Budget 2004: Media
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Recorded audio compact discs removed from the purview of excise duty. |
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Peak customs duty reduced from 30% to 25%. |
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This move is likely to benefits players like Tips Industries that manufacture and market compact discs. Though Tips is facing stiff pressure from piracy, this would boost CD sales at the retail end. |
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One of the key long-term growth drivers for broadcasters is the implementation of conditional access system based regime. This would require installing set top boxes at the subscribers end. Since there is no player manufacturing set top boxes at the current juncture, it has to be imported. Though the broadcasting ministry recommended a 10% customs duty on set top boxes to the Ministry of Finance, it has been now fixed at 25%. As a result, the cost of set top box will still be on the higher end and therefore, could slowdown the implementation of the CAS regime. |
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Other technical instruments that are used in production and post-production now attract lower import duty. Players like Adlabs, Padmalaya and Zee will benefit. |
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Industry is looking at initiatives to push structured finance and curb film piracy. |
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Technology imports by film markers should be exempt from customs duty (as is done for the IT industry). Reduction in customs duty on import of CD's related to technology. |
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Service tax on the film industry should be abolished, as it is impossible for the industry to pass it on to the viewers. |
| Budget 2000-01 |
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Budget 2001-02 |
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Budget 2002-03 |
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| Phasing out of the exemption for export earnings over a period of five years.
20% of the earnings were brought under the direct tax net
Import duties on video recording and reproducing equipment brought down from 40% to 25%
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Service tax on broadcasting services
Foreign telecasting companies brought under the tax net
Import duty on cinematographic equipment reduced from 25% to 15%
Convergence bill to be introduced in the current session of Parliament
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Cable operators brought under service tax net
Budgetary support for the Ministry of Information and Broadcasting increased by 22% to Rs 4.2 bn
Customs duty on earth stations equipment and studio equipment reduced from 35% to 25%
50% income-tax exemption for companies setting up and constructing multiplex theatres in non-metros
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| [Read more on Budget 2000-01] |
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[Read more on Budget 2001-02] |
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[Read more on Budget 2002-03] |
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| Key Positives |
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Due to media getting industry status, one can see an increasing number of players getting access to institutional finance. As a result, both content providers and viewers are becoming sophisticated. |
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Passing of the CAS (conditional access system) bill, will curb the menace of under-declaration of subscribers by cable operators. Subscribers will now pay for only channels of their choice. |
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With FMCG companies (which have been a key contributor in the total ad-spend) increasingly concentrating towards rural markets, ad-spend in regional channels is likely to register a rise in growth going forward. In the long term, media companies can safely look to tap the FMCG industry for perk up revenues. |
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| Key Negatives |
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Due to a difficult demand environment, most FMCG companies reduced their advertising budget considerably during 2002. With a lackluster 2003 staring them in the face, advertising spends could continue to be under pressure in the short term. |
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Increasing competition has led to burgeoning costs of production. The primary contenders viz. Star, Sony and Zee have all ramped up annual production budgets. This is bound to put pressure on the bottom lines. |
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The revenue model for the cable and satellite companies is still skewed in favour of cable companies. Cable operators are in a commanding position. However, this industry is likely to face consolidation with Multi System Operators (MSO's) like Incablenet, Siticable, Asianet, Hathway cable and Datacom buying over the small local cable operators (LCO's) and setting up their integrated network. |
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