MxMIndia

Blog

  • The role of the Competition Commission in the industry and the need for this umbrella body.

    @FF12: CCI is an overall market regulator: Ashok Chawla

    By A Correspondent

     

    Keynote speaker Ashok Chawla, Chairman, Competition Commission of India (CCI) opened his address by pointing out that the media and entertainment (M&E) industry is one of the fastest growing sectors in India today, with an expected CAGR of 14-15 percent. He attributed this to increase in disposable incomes and aspirational lifestyles.

     

    He said that with digitisation set to come in by July 1, the M&E industry witnessed consolidation which has ensured synergy for players looking for entry. The state has been acting as facilitator, and by not regulating directly, ensuring a balanced growth.

     

    Outlining this scenario, Mr Chawla proceeded to outline the role CCI performs in the industry. He said that CCI is an overall market regulator whose objective is to ensure that market forces operate with transparency and fair play. It has been put in place to identify the boundaries of behaviour of the industry.

     

    Mr Chawla gave an overview of the Competition Act and how it came into force in 2009, in spite of having been passed in 2002. The philosophy of the Act was that with deregulation, there is a need for a body which can look at behaviour and how businesses are conducted.

     

    Mr Chawla said that the Act has a two-fold agenda. It takes a look at, and if necessary action against, activities which are anti-trust and anti-competition in nature. It also ensures that the economic activity is not restricted and freedom of trade is not affected. The main objective is to ensure that the consumer should benefit by the more efficiency.

     

    He said that they keep an eye on the mergers and acquisitions (M&A) in all the sectors. Any M&A which goes above a certain threshold and can have an adverse impact on the market requires the mandatory approval of CCI, he added. The dissenters made to pay monetary penalties.

     

    Mr Chawla also outlined the role that trade associations and bodies should play. He said that rules framed shouldn’t inhibit non-members as it could be anti-competition in nature. The bodies shouldn’t encourage collective boycott of non-member players as it would be construed as engaging in anti-competition practices and abetting collusion among the members and let the consumers choose their preferences.

     

    He said that self-regulation was of prime importance to avoid infringement of law or market practices. He cautioned the players that consumers should be given primary importance and that should be the end goal of the businesses.

     

     

  • Sachin Tendulkar is one of today's top celebrity endorsers. But Brand Sachin's biggest strength is his ability to change with the times, MxMIndia finds out.

    Brand Sachin still on strong wicket

    Sachin Tendulkar launches G-Hanz Mobile

     

    By Tuhina Anand

     

    India collectively heaved a sigh of relief when Sachin Tendulkar finally reached his 100th 100. The long-chased milestone had become practically a national issue, and had also brought flak on the master blaster, especially speculation about his retirement. Sachin in his illustrious career has not only reached many cricketing milestones but along with that has also become the face of many popular brands in India. He has been seen in the ads of Pepsi, Visa, Aviva Life Insurance, Boost, Adidas, MRF, Britannia, Toshiba and Castrol India among others. In fact, Future Group has co-created the Sach brand along with Tendulkar which has products including toothpaste and bathing bars. The Sach brand proves the icon’s sheer clout, that a brand can be created with a varied range of products, and is considered a viable commercial option.

     

    Talking about brand Sachin, Piyush Pandey, Executive Chairman & Creative Director, Ogilvy South Asia said, “Brand Sachin is not just about cricket but it’s the persona that comes with the brand which is appealing. Sachin is a non-controversial, family man with high value systems. He is the son, father, husband, friend that one would want to have and his recognition is beyond the nation. He is a total package if one may say in terms of advertising jargon. He is a successful cricketer but along with that he is an endearing personality and therein lies his brand appeal.”

     

    Mr Pandey pointed out that Sachin has been able to last so long in his career and done so well only because he has been able to reinvent himself and adapted to changing times. The truth, after all, is that he is no more an 18-year-old and his reflexes will change with age but he has managed fantastically to adapt himself to this change. “Sachin is special and I can’t really think of any other person from cricket who has created such an impression. Rahul Dravid probably could come a close second. But Sachin is Sachin and beyond comparison. The only other name that comes to my mind who has successfully adapted himself with time is Amitabh Bachchan.”

     

    Looks like the naysayers can keep on debating on Sachin but the masses will continue to hold him in high regard despite the man himself saying: “I am not God, I am Sachin.” Prahlad Kakkar, ad filmmaker and CEO, Genesis Films who has worked with Sachin on many ad films said, “Sachin’s track record is impeccable and his dedication to cricket and the team is firm. His brand value lies in his courage, honesty and sincerity with which he plays. In fact, he is the real gentleman in this gentleman’s game.”

     

    He added, “Sachin is humble to the point of being irritating. There was a time when we had shot an ad with him knocking a ball with a fly swatter. When Sachin saw the final cut he was not happy with the use of the fly swatter and requested us to re-do the shot. We didn’t find anything wrong with the shot but Sachin had a point of view and we respected and understood his view and re-did the sequence. He has no ego and he is clear that the game always remains bigger than him.”

     

    Kakkar said that the Pepsi films, especially the one with the Sachin mask, “Sachin Ala Re”, remains his pick of the best Sachin film.

     

    Hemant Kenkre, former first class cricketer and communications specialist who has had seen Sachin play from close quarters, says that two qualities that stand out in Sachin’s personality is his ability to reinvent and his commitment to the game. Kenkre said, “Sachin delivers and that’s the bottom line. The cynics will be cynics and there will be talks of his retirement but I really can’t think of anyone from the younger lot who can replace him.”

     

    He added, “While people have been talking of the 100th ton, one should remember the 99 100s that he has scored before. I think his not getting the 100 was a minor bump towards this milestone. He is a man who is obsessed with the game and one can easily bank on him. His retirement is a personal issue and it will come the day he stops enjoying the game. In fact, his current brand value can be understood from the fact that his 100th 100 got 5-page coverage in TOI whereas the retirement of Dravid must have got him a one-page dedication!”

     

    So there could be speculation on Sachin getting old for the game, but people in the business vouch for his brand value which still remains consistent. Mustafa Ghouse, Head of Sport, Globosport categorically states that Sachin is still the most sought after cricketer in the country when it comes to endorsements. However, he has a point when he says that the brands that he will attract now will differ and will be for products that appeal to older age group like insurance. For youth brands he might not be appropriate.

     

    Manish Porwal, Managing Director at Alchemist Talent Solutions has a different view on the cricketer’s brand value. He said, “I think this is the first time but in the last two months brand Sachin has taken a beating. There has been criticism all across and this has taken a personal note than remaining professional. So there would have been some loss in terms of potential and revenues that would have come in from endorsements.”

     

    He added, “This however will be temporary. Indians have a skewed sense of loyalty and one success will again put him back on the pedestal. His equity so to say has fallen on account of his performance but this 100th 100 will give him the jolt and become a personal milestone because of so much speculation around it. However, in terms of his long-term brand persona and brand associations one should look at characters for brands that will express long-term maturity and consistency rather than stamina or performance.”

     

    Brand Sachin still remains strong and will remain strong in this cricket-crazy country. However, there is a feeling that the brand may have taken a temporary dip because of all the speculation and pressure on attaining the long-elusive 100th 100. However, the consistent view is confidence in Sachin’s ability to reinvent, hence his moving away from brands appealing to the youth, towards advertisers who look for traits like commitment and consistency. Qualities where Sachin fits the bill perfectly.

