rising domestic consumption and growing contribution of rural markets, coupled with the delayed but eventual completion of digitization rollout.

    Digital advertising

    Continuing to ride on a high growth trajectory with a 28 per cent growth in 2016, digital advertising has captured 15 per cent share in the overall advertising revenues, with a minor hiccup due to demonetization. 4G rollouts and the resultant data price wars are providing further impetus to the growth as digital consumption and habits are becoming more mainstream. It is projected to grow at a CAGR of 31 per cent to reach INR 294.5 billion by 2021, contributing 27.3 per cent to the total advertising revenues. Advancement in infrastructure, evolving audience measurement technology, leading to better content and lowering data costs, will drive user habits towards greater digital consumption, driving tremendous growth for the industry.

    Animation and Visual Effects (VFX)

    The industry grew at 16.4 per cent, driven majorly by a 31 per cent growth in VFX due to increase in outsourcing work, growing use of VFX in domestic film productions and increase in demand for domestic animated content on television. The industry is estimated to grow at a CAGR of 17.2 per cent over 2017–21.

    Out of Home (OOH)

    The industry registered a slowdown in growth rate at 7 per cent majorly due to adverse impact of demonetization. OOH is projected to grow at a CAGR of 11.8 per cent primarily driven by development of regional airports, privatisation of railway stations, growth in smart cities, setting up of business and industrial centers and growing focus on digital OOH.

    Radio

    Radio recorded a 14.6 per cent growth led by volume enhancements in smaller cities, partial roll out of batch 1 stations and a marginal increase in effective advertising rates. However, weak uptake in batch 2 auctions of FM radio Phase 3 and delays in the rollout of majority of batch 1 stations, coupled with adverse impact of demonetization, dampened the overall sentiment. Nevertheless, it is expected to be the fastest growing amongst the traditional mediums at a CAGR of 16.1 per cent, arising from operationalisation of new stations in both existing and new cities, introduction of new genres and radio transitioning into a reach medium.

    Print

    The revenue growth rates of print continued to witness a slowdown at 7 per cent in 2016, as English newspapers remained under pressure. Regional language papers demonstrated strong growth, but were adversely affected by demonetization given their high dependence on local advertisers. Print is expected to grow at 7.3 per cent, largely driven by continued growth in readership in Indian languages markets and advertisers’ confidence in the medium, especially in the tier II and tier-III cities. Rise in digital content consumption poses a long-term risk to the industry.

    Films

    Films grew at a crawling pace of 3 per cent in 2016. The segment was impacted by decline in core revenue streams of domestic theatricals and satellite rights, augmented by poor box-office performance of Bollywood and Tamil films. Expansion of overseas markets, increase of depth in regional content and rise in acquisitions of digital content by over-the-top platforms are expected to be the future growth drivers that would help the segment bounce back at a forecasted CAGR of 7.7 per cent. However, factors such as dwindling screen count and inconsistent content quality could prove to be limiting factors.

    ALSO READ:

    FICCI-KPMG report projects TV sector to reach Rs 1166 bn by 2021

  • FICCI-KPMG report projects TV sector to reach Rs 1166 bn by 2021

    MUMBAI: The year 2016 was a mixed bag for the Media and Entertainment (M&E) industry. The sector is projected to grow at a faster pace of 14 per cent over the period 2016–21 with advertising revenue expected to increase at a CAGR of 15.3 per cent, according to a report released today.

    As per the KPMG-FICCI Indian Media and Entertainment Industry Report 2017, themed Media for the Masses: The Promise Unfolds, the television industry in India stands at an estimated size of Rs 588 billion in 2016, a growth of 8.5 per cent over 2015, and is envisaged to register a CAGR of 14.7 to reach Rs 1166 billion by 2021.

    The Indian economy is expected to outperform major economies with a projected financial year FY17 GDP growth rate of 7.1 per cent despite the speed bump caused by demonetization, the report states, adding TV witnessed a slower growth in 2016 at 8.5 per cent primarily due to a lackluster year for subscription revenues and a slowdown in advertisement revenue growth. However, over the next five years as both advertisements and subscription revenues are projected to exhibit strong growth at 14.4 per cent and 14.68 per cent, respectively, the industry too will grow.

