Media industry hopes Budget 2018 will spur demand, boost ad growth
MUMBAI: The Union Budget 2018 might not have any direct benefit for the media and entertainment (M&E) sector, however, officials from leading media companies expect the government’s rural push and certain deductions/concessions to the salaried class and senior citizens to spur consumption which will lead to growth in ad spends.
TV18 president revenue Joy Chakraborty believes that the overall budget is positive even though there is nothing much for the M&E sector. Chakraborty is among those who believe that advertising will get a boost due to increase in consumption.
“The budget is good from TV advertising point of view. The standard deduction coming to Rs 40,000 people will save some money and that money will be spent on consumption. A lot of thrust has been given to rural India which is what a lot of media owners are looking at,” Chakraborty stated.
“We all are looking at tier 3 and tier 4 towns for growth where thanks to digitisation already cable penetration is there. Advertisers like FMCG brands are looking to reach tier 3 and tier 4 towns. With benefits being given there would be expenditure there. It should benefit the media and advertising world. Overall, it’s fine.”
He further stated that the ad growth is slowly improving although it is still not what it used to be pre-demonetisation era. “At the end of the day, it’s all about sentiments. If sentiments are good everything will be good. Things are gradually moving back to normal. It is not as bad as it was due to demonetisation and GST,” he noted.
Dentsu Aegis Network Chairman & CEO South Asia Ashish Bhasin also believes that the government’s rural push will give a fillip to consumption. He further noted that the emphasis on digital, particularly higher-end digital areas like Artificial Intelligence and usage of Block Chain shows that the government is committed to providing a further digital thrust.
“The steps being taken, like provision of free WiFi and other forms of the internet to all parts of the country will be extremely beneficial in the long run for the digital sector. It will help agencies like ours who are partnering clients for Digital Transformation,” he added.
For Bhasin, the dampener was lack of initiative to simplify the Goods and Service Tax (GST) for the service industry which would have gone a long way to help the advertising industry. “The advertising industry doesn’t mind paying the taxes but abhors non-productive, complex procedures including the filing of hundreds of returns every year,” he said.
Like Chakraborty, Bhasin too stated that the overall growth in the economy will benefit the ad industry. “Overall I think the right sectors have got the incentives and therefore it should be good for the country. If it is good for the country, it will be good for the economy and once the economy grows, the advertising sector will benefit from it,” he averred.
BTVI COO Megha Tata said, “Budget announcements signal a stronger eco system for media and broadcast industry. In continuation with my pre-budget expectations, I am happy that FM has kept his promise by reducing corporate tax rate to 25%.”
Dharma Productions CEO Apoorva Mehta feels that government’s Digital India push by proposing to set up 5 lakh WiFi hotspots in the rural areas will pave the way for greater consumption of entertainment and news related content. It will also provide a boost to regional content, which is already expected to grow multifold in the coming years.
Big FM CEO Tarun Katial said that the proposal to reduce corporate tax to 25% for companies with a turnover of up to Rs 250 crore will encourage more investments by producers to create more compelling content for the entertainment industry.
“Also, the announcement of setting up 5 lakh Wi-Fi hotspots in rural areas will ensure wider reach, boosting overall digital content consumption in the country to a great extent,” he noted.
Vidooly CEO and co-founder Subrat Kar said rural connectivity schemes like public WiFi is a welcome move not just for telcos but also content players as digital consumption will rise and provide more monetisation opportunities for content creators.
EY India Tax Partner, Media and Entertainment Rakesh Jariwala said India has taken one more step towards taxation of the digital economy transaction by expanding the scope of domestic tax nexus rules by introducing the concept of ‘significant economic nexus’.
“It is proposed to now tax a digital economy transaction exceeding a monetary threshold (to be prescribed) or systematic and continuous soliciting of business or interaction with such number of users as may be prescribed, in India through digital means. MNCs, with tax treaty protection, will not be affected by the proposed changes as the expanded definition is unfounded yet in the tax treaties,” he said.
“This is a clear indication by the Government that they will continue with their stance of taxing companies in India on source rules principles and extend them to digital companies who intend to benefit from India’s vast digital economy, offering a level playing field to the Indian players, but equally, they will be mindful of their international tax treaty obligations.”
“The ‘Digital India’ program has received a major boost with double the allocation of Rs. 3073 Crore for the coming year. Budget 2018 has proposed the set-up of 5 lakh Wi-Fi hotspots in rural areas thereby pro
viding broadband access to 5 crore rural citizens. Much to the delight of digital media players, this move will open extended avenues for them and give a strong push to regional and mainstream digital content in these markets. With extensive broadband penetration, affordable data prices and smartphones, the vision for digital India could well come to fruition in the coming years. Lastly, the estimated over 7% growth for the next fiscal creates a positive sentiment for India’s economic and financial ecosystem,” said Worldwide Media CEO Deepak Lamba.