     

    Photograph: Fotocorp

     

  • Managing a brand's potential is the most challenging aspect of today's marketing environment, with the accelerated pace of change, says the marketing guru.

    A brand’s success does not guarantee anything: Kevin Lane Keller

    By A Correspondent

     

    Prof Kevin Lane Keller, brand management guru and the author of well known book Strategic Brand Management, believes that brand is the most important intangible asset that any corporate can have. He states, “The role and functions of brands are so fundamentally pervasive and valued by consumers, it is difficult to see their potential importance diminishing. Managing brands to achieve that potential, however, is as difficult as ever. The pace of change in the marketing environment has greatly accelerated in the last decade.”

     

    Three of the major changes he stresses upon are emerging markets, emerging media and social networks, and with them has emerged the need for the brands to remain valuable in the changing environment.

     

    As per him, a strong brand is key to enhancing marketing effectiveness and efficiency, and is therefore a promise to customers and means to set expectations and reduce risk. Heart of a great brand is a great product or service but every brand contact matters.

     

    A strong brand, according to him does not only work wonders with customers but also gives direction and purpose to employees by motivating them.

     

    In the changing market environment, challenges of branding too have changed. Some of the challenges, mentioned by Prof Keller are as follows:

    • Rapid technological developments all over the place
    • Great customer empowerment
    • Fragmentation of tradition media
    • Growth of the interactive and mobile marketing
    • Channel transformation
    • Increased competition and industry convergence
    • Globalisation and growth of developing markets
    • Heightened environmental and community welfare awareness
    • Social concerns
    • Recession

    And in the backdrop of these changes, he recommends six branding imperatives, for effective brand management.

     

    Fully and accurately factor the consumer into branding equation: As per Prof Keller it is important to ‘Engage in participation marketing by establishing what consumers know and don’t know, and what they want and don’t want from the brands.’ Permission marketing, in his view is not the right answer – many consumers don’t even know the questions they should be asking.

     

    Prof Keller explains the concept further by giving example of Nike. Nike’s brand mission is :’To bring inspiration and innovation to every athlete in the world’.

     

    And right under its mission statement Nike website states, ‘If you have a body you are an athlete.

     

    By making that statement, Nike clearly mentions that it is not just marketing to athletes, it is marketing to everyone. Nike has a trickle down target market – top of the pyramid are most evolved – athletes, next come the weekend warriors and the bottom of the pyramid are casual athletes.

     

    However, It is not only trickledown effect to other segments, but they also market directly to each segment. One of the reasons, the brand is so successful is because it realises the importance of establishes broad access points.

     

    Another important takeaway from Nike branding is that it is important to have a brand mantra – three words that are the essence of the brand, and in Nike’s case it is ‘authentic athletic performance.’

     

    2. Go beyond product performance and rational benefits: Well-designed products and services that provide a full set of rational and emotional benefits are key to successful brand management.

     

    Prof Keller brings home the point that developing better designed products and services requires ‘a comprehensive, up-to-date understanding of consumers, how they purchase and use products and services, and how they think and feel about the brand.‘

     

    A well deigned brand, as per him, offers advantages in product and service performance, and imagery that creates significant functional and psychological benefits. The strongest brands connect their emotional and functional benefits.

     

    He elucidates it with Apple’s example, which has a strong brand promise. Its Intrinsics are performance and design, while its extrinsic s are think different, personality and character.

     

    Apple has done sustained product innovation through feedback and expansion.

     

    Another brand Prof Keller refers to, in this context is Pampers, which has evolved from a functional to an emotional positioning.

     

    Based on the functional benefit of ‘Absorbency and dry baby’ , it created the emotional connect with mothers by emphasising that by being dry baby sleeps well at night and so is more active in the day. It established itself as a brand, caring for baby’s development.

     

    Pampers created emotional pay off for the functional benefit – and they worked well in a synergistic way. And to do it effectively, Pampers changed their marketing program – both advertising and online.

     

    3. Make the whole of the marketing programme greater than the sum of its parts: Prof Keller believes that it is imperative to ‘develop fully integrated channel and communication strategies that optimally blend their strengths and weaknesses.’

     

    He states, “Marketers can combine push and pull distribution strategies to maximise coverage and impact, selling directly via email, internet, telephones, cell phones and company stories while also selling indirectly via whole sellers and retailers.in devising communication styrategies marketers must address a number of market place developments – the fragmentation of TV viewership, the increasing use of mobile phones, the explosion of online blogs and social communities, and the greater importance of buzz marketing.” In his view,tTo develop successful communication programmes, marketers must combine online/interactive communications. Real world/experiential communication and traditional mass media communication.

     

    Here he gives the example of Red Bull – which has been successful for the longest time.

     

    The brand employs a full set of brand elements and marketing activities – from traditional media to digital to ground events.

     

    In traditional media – it largely uses cartoon ads and delivers brand promise in a very cost effective way. And hence has enough budgets to spend on digital and events among other things.

    Prof Keller insists that marketing will become more interactive, more digital, more social in times to come. It is important to establish a public voice and presence on the web for dialogue and monitoring consumer reaction and also because it compliments and reinforces other communication.

    Having said that, he also reminds that not everyone actively participates in social media – ‘only some consumers want to get involved with some of the brands some of the time’ – and hence integrated marketing communication is the key. Traditional mass media gives advantage of broader coverage and greater control.

    It is smart brand marketing, as per him to employ multiple touch points and appeal to multiple senses via special events, contests, promotions and sampling. “Make a splash, but pick your spots,” advises Prof Keller.

    Capitalising on real news is another factor brands need to integrate in their marketing.

     

    4. Understand where you can take a brand (and how): “Design and implement a new product development and brand architecture strategy to maximise long term growth across product offereings, customer segments and geographical markets” is Prof Keller’s advice on brand extensions.

     

    As per him, from a branding standpoint, growth requires a well-though-out and well-implemented brand strategy that clarifies three key issues:

    A. The potential of a brand in terms of the breadth of its ‘marketing footprint’
    B. The types of product and service extensions that would allow a brand to achieve that potential
    C. The brand elements, positioning and images that should be used to brand any new or existing products

    Crayola, the market leader in crayons in the USA, is his example of choice here. Crayola broke free from the thought process that it was about crayons to ‘Colouring is about imagination and not only crayons – and hence Crayola too has to be about imagination and not just crayons.’

     

    First right step in brand extension is thinking out of your box – and that is the most difficult step’ underlines Prof Keller.

    The other example he gives here is of Virgin mobile, whose brand strategy is to enter categories where customer needs are not well met and do different things, and do things differently.

     

    5. Do the right thing with brands – ‘embrace CSR’ is Prof Keller’s parting message to the brands. And this can be done by creating win-win marketing programmes and activities. He gives the example of British Airways, which has for years kept an envelope in the back pocket of the seat – where people can put in foreign currency coins of no use to them. And the proceeds are sent to Unicef.

    CSR, in his view, helps in creating a bond with customers and employees. If done right, it helps in increasing sales.

    Prof Keller also recommends doing the right thing with brands by avoiding over extending, over exposing, over modernising, avoid death by 100 cuts.’