    According to the report, advertising revenues are expected to grow at marginally slower rate of 13.1 per cent due to the lingering effect of demonetization and initial volatility arising from GST implementation. Digital advertising is expected to grow at a CAGR of 31 per cent to reach Rs 294.5 billion by 2021,

  • Top M&E industry honchos see no major benefit from Budget ’17

    Top M&E industry honchos see no major benefit from Budget ’17

    MUMBAI: With the Union Budget’s focus on rural and infrastructure sectors, the media and entertainment (M&E) industry seems to be disappointed as the budget does not offer much. Though the sector is hoping to get some benefit through the digital push mentioned in the budget, expectations were high as the budget overlooked the sector even in the previous two budgets.

    No clarity on foreign direct investment (FDI) policy, goods and services tax (GST), no further reduction in the service tax, no direct benefit for the digital ecosystem, MSOs, telecom, and many such misses has upset the M&E industry at large.

    Impetus on digital payments and transactions will eventually help the OTTs/VoDs platforms subscription model. The government’s move to abolish Foreign Investment Promotion Board (FIPB) is believed to make it largely easier for foreign investors to invest in Indian companies.

    Reliance Broadcast Network Limited

    Reliance Broadcast Network (RBNL) CEO Tarun Katial said, “Budget 2017 is Neutral for the M&E sector although the consumption centric budget will put more money in the pocket of the common man and hence help the advertising and broadcast industries. Radio broadcast industry has requested specific policy measures like five per cent GST rate, reduction in custom duty for capex, etc and we look forward to the announcements when the GST rates are announced.”

    Mukta Arts 

    Mukta Arts MD Rahul Puri asserted, “The Union Budget this year has focused more on uplifting some of India’s poorest sections of society. While this year again the media and entertainment sector has been overlooked, however some announcements will definitely help our industry in many ways. Setting up the cyber security teams will help fight piracy, similarly, the government’s push towards Internet penetration in rural markets will help increase content consumption and increase the audience base. Further the abolishment of FIPB will make it easier for foreign investors to invest in Indian companies.”

    Worldwide Media 

    Worldwide Media CEO Deepak Lamba added, ‘’The Union Budget 2017 announced today, doesn’t include much on the  M&E sector, however there are some points that will have a positive impact on our industry. The budget reinforced India’s huge shift towards digitization especially with the proposed deployment of high optic cables to increase internet penetration in rural India. This is a big positive for content creators like us, as it will boost the digital content consumption across online and mobile platforms. Further impetus on digital payments and transactions will eventually help the subscription model. Also, the government’s move to abolish FIPB to make the inflow of FDI smoother and to consider liberalization of the FDI policy will have a positive impact for players across sectors in the long run.”

    KSS Limited (K Sera Sera)

    KSS Limited group CEO and KSS Digital Cinema CEO Rahul Kanani added, “The Union Budget 2017 introduces the abolition of the Foreign Investment Promotion Board which is a positive step leading to inducing more foreign studios investment in India. More investments coupled with technological upgradation will certainly be a boon for the Indian film industry. Further, with the digital transactions getting a boost the industry especially single screen businesses which have suffered hugely because of the recent demonetization will help get a push.”

    Pixel Pictures 

    Pixel Pictures CEO Prashanti Mallisetti said, “The budget on the onset looks quite positive and is in-line with the recent reforms. Though there are no major takeaways for any industry in particular that can affect a trajectory movement – the curb on cash transactions of 3 Lakhs is the one that is going to be a predominant factor in the demonetization short term scenario. More clarity in GST would have been great, but I guess we have to wait for that a little longer.”

    Dome Entertainment

    Dome Entertainment’s Mazhar Nadiadwala added, “GST would be implemented on the entertainment and events industry, and this would unify the indirect tax administration in India and help the country in two ways. Firstly, it will simplify and make it easy for the consumers to understand. Secondly, it will ease doing business in India. Also, application of GST will result into growth of the country and there will be transparency in the transactions. Under GST, service tax or state tax will be available as a credit which will reduce overall costs and eliminate dual levies of service tax and VAT on transactions. However, every coin has two sides, at one end where we have advantages of GST, on the other end certain businesses will face initial challenges, especially the ones who use traditional methods for transactions.”

    ActorsApply.com 

    An ActorsApply.com spokesperson said, “Government’s proposed reduction in the income tax for smaller organisations will add to the agenda of Startup India thereby expanding the scope for aspiring start ups. Also, the plan to provide a seven-year tax relief will help startups to overcome the losses incurred post demonetisation. The increase in time frame from 5 to 7 years for profit linked deductions was a much needed move specially for emerging start ups. The budget also levelled India’s huge shift towards digitization supporting it with the announcement of use of optic fibre cables for high-speed broadband connectivity in rural areas. This will mean increased Internet penetration through mobile and online mediums thereby boosting the start up sector overall.”