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Electronic media may benefit from social sector plans

By Equitymaster
July 07, 2009 11:42 IST
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The Indian entertainment industry is one of the fastest growing in India. Changing lifestyles and increasing disposable income levels have led to increased penetration levels of the media, although there is still ample scope for growth.

Access to global entertainment avenues, outsourcing of animation business to India and increasing migration of Indian population will help this industry to grow at a faster pace.

Further, companies have diversified to provide a complete package across various segments of the entertainment value chain.

The future of the entertainment industry will be decided on the interplay of a number of reasons like consumerism, advertising spend, content, pricing, technology and regulation. It is estimated that this industry is set to grow at a CAGR of 18 per cent to reach an estimated size of Rs 1.1 trillion in 2011.

 Budget Measures
  • Stimulus package for print media in the form of a waiver of 15% agency commission on DAVP (The Directorate of Advertising and Visual Publicity) advertisements and 10 % increase in DAVP rates to be paid as a special relief subject to documentary proof of loss of revenue on governmental advertisements, extended till the end of the year.
  • Customs duty on LCD panels for manufacture of LCD televisions reduced from 10% to 5%.
  • Customs duty of 5% imposed on set top boxes.
  • Fringe benefit tax (FBT) abolished.
  • Rate of minimum alternate tax (MAT) on book profits has been increased from 10% to 15%, but with a provision of carrying forward the tax credit on MAT to ten years from the current seven years.

     Budget Impact
  • The government had earlier come to the rescue of print media companies, who were reeling under high newsprint costs and had exempted the custom duty of 3% applicable on newsprint and 5% on lightweight coated paper. It had also hiked the DAVP (The Directorate of Advertising and Visual Publicity) rates. The current stimulus package will provide further help to the print media industry in coping with lower advertising revenues in the face of an economic slowdown.

  • The changes in customs duty on LCD panels and set top boxes will only have marginally positive and negative impact respectively as a 5% price change will not substantially influence the end user of these products.

  • The electronic media industry did not receive much attention in the budget although it will indirectly benefit from the social sector schemes.

  • The abolition of FBT will help reduce the employee cost in electronic media companies who had witnessed escalating costs of late.


     Company Impact
  • With the print media companies depending on advertisements for a large portion of their revenues, they will find the going difficult as long as the economy remains subdued. As such, Jagran Prakashan and HT Media will benefit from the waiver of commission on DAVP advertisements. Moreover, the 10% increase in DAVP rates will also help.

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