    Says he, “The best and most widely admired marketers treat their brands with understanding and respect, as well as a clear sense of commercial and social purpose. They take out their brand on thought – out journeys that allow them to grow profitably, while preserving brands’ close bonds with consumers and benefits to society as a whole”.

    Multiple compromises and shortcuts, as per Prof Keller, add up and create big problems. A series of micro –decisions by Starbucks in recent years added up enough to transform the customer experience in adverse ways that loyalty suffered, forcing Howard Schultz, the CEO to take drastic actions

     

    6. Take a big picture view of branding effects. Know what is working and why: The last imperative that Prof Keller suggests is, ‘achieve a deeper understanding of the limits and powers of brands, and be able to qualitatively and quantitatively justify brand investments.’

    As per him, increasingly marketers have to do ‘more with less’ in their marketing budgets. “To help develop return on investment insights and interpretations, marketers must adopt comprehensive, cohesive and actionable branding models,” he advises. Three linked interlocking models, as per him, for brand planning, tracking and measurement can be:

    1. The brand positioning model describes how to establish competitive advantage via points of difference and points of parity
    2. The brand resonance model considers how to create intense, active loyalty relationships with customers. Brand resonance occurs when the consumers feel completely in sync with the brand.
    3. The brand value chain model describes how to trace the value creation process to better understand the financial impact ot marketing expenditures and investments.

    Prof Keller stresses that brand management is an ongoing process and just because you are successful today does not guarantee anything.

     

    MySpace, Yahoo and Barnes & Noble were the market leaders in their space at a point in time, but they have been replaced by successful challengers: Facebook, Google, Amazon. Another case in point is Samsung, which is competing with Sony across the globe today because it has an excellent value proposition.

     

    Prof Kevin Lane Keller was invited by Cogito Consulting, the brand consultancy division of FCB Ulka group, for an exclusive, informative and enlightening talk – and the above article is MXM India’s take away from the talk. The Indian edition of the book Strategic Brand Management is co-authored by MG Parameswaran (ED & CEO Draftfcb Ulka Mumbai) and Prof Isaac Jacob (Head of Marketing Faculty, SIMSR). The book has 40 informative examples from the world of branding and marketing in India.

     

  • Having played a tepid role thus far, digitization is poised to take a big leap as it sets out to revolutionize the fortunes of the M&E sector.

    @FF12: Counting on digital to be M&E’s opportune trailblazer

    By A Correspondent

     

    Those familiar with the going-ons at FICCI Frames would testify how an infatuation gets displayed by delegates at the event each year so as to summarise the mood of the convention even before it broadly takes off across the three days that it is entitled to. But probably, the setting was a bit different this time around when the delegates – joined in unison by the media – were running ballroom to ballroom trying to ingest giveaways that were being thrown up abundantly across several sessions. May be, it was a year where each day had something new to offer to the delegates that kept them at tenterhooks throughout the 3-day event. And going by the loud decibels that were being emanated across every nook and corner of the venue, it was evidently clear that there was some motivating factor that was driving the gathering to go on an overdrive spree.

     

    The organisers of FICCI Frames 2012 have every right to take credit for coming up with a theme around a medium that attracted the attention of one and all. Having kept it on the sidelines till last year, digital was finally given its due at the convention as experts, authorities and enthusiastic youngsters came face to face to deliberate and come up with outcomes that would redefine the way the consumers consume the medium. From television to print to films and even radio, digitisation and the benefits and effects it would cast on these sectors were discussed in length at the venue. In fact Star India CEO Uday Shankar in his keynote address didn’t hesitate in thanking the FICCI committee for putting across a theme that would go on to redefine the way the industry functions in the future.

     

    What was apparently clear through the various sessions at the convention is that with the nearing of date for total digitisation across key metros by June 30 2012, and then across the country by 2014, broadcasters had to relook their distribution and content provision models so as to keep the consumer at the heart of every shift that will transpire in the future. Emphasising on the current digitisation scenario in the country, Mr Shankar said, “Most of the discussions that I have participated in are still around whether digitization will happen and if it indeed were to go through, how chaotic it would be. But all these are meaningless discussions triggered by a bunch of retrograde interests who are living in denial.” According to Mr Shankar, digitization of distribution is a big reality and the 40-45 million homes that have bought DTH boxes at some point or the other are a conclusive evidence of that.

     

    Shooting back at critics who had doubted whether the makeover to digital would ever be a reality, Mr Shankar said, “To the critics and the cynics who are still wondering whether digitization would happen, my answer is: Look around, it is already happening and the rest of it is bound to happen because even in this country it would be difficult to undo such a momentous shift. To those who wonder how chaotic it would be, my response is that there would be some chaos, but chaos is not necessarily bad if the alternative is status quo or regression. When a transition at such a scale is happening that affects the illegitimate but strong vested interest in certain pockets, then there is an incentive to put up with chaos in the interest of the larger social objectives.”

     

    A broader outlook was provided by a few panellists who said that digitization will come in as a relief for broadcasters who will be benefitted from additional subscription revenue, relaxation on paying heavy carriage fees, and of course providing viewers with a superior content experience – MSOs and cable operators have to quickly respond to the digitization mandate by investing in set-top boxes – the cost that is only possible to recover after four years.

     

    Sounding off the challenges that digitisation would present for the broadcast sector, Tarun Katial, CEO of Reliance Broadcast Network Ltd said that, “For television, it will be a combination of content as well as marketing. The old model which was a combination of carriage and product, as it stands today, won’t work. The business plan which currently has a very high rate of carriage will obviously see the content taking precedence.” And as for content, it will be niche content that will call the shots for broadcasters as according to experts at the convention, niche isn’t niche any more as all niche channels put together command a share that is equivalent to the share of Hindi GECs and the mass channels, so to say.

     

    Perhaps the many advantages that digitisation will have on several mediums was rounded off by Vikram Sakhuja, CEO, South Asia, Group M who said, “The inherent power that digital brings along with it is interactivity and its ability to link multiple devices. Also the ability to enhance real-time consumption of content; linked to that is the entire thing about going mobile.” On the roadmap for the industry, Sakhuja said, “I think integrated media is the best way forward. Today when people think of multimedia planning, they do a separate TV plan, print plan, radio plan, internet plan and so on. I believe that if you actually look at media agnostically and at common metrics of each cost per thousand impressions, these are the ways in which you can construct a media agnostic plan. What it does is, it suddenly gets more money into digital, and when more money can come into digital, that’s when focus is going to come in.”

     

    While digitisation was the mainstay of every discussion, the all-important issue of regulation too was taken up by panellists who chose to have the government respond to the many queries surrounding the topic. Uday K Varma, I&B Secretary, said that “if people at large seem to be happy with self regulation, I think the government would have no problem in legitimizing them. But I think the self regulation mechanism which has been set up by both the news broadcasters and the entertainment broadcasters, they’ll have to really prove it, not to the government but to the people at large.” He was joined in his cause by Prithviraj Chavan, Chief Minister of Maharashtra who said that the challenge would be to adopt the regulatory framework to new technology and ensure that over regulation doesn’t kill a good thing. The Chief Minister emphasised on the need for regulation and suggested that instead of the state regulating the media, the medium should look at regulating itself.

     

    The other important announcements that came up at the venue included the soon-to-be-passed Copyright Amendment Bill, the roll-out of the imminent phase 3 radio policy that would steer the growth of the medium and increased government aid for the film & entertainment sector.

