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Media - Good news all the way

March 1, 2008

Rosy days ahead
Rosy days ahead
The Media and Entertainment Industry was estimated at Rs 55,000 crore in 2007, having grown 22 per cent over the previous year.

Some key trends included digitisation of the television and films sector, implementation of CAS, record subscriber additions in the DTH space and increase of FM radio stations to over 150.

The print media continued to garner over 50 per cent of advertising and saw entry of foreign publishers. There is huge potential in the space, as ad spend in India, at an estimated 0.45 per cent of GDP, is amongst the lowest in the world.

However, with the emergence of internet and Out-of-Home, there is a likelihood that this ratio will improve in the years to come.

Digital cinema through satellite has gained increased momentum particularly with reduced costs, thereby helping penetrate smaller cities and curbing piracy.

The industry saw several investments like George Soros investing close to $100 million (Rs 400 crore) in Reliance Entertainment for a 3 per cent stake and Global Broadcast News raising more than $150 million (Rs 600 crore) through a private placement transaction.

 Corporate impact

  • Jawahar Goel, Managing Director, Dish TV
    “The issue of multiple taxation is being addressed for the DTH industry. Earlier, along with service tax, VAT was also being charged on the Consumer Premises Equipment”

    Jawahar Goel
    Dish TV: The reduction of duty on import of specified parts of the set-top boxes is likely to ease the burden. It now has some bandwidth with the price, though already most of the set-top boxes are hugely subsidised thanks to fierce competition and they do not really make money. But this is likely to ease some pressure on the players’ cost structure

  • WWIL: Wire & Wireless (India) Ltd., Zee’s demerged cable TV distribution company, is likely to benefit, thanks to the rebate on settop boxes. The stock has already bounced on the back of the news. One can expect convergence to be a big part of its growth strategy

  • Hinduja Ventures: The company that runs IndusInd Media and Communications is among the large multi-system operators. It has already established its hold on convergence platform. Though the scrip witnessed a slight dip, it’s likely to turn around

Sectoral impact

  • Rs 75 crore outlay to Indian Council of Cultural Relations to promote music, dance, literature, films, etc

  • Exemption from customs duty on set-top boxes and reduction in customs duty on convergence products and inputs in electronic hardware industry

  • Relief in DDT to parent holding company to help simplify complex holding structures and reduce tax cost

  • Amendments in service tax provisions relating to internet telecommunication and supply of tangible goods may have a bearing on some of the M&E transactions

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