     

    Session Byte

    “I think we have created some kind of history by encouraging self-regulation for the news and entertainment channels. We are keeping a close watch on the efficacy of this novel mechanism. A lot would depend on how effectively these self regulations become functional. If people at large seem to be happy with self-regulation, I think government would have no problem in legitimizing them, but I think the self-regulation mechanism which has been set up by both the news broadcasters and the entertainment broadcasters, they’ll have to really prove it, not to the government but to the people at large.”

     

    — Uday K Varma, I&B Secretary

     

    New ventures @ FICCI

    BARC takes wings

    In between the many promises and hopes that were being doled out at the sessions came the news of the Indian Broadcasting Foundation (IBF), the Indian Society of Advertisers (ISA) and Advertising Agencies Association of India (AAAI) announcing the official formation of a nationwide audience research joint body — Broadcast Audience Research Council (BARC).

     

    While IBF will have 60 per cent stake in BARC, ISA and AAAI will each hold 20 per cent stake. The Board of the council will have 10 members, six members from the IBF and two members each from the ISA and AAAI.

     

    Discovery Kids to flag off ops in April

    Another important announcement was made by President & CEO of Discovery Networks International, Mark Hollinger who announced the launch of its new network for children in India, ‘Discovery Kids’. Mr Hollinger said, “Launching in April, the network will initially be available in three languages – Hindi, English and Tamil. The channel will offer children a fun and entertaining way to satisfy their natural curiosity with stimulating and imaginative programming,” he said. The company plans to roll out the channel in Philippines and Indonesia later this year.

     

    Ten Golf tees off

    Taj Television India Pvt Ltd announced the launch of Ten Golf, a dedicated 24-hour golf channel. Ten Golf is the fifth channel from Taj Television India Pvt Ltd and began transmission on March 15, 2012. The dedicated golf channel will showcase a mix of live, non-live and feature programming. The channel will also broadcast live, high quality Golf action from around the world.

     

    Ten Golf has acquired rights for European Tour and Asian Tour till 2016, and has also entered into partnership with PGTI for three years to telecast the Indian Tour. Further, Ten Golf will be telecasting 400 hrs of golf programming in association with NBC.

     

  • It is not media’s right but rather an obligation to keep the people informed and it should not give the government a chance to step in and hold it accountable, says Justice Varma.

    @FF12: NBSA chief suggests independent regulation for media

    By A Correspondent

     

    In 1950, Jawaharlal Nehru said that freedom of speech should be granted to good and bad editors, but they should use it in national interest for he believed that if it is left to the government to decide, the good editors will be jailed and the only the chamchas will survive. This was the opening Justice JS Varma, former chief justice, Supreme Court and  News Broadcasters Standards Association (NBSA) Chairperson used for his keynote address for the session ‘Freedom of Media: Significance of self regulation’.

     

    Justice Varma said that freedom of speech is precious and we have to preserve it. The way to do so is self regulation as the media is mature enough to know to do it themselves and ward off the danger of state regulation.

     

    He said that it is not media’s right but rather an obligation to keep the people informed so that they can participate in government decision making process. It is the media’s duty to ensure transparency to ensure accountability.

     

    Justice Varma emphasised that the media should not give the government a chance to step in and hold it accountable. He said that the media (which reports) and judiciary (which decides) are the two strongest pillars of our democracy and they shouldn’t use their strength (power) to harm anyone, lest their power be curtailed due to lack of their accountability.

     

    Moving on, Justice Varma criticised the media, especially the broadcast media’s tendency for breaking news. He said that the key tenets of journalism should be kept in mind while reporting ‘breaking news’- is it true, fair and in public interest. He said that objectivity and due diligence must be applied while covering news. He cautioned the media, which has tremendous reach, to be cautious in its reporting as the effect of the news it flashes is instantaneous. He closed his address by saying “The more potential for damage, the more is the accountability you have”.

     

    The moderator, Barun Das, Zee News CEO and Vice President, News Broadcasters Association (NBA) spoke about how the media can’t be regulated as it is an essential pillar of democracy. He opined that free media can be good or bad but media which is not free can never be good.

     

    Mr Das said that regulation is a process of evolution. The media needs to introspect and understand where it stands.

     

    He outlined the dilemmas faced by the media while trying balance the content and the bottomline where news is trivialised for gaining eyeballs. The broadcast media especially is constantly grappling with trying to strike a balance between what the audience ‘would like to see’ and what they “should see”.

     

    The stage was then thrown open for the panel discussion. Each of the panellist was given time to speak and answer questions by the moderator.

     

    The discussion was opened by KVL Narayan Rao, executive vice chair person NDTV and President, NBA.

     

    Mr Rao said that there is no question of compromise on the fact that that media is free and that is the way it should be in a democracy. He said thatIndiais the largest free news market with a reach of 500 million households (news TV reaching nearly 115 million households).

     

    He said that in the early 2000s, after the private players were allowed in, they got together to set up the NBA to set up a code of programming and ethics which will regulate their broadcasting. He emphasised that it was important to have an independent and respected authority to keep a vigil on what is happening in the industry. He was proud of the fact that they telecast a scroll reminding the viewers that they have a forum to go to if they have any complaints.

     

    He also spoke about the NBSA which has been an advisory to the media with regards to improvement in news coverage and takes up issues suo moto if the media is found lacking.

     

    When questioned by Mr Das about balance or conflict on interest between news and business, Mr Rao was emphatic that there should be a “Chinese wall separating news and commercial interests”. He opined that news is to inform, educate and entertain the public independent of government and advertisers. He allowed that some compromise may take place but said that with digitisation, more cost can be spent on content and hence the scenario will change.

     

    Next to take the mike was Nitin Desai, Former under Secretary General, United Nations and member NBSA.

     

    Mr Desai started by saying that he disliked the term self regulation and “independent regulation would be a more appropriate term”. He said that emphasis should be given to developing the independent regulation in such a way that it is credible in the eyes of the media, the people and the view makers.

     

    His main concern was about the emergence of new media and challenges presented to regulate it.  He reiterated the need for due diligence to be given to fair and unbiased reporting, rights of an individual to privacy and avoiding trial by media.

     

    He said that he had already noticed a change in the fact that the mindset of the editors and the non-media members on the NBSA was converging due to the internalising the sense of responsibility.

     

    When questioned about the trivialisation of content, Mr Desai said that it was being done as the measurements showed that the audience preferred it. He said that there was a need for a different measuring system for news channels. He also opined that news channel have to stop behaving like money making operations and take responsibility to cover news that “people should know”.

     

    Phillip Turner, Chief of Bureau, CNN International, South Asia said thatIndiahad a long tradition of journalism but we tended to forget it. He emphasised that focus should be on stories that have a relevance to the rest of the world and maintaining the integrity of the media. He agreed with Mr Desai that the new media is presenting a challenge for regulation but he was of the opinion that everything would work out if the media stuck to the basic tenets of journalism – fair, relevant, responsible and accurate reporting.

     

    When asked about the need for a NBA-like worldwide authority, he wasn’t sure that such a platform could work globally.

     

    Kiran Karnik, member NBSA and former president of NASSCOM spoke about the challenges of new media. He said that today, when the news is available instantly as reported by citizen journalists and through the new media, it is the responsibility of the media to separate what is true and what is not. He also opined that news media today has shifted from reporting news to making news. He cautioned them to use the power they have responsibly by maintaining their standards and not infringing on the rights of the people.

     

    When questioned on the challenges thrown up by the new media, he agreed that technology is not amenable to censorship and also the consumer is becoming the creator and consumer. But he emphasised that there should be zero tolerance for unverified news and the news media as the aggregators of news should use their own censors.

     

    Mr Das wrapped up the session by stating that now is the time to convert challenges into opportunities and inclusive growth through media is the way forward.

     

  • Ernst & Young Post-Budget Analysis of Direct and Indirect tax proposals in Media & Entertainment Industry

    Budget 2012: Ernst & Young Analysis of Direct & Indirect Tax proposals in M&E

    Ernst and Young shared with MxMIndia its analysis of what the Union Budget 2012’s tax proposals mean for the Indian media and entertainment sector:

     

    Foreword

    Union Budget 2012-13 was keenly awaited by the Indian businesses and Foreign Investors/ businesses alike largely to see if the Finance Minister (FM’) chalks out a credible path for the reforms process which seemed to have been halted. The FM has announced several steps for agriculture, infrastructure and capital markets, and their impact on the economy will need to be analysed.

     

    On the direct tax front, there are several surprises in form of various amendments proposed, some of which were particularly not anticipated in view of the report submitted by the Standing Committee on Finance (SCF’) of the Parliament on the Direct Taxes Code 2010 provisions on 9 March 2012.

     

    On the indirect taxes front, most of the amendments were largely anticipated. In fact, the film industry received a centenary year gift in form of exemption from service tax. Rate of excise duty has been increased from 10.3% to 12.36% from 17 March 2012 while similar increase in service tax is effective from 1 April 2012.

     

    Some of the key tax measures announced by the FM are as follows:

    • Direct Taxes Code (DTC’) to be enacted after giving due considerations to the report of the SCF
    • Goods and Service Tax (GST’) Network, the IT backbone for GST, to become operational by August 2012
    • Advance Pricing Agreements (APA’) and General Anti Avoidance Rule (GAAR’) provisions proposed as amendments to the domestic income tax law
    • Permanent Account Number – income tax identification number – to be used as a common identifier for direct tax and indirect tax purposes to ensure transparency and check on tax evasion
    • Setting up a study team to examine the possibility of a common tax code for service tax and central excise

     

    The FM also announced a five pronged strategy to tackle the malaise of generation and circulation of black money and its illegitimate transfer outside India. Government has taken a number of proactive steps to implement this strategy. As a result:

    • 82 Tax Treaties and 17 Tax Information Exchange Agreements have been finalised and information regarding bank accounts and assets held by Indians abroad has started flowing in. In some cases prosecution will be initiated
    • Dedicated exchange of information cell for speedy exchange of tax information with treaty countries is fully functional in Central Board of Direct Taxes
    • India became the 33 rd signatory of the Multilateral Convention on Mutual Administrative Assistance in Tax Matters
    • Directorate of Income Tax Criminal Investigation has been established within the tax administrative set up

    In this tax alert, we have summarized some of the key amendments proposed in the Budget 2012 which may have an impact on the M&E Industry. For detailed summary of the Union Budget, please refer to the Ernst & Young India Budget Plus 2012.

     

    Direct Taxes

    While outlining the direct tax proposals, the FM mentioned that his proposals for the financial year 2012-13 mark further progress in the direction of movement towards the proposals outlined in DTC. Key proposals are summarized as under:

     

    No changes are proposed in the corporate tax rate.

    It is now proposed to clarify by way of a deeming fiction that share or interest in a company or entity registered or incorporated outside India shall be situated in India, if the share or interest derives, directly or indirectly, its value substantially from the assets located in India. This clarification will be applicable with retrospective effect from 1 April 1962 (ie assessment year 1962-63). This proposal has the effect of neutralising the recent ruling of Hon’ble Supreme Court in case of Vodafone from a retrospective effect.

    Considering the conflicting decisions of various courts in respect of income in nature of royalty’ and to restate the legislative intent, it is proposed to amend the definition of royalty retrospectively from 1 June 1976, in following manner:

    • Transfer of all or any right for use or right to use a computer software (including granting of a licence) is in the nature of royalty’ irrespective of the medium through which such right is transferred.
    • Royalty includes consideration for any right, property or information whether or not possessed by the payer, directly used by the payer or located in India.
    • The term process’ in the royalty definition to include transmission by satellite (including up-linking, amplification, conversion for down-linking of any signal), cable, optic fibre or by any other similar technology, whether or not such process is secret.
    • This proposal could lead to characterisation of payments towards use of computer software, information, databases, transponder, uplinking facilities, leased lines, etc as royalty under the domestic income tax law with a retrospective effect.
    • Presently, income of a Venture Capital Fund (VCF’) or Venture Capital Company (VCC’) derived from investment in a domestic company ie Venture Capital Undertaking (VCU’), is exempt from taxation, provided the VCU is engaged only in nine specified businesses. The investor in VCF/ VCC is taxable upon distribution being made by the VCF/ VCC on a deferred basis. In order to avoid multiplicity of conditions in different regulations for the same entities, the sectoral restriction on business of VCU is proposed to be removed, and the income is now proposed to be taxed in the hands of the investor in VCF/ VCC on an accrual basis and be subject to withholding tax. The investments in M&E sector through VCF/ VCC route will now be eligible under the provisions, which was earlier not possible.
    • It is now proposed that when a company in which public are not substantially interested, receives a consideration for issue of shares from an Indian resident in excess of face value of its shares, the aggregate consideration received for such shares in excess of the fair market value of the shares will be chargeable to tax in the hands of such company. This provision could lead to structuring and commercial challenges in case of a joint venture with a non-resident participation or foreign investments in Indian companies in form of private equity or such other route with lower than 100% interest.
    • Presently, there are no specific requirements under the domestic income tax law to grant tax treaty benefits to a non-resident taxpayer on the basis of Tax Residency Certificate (TRC’). It is now proposed to make submission of TRC containing prescribed particulars, as a necessary but not sufficient condition for availing benefits of the tax treaty.
    • Presently, income received by non-citizen and non-resident sports persons from participation in any game or sport, advertising or contribution of article in any newspaper etc and income of non-resident sports association or institution for guarantee money payable to such institution in relation to any game or sport played in India is subject to tax at the rate of 10% of the gross receipts. It is now proposed to increase the tax rate from 10% to 20% on gross receipts.
      It is further proposed to tax income arising to a non-citizen, non-resident entertainer (such as theatre, radio or television artists and musicians) from performance in India at the rate of 20% of gross receipts, which was earlier taxable at the rate of 30%.
      Consequential amendment is also proposed in the withholding tax provisions to provide for withholding of tax at the rate of 20% from income payable to non-resident, non-citizen entertainers, sportspersons, sports associations etc and will be applicable with effect from 1 July 2012.

     

    • It is now proposed to widen the scope of compliance of withholding tax provisions for payments to non-residents by clarifying that the obligation to withhold tax on payments to non-residents applies and extends to all persons, resident or non-resident whether or not the non-resident person has a residence or place of business or business connection in India or any other presence in any manner whatsoever in India. This proposal intends to cast an obligation on the non-resident irrespective of such person’s territorial nexus with India.
    • Under the existing provisions of domestic income tax law, as a one-time’ concessional measure, dividends received by a resident company in India from its foreign subsidiary was taxable at the rate of 15% for financial year 2011-12. It is now proposed to extend the applicability of this provision by one more year ie for the financial year 2012-13.
    • It is now proposed to remove the cascading effect of dividend distribution tax (DDT’) from multi-tier structure. Dividends distributed by a holding company will not be subject to DDT to the extent of amount of dividends received from the subsidiaries by such holding company in the same financial year, effective from 1 July 2012.
    • To offer better assurance on transfer pricing methods and certainty and unanimity of approach, it proposed to introduce APA regulations with effect from 1 July 2012.
    • It is now proposed to amend the definition of international transactions’ for the purpose of transfer pricing provisions with retrospective effect from financial year 2001-02. It is also proposed to extend the transfer pricing regulations (including procedural and penalty provisions) to specified domestic transactions entered into between domestic related parties or by an undertaking with other undertakings of the same entity. These provisions will apply only in respect of specified domestic transactions exceeding INR 50 million.
    • To codify the doctrine of substance over form’, it is proposed to introduce GAAR provisions to determine tax consequences by taking into account real intention of the parties, effect of transactions and purpose of an arrangement.
    • As an anti-avoidance measure, it is now proposed to grant additional power to the Tax Officer to declare an arrangement to be an impermissible avoidance arrangement under certain circumstances and refer such cases to the higher level authority (ie Commissioner of Income-tax). The onus is on the taxpayer to establish that the arrangement was not executed with a view to avoid taxes.
    • Under the existing provisions of domestic income tax law, every person is required to furnish a tax return if his income during the financial year exceeds the maximum amount which is not chargeable to tax. It is now proposed to amend the provisions for filing the tax return in India to make it mandatory for every resident having any asset (including financial interest in any entity) located outside India or signing authority in any account located outside India irrespective of the fact whether the resident taxpayer has taxable income or not. This amendment will take effect retrospectively from 1 April 2012 (ie assessment year 2012-13).
    • It is now proposed that the Alternate Minimum Tax (AMT’) provisions (introduced for Limited Liability Partnerships in the Budget 2011) should be extended to include certain specified persons (other than a company) and such persons be made liable to pay AMT at the rate of 18.5% (Effective Tax Rate of 20.00%) when their adjusted total income exceeds INR 2 million.
    • It is now proposed to increase the exemption limit for carrying out tax audit of a person carrying on business from INR 6 million to INR 10 million; and a person carrying on profession from INR 1.5 million to INR 2.5 million.

     

    Indirect Taxes

    Goods and Services Tax (‘GST’)

    • The Finance Minister (FM’) has assured that drafting of the model GST legislation for Centre and State GST is under progress along with State Governments.
    • Structure of GST Network (GSTN’) has been approved by the Empowered Committee of State Finance Minsters. GSTN, implementing common PAN based registrations, returns filing, payment processing, will be operational by August 2012.

     

    Service Tax

    • Effective rate of service tax has been enhanced from 10.3% to 12.36% wef 1 April 2012.
    • Time limit for issuance of invoice under Point of Taxation Rules is proposed to be increased from 14 days of provision of service to 30 days of provision of service.
    • Continuous supply of service will include services provided on a recurrent basis under Point of Taxation rules.
    • Settlement commission provision introduced.
    • No monetary limit specified for service tax adjustments if the adjustments are not on account of interpretation of law, taxation, valuation, classification etc.
    • Receipt of consideration for export of services aligned with the time prescribed by RBI (including extended period allowed), for determining date of payment of tax.
    • Disputes on refund/ rebate in case of service export will now be referred to Revision Authority instead of Tribunal.
    • Commissioner is empowered to conduct special audit by engaging a Chartered Accountant or a Cost Accountant in certain circumstances.

     

    Negative List under service tax

    • The Finance Minister has proposed change in manner of levy of service tax by taxing services on negative list basis. Services mentioned in negative list or in exemption notification shall not be liable to service tax.
    • New definitions in the context of negative list based taxation introduced inter alia including negative list, taxable territory, services, renting, money, actionable claim, interest, person.
    • Under the earlier draft concept papers, advertisement in print was proposed to be covered under service tax net. However, negative list legislation continues to keep print industry outside the tax net.
    • Exemption is proposed on temporary transfer or permitting the use of copyright in cinematograph films in addition to currently exempted copyrights in original literary, dramatic, musical or artistic works. Copyright in sound recording shall continue to be taxable.
    • Exemption to copyright in cinematograph films likely to cover television programmes, theatrical or non-theatrical films etc.
    • Services by performing artists in folk or classical art forms of music, dance or theatre is proposed to be exempted.
    • Services provided to a recognised sports body by another recognised sports bodies or individual as player, coach referee, umpire etc for a tournament organised by such recognised sports body is proposed to be exempted from service tax. Further, sponsorships for tournaments organised by specified sports bodies is also proposed to be exempted from service tax.
    • Under earlier draft concept papers, admission into premises (including theatres, amusement parks etc) was proposed to be chargeable to service tax. However, admission to entertainment events or amusement facilities is proposed to be included in negative list and hence, not liable to service tax.
    • Selling of advertisement space and time on media other than radio or television has been considered to be a service under the negative list. Thus, it would need to analyse if advertisements in electronic medium (such as internet, telecommunication etc) or in outdoors will attract service tax.
    • Services of betting, gambling or lottery are included in the negative list and hence, shall be exempted from service tax.
    • The proposed negative list concept intends to define service’ for the first time under the service tax legislation. Service’ has been very broadly defined and includes declared services’. Such declared services’ deems temporary transfer of any Intellectual Property Right, works contract, construction, IT software, non compete, hiring, leasing or licensing of goods without right to use etc as services.

     

    Draft Place of Provision of Services Rules (‘POS Rules’)

    • Proposal to replace existing framework of identifying jurisdiction for levy of service tax through Export of Services Rules, 2005 and Taxation of Services (Provided from Outside India) Rules, 2006 with a common Place of Provision of Services Rules.
    • Guidance note on POS Rules has been issued to determine taxable territory’ for appropriate levy and collection of service tax. These Rules aim to identify a more consistent and efficient mechanism to collect service tax.
    • Generally, place of provision of services to be the location of service receiver’.

     

    Cenvat credit

    • Interest on wrong credit to apply only when the credit is utilised.

     

    Excise duty

    • Effective rate of excise duty enhanced from 10.3% to 12.36%, 5.15% to 6.18% and 1.03% to 2.06%.

     

    Customs duty

    • Effective rate of customs duty enhanced from 26.85% to 28.85.

     

    Central Sales Tax (‘CST’)

    • CST rate against declaration forms has been retained at 2%.

     

    Ernst & Young is a global leader in assurance, tax, transaction and advisory services. In India, it is located in 14 offices across 10 cities.

    You may refer to original document also at http://www.ey.com/Publication/vwLUAssets/Media-Tax-Alert/$FILE/Media-Tax-Alert.pdf

     

     

  • In Freaking News, which will now appear every Tuesday and Friday, Ranjona Banerji reviews the fare in the morning papers and the nightly news. And sometimes the afternooners, the newsmags and all that’s on the Web

    Budget 2012: Ranjona Banerji on how TV Channels fared with their Budget specials

    By Ranjona Banerji

     

    Soon after India liberalised her economy, the late great Nani Palkhiwala, whose budget analysis speech would fill up Brabourne stadium, decided that there was no longer any need to discuss the budget. Yet in India, it is still a grand tamasha event and even more so, with the massive explosion of television. Before the TV days the best we had to contend with were the massive graphics on the front page of The Economic Times, with the “fin min” portrayed as some kind of super hero or failing that, a comic character.

     

    (By the way, thank god they don’t call them fin mins any more or maybe Pranab Mukherjee threatened dire consequences.)

     

    From early on Friday morning, all the channels were in a high state of excitement as they discussed what the budget could be, what they wanted it to be and so on. Despite the Economic Survey of the day before, no one had too many clues though everyone wanted reforms. Some business types even conceded that the poor and less fortunate needed help while the economists looked askance at the idea. This continued till 11 am when everyone had to switch to the feed from the Lok Sabha channel.

     

    After that, it was a juggling act to get the best interpretation of the budget as it happened. I started with juggling between NDTV and NDTV Profit because the discussions headed by Prannoy Roy on one and Vikram Chandra on the other were interesting. But then they filled their screen with so much other information that I lost track of the “fin min” (oops).

     

    So I surfed till I reached CNNIBN which had the cleanest screen of the lot. No millions of shares going up and down, no “insta analysis” from experts as provided by Times Now and no tweets from the general public. Suddenly however CNNIBN started running a little cartoon man with placards saying “cool”, “good idea”, “bad idea” to several budget proposals which became a tad distracting. When I started spending more time figuring out if the cartoon man’s moustache changed position as he changed placard from cool to bad idea, I realised CNNIBN was also a bad idea and shifted to the Lok Sabha channel.

     

    I did surf through the business channels but not only were the screens cluttered with shares going up and down, they were also full of acronyms which I could not decipher. Seemed like maths class after some time – if you put the ELSS on the SME and divide it by the ECB you realise that the squaw on the hypotenuse is actually sleeping with the Big Chief. Or something like that but probably not as exciting.

     

    The speech took two hours, after which the viewer was exhausted but the analysts were chomping at the bit to take off and expound. The economists and journalists all hated the budget while the industrialists, bankers, investment and money people did not think it was so bad. It was clear that the journalists and economists were deeply hurt that Air India had not been sold, petrol prices had not been increased to Rs 150 a litre and even worse, so much money had been given to NREGA, rural and urban health and education and so on. Others talked about how “inclusive growth” was necessary in a politically correct manner, except for one man on one of the business channels who talked about “socialist stuff… health and all this blah blah”. One can only hope no one he knows ever has need of “blah blah”.

     

    As the evening progressed, Times Now looked at the politics of it and Headlines Today and NDTV went quite quickly into Sachin Tendulkar’s 100th century (glory be, at last, what a joyous day for Pranab Mukherjee). The business channels divided themselves us as some looked at property, others at investment and others at the stock market.

     

    Interviews with Pranab Mukherjee were shown on NDTV with Prannoy Roy and TN Ninan, on Times Now with Arnab Goswami and Navika Kumar, on CNBC with Raghav Bahl and on CNNIBN through Lok Sabha TV with a young man who Rajdeep Sardesai told us was a TV18 staffer. Whatever. Mukherjee’s famous temper was on display only with Raghav Bahl when he told him quite categorically that he was not going to get into a “school debate” with him. For all the posturing that the experts did on the other channels about the budget and the deficit and so on, only Bahl asked the really tough questions. Not that it came to anything.

     

    The verdict at the end: a choice between CNNIBN, NDTV for regular channels and Bloomberg and CNBC at the business end. The winner is possibly the remote, in that case.

     

  • What the Finance Minister's proposals mean for business

    Budget 2012: What it means for India Inc

    Local Deals Under Transfer Pricing

    This is bad news for companies as their tax outgo and compliance burden will rise. Firms use transfer prices to shift profits to tax havens. The new rule will increase documentation for companies. Right now, these rules cover only deals between a domestic company and its overseas subsidiary.

     

    No More Tax Surprises

    An advance-pricing agreement is good news for MNCs investing in India. It will reduce disputes as taxpayers would know their liability on transactions within their group companies in advance. These pacts are binding on both the taxpayer and the government, but can be quashed if the taxpayer misinterprets facts. The agreements will end aggressive assessments and reduce tax arrears locked up in litigation.

     

    Declaring Foreign Assets a Must

    Taxpayers must declare overseas assets and income-tax offi cers can reopen their books for the past 16 years. The fi rst development could pave the way for an amnesty scheme while the second will increase compliance burden on taxpayers but check tax evasion.

     

    Dressing Up Cash Trails to Get Tougher for Cos

    Share premium in excess of fair market value will be treated as income. This will increase the tax outgo for firms as share premium has so far been treated as capital. A similar move to impose tax on cash credits, unexplained money and investments will check evasion. It will end the practice of closely-held companies laundering black money by bringing it back as share capital.

     

    Offshore Transfers to Come Under Tax Net

    In a big blow to foreign investors, the government has re-written law so that it can tax indirect transfer of capital assets or property located in India. The amendment, effected retrospectively from 1962-63, will empower the government to impose capital gains tax on Vodafone and other such M&A deals in the past. It’s one step back in tax reforms.

     

    Source:The Economic Times

    Copyright © 2012, Bennett, Coleman & Co. Ltd. All Rights Reserved

     

  • Eco-system for early stage companies set to improve with proposal to remove restrictions on venture capitalists

    Budget 2012: Entrepreneurs may find fund-raising easy with removal of restrictions for VCs

    By Paramita Chatterjee

     

    The eco-system for early stage companies is set to improve as the FM proposes to remove restrictions on venture capitalists, who earlier gained tax benefits on investments in nine specified sectors. The removal of this sectoral cap will make fund raising easier for entrepreneurs going forward.

     

    Besides, the proposal to float a Rs 5,000 crore India Opportunities venture capital fund with SIDBI to help start-ups is seen as a step to benefit micro and small enterprises (MSMEs) across the country. As per estimates of Federation of Indian Micro and Small & Medium Enterprises (FISME), there are currently 26 million MSMEs present in India, of which only 5% has access to institutional funds. “Any kind of equity support to MSMEs is welcome as it was greatly needed,” said Anil Bhardwaj, secretary general at FISME.

     

    However, analysts feel the amount is still too little. “The initiate to set up a fund for MSMEs is good but the budget allocation is small,” said Raja Lahiri, partner at advisory services firm Grant Thornton. But overall, its a good start, as currently not many MSMEs would require capital for expansion, said Bhardwaj.

     

    Source:The Economic Times

    Copyright © 2012, Bennett, Coleman & Co. Ltd. All Rights Reserved

     

  • Five ways in which the government can make monies on the Budget and perhaps reduce duties

    Budget 2012 Anchor: 5 M&E ways in which the govt can make monies on the Budget

    By A N Chorrea

     

    Bizarre as these sound, given that the government appears to be in need of money if all the extra taxes are an indication, here are a few ideas which Pranabda may like to consider for his speech next year.

     

    1. Take a couple of breaks in the Budget speech. Ensure channels shell out 50 per cent of the revenues earned in these breaks to the government

    2. Since it’s a high ratings and readership game, suggest options for profit share to media organizations or just impose stiff charges for budget text document (instant delivery in various formats) and live video

    3. Run a contest on channels, newspapers and mobile phones where you can ask for Predict the Proposals. Those who guess it right, can get prizes as well as entry to the Budget speech. Ask mobile companies to part with revenues

    4. Democratize the Budget. Take views of the public on what to do with proposals. For instance, taxes on cigarette. Press A for 5 per cent, B for 10 per cent, C for 15 per cent and D for no change. Make money through SMS charge profit share

    5. In-speech placement. Shah Rukh’s gain is Saif Ali Khan’s loss. Rather than plug Ra One, Saif should’ve lobbied to ask for a mention of Agent Vinod. Would’ve worked wonders given the March 23 launch. Select in-speech brand placements could get big money (one shaayari in the form of song lyrics may also be allowed).

     

    A N Chorrea is a seasoned media-watcher who writes the MxMIndia anchors under a pseudonym

     

  • Reactions on video from select members of the industry on the sidelines of Ficci-Frames 2012

    Budget 2012: Video reactions from trade

    [youtube width=”400″ height=”250″]http://www.youtube.com/watch?v=Cx39gg69K9o[/youtube]

    By Team MxMIndia

     

    At the sidelines of FICCI Frames 2012, where there was much talk about digitization from both the industry and the government, MxMIndia caught up with a few industry members to get their reactions on the Budget.

     

    Nachiket Pantvaidya, Executive Vice President & General Manager, Star Pravah

    To be very honest at this point in time we like to go by the market forces so we don’t expect subsidies from the government. What we do expect is some kind of support in nurturing local talent in providing a base for regional television to shoot and to propagate learning and education in the regional field. Honestly, I think this has to be done through market forces in sync with the government and not through a subsidy model.

     

    Naresh Chahal, Director-Finance, Indian Broadcasting Foundation

    There is no incentive or concession given to set top boxes for the broadcasting industry and the ministry has already issued a notification for digitization and the first sunset date is July 1. So we are not happy with the way the government has not given any concession. We were expecting 0 percent duty on set top boxes to get a set top box at a nominal cost.

     

    Raman Kalra, Director & Partner, Industry Leader- Media & Entertainment, IBM Global Business Services India

    Nothing much was expected from the Budget. There were some expectations though, like FDI will go up for digitization, maybe it will happen for cable, some tax relief, that hasn’t come through but industry has already accepted it. They don’t need these one or two things to go ahead on digitization. It’s moving very fast so it will happen.

     

    Ashok Mansukhani, Director, IndusInd Media & Communications Ltd

    The Budget doesn’t go into the cost to be borne by the government. The government calls digitization a public private partnership, in fact, the private sector will have to spend, the cable sector and the MSOs will have to spend. What we had asked for was that if we spend 40000 crore, we need to also be in a position to be able to get fiscal incentives, tax incentives, duty exemptions, unfortunately all has been denied.

     

    Ravi Mansukhani, Managing Director, IndusInd Media & Communications Ltd

    We are very disappointed, anywhere else if you look, government always helps towards digitalization. There is no infrastructure status, you are not getting any fiscal incentives, nor are you getting favourable interest rates from banks, so basically we are very disappointed because the entire burden of digitization has fallen on the MSO, on the cable sector and there’s going to be a lot of funding required and we are disappointed that there was nothing done on either duties or fiscal incentives.

     

    Amit Dev, Director CMAI & Head of Focus Group of Multimedia

    I strongly feel that government doesn’t take a step in a direction unless they see a significant addition of tax or money making to the exchequer through multiple secondary direct indirect ways. So if there is no mention this year that means it is not among the top ten priority issues of the government.

     

  • No sops on duties for set-top boxes and squeeze on adspend budgets given service tax hike are dampeners in Union Budget 2012

    Budget shows the finger to digitization

     

    By A Correspondent

     

    In the end, one hopes that the angel is in the details. On Day 3 of the annual Frames jamboree put up by industry body FICCI, one hoped that Finance Minister Pranab Mukherjee will announce sops for digitization. The broad proposals didn’t. And for once, one hopes that rather than find the devil, there’s an angel hidden out there.

     

    Okay, there are some nice things in there. Like sops early stage funding from Venture Capital companies to media companies. But the IBF director-finance Naresh Chahal’s outrage was understandable. The government – and infobroad secretary Uday Varma re-iterated it – is firm on the June 30 deadline for the four metros. “If India has to grow, digitization will be a vital ingredient for its growth and thus it is important that we be technologically updated. Digitization is here to stay and we need to embrace this change.” While set-top boxes may not have found favour, LED and LCD television panels and parts of mobile phone memory cards have been looked at favourably by Mr Mukherjee.

     

    So while the FM hasn’t made life tough by adding taxes, the fact that he didn’t cut or even totally drop duties on set-top boxes was a huge dampner. Doubtless, the economically weaker sections in the four metros of Kolkata, Chennai, Mumbai and New Delhi will be forced to cough up monies if they want to catch non-terrestrial entertainment.

     

    Meanwhile, Mr Rakesh Jariwala, Partner & Tax Expert, Media and Entertainment at leading consulting firm Ernst & Young said:  “The key takeaway from the Union Budget 2012 for the Media and Entertainment Sector (‘M&E’) is the exemption to be provided from service tax on Copyrights in Cinematographic films with the introduction of the negative list concept under the service tax legislation.”

     

    The non-inclusion of advertising in television and print in the negative list for service tax is also a dampner given that the levy has been increase from 10 to 12 per cent. This means that there will be a tighter squeeze on adspend budgets. While advertising on big ticket shows will not suffer, the small monies spent on digital, outdoor, radio and other experimental/BTL activities may take a hit given the 2 per cent additional squeeze.

     

    And then there’s an increase in excise duty too which will increase the burden on M&E professionals and corporates and with the easing of Income Tax slabs not quite balancing the increase in expenses elsewhere.

     

    However, the film industry and entertainment event organisers may find some benefit with the recommendations.”The proposed negative list legislation seeks to specifically exclude admission to entertainment events and access to amusement facilities, thereby granting a much needed relief to the entertainment industry,” Mr Jariwalla added. “For film industry, it is proposed that service tax will not apply on transactions between producer to distributor, distributor to exhibitor (by exempting copyrights in cinematographic films) and between exhibitor to cinema goer (by including admission to entertainment events in negative list),” he said.

     

    For entrepreneurs just getting into media and entertainment who were cold-shouldered by venture cap companies given the restrictions, the easing up of restrictions on funding should be a welcome move.

     

    Please refer to Microsite on Budget 2012 for the following stories which were uploaded on Saturday, March 17:

    Budget 2012: Ernst & Young Analysis of Direct & Indirect Tax proposals in M&E

    Budget 2012: What it means for India Inc

    Budget 2012: Reactions from Stakeholders

    Budget 2012: Video reactions from trade

    Budget 2012: Entrepreneurs may find fund-raising easy with removal of restrictions for VCs

    Budget 2012: Ranjona Banerji on how TV Channels fared with their Budget specials

    Budget 2012 Anchor: 5 M&E ways in which the govt can make monies on the Budget