What India's media and entertainment industry wants from Narendra Modi?

Courtesy: www.financialexpress.com 

Source: Anushree Chandran | Updated: Jun 03 2014, 13:49 IST

SUMMARY

Media and entertainment industry eyes liberal FDI norms, fewer restrictions from Narendra Modi...

WITH the world's largest democracy ushering in a new government, the Rs 91,800 crore media and entertainment industry in India is pinning renewed hopes on the new regime, and clamouring for change, be it the push for cable digitisation, de-regulation in pricing of channels, tax waivers or implementation of new foreign direct investment (FDI) norms, as per the recommendations of the Telecom Regulatory Authority of India (Trai). Sudhanshu Vats, group chief executive officer, Viacom 18 Media says that Prime Minister Narendra Modi has laid down the mantra of 'less government and more governance' and has followed his ideals, with a cabinet team that looks both consistent and promising. He adds that the appointment of Prakash Jayadekar as the information and broadcasting minister is a key move—looking at his active bent towards transparency and efficiency in introducing e-governance in state level processes and general administration in the past. In his party manifesto, Modi highlighted the geographical and cultural diversity of India, points out Vats. "With such a varied landscape, we have so much to offer in terms of entertainment and tourism. Imagine the possibilities if the two were combined— it would generate employment opportunities galore and there is exceptional potential to explore this space with creativity."

The Indian media and entertainment sector is expected to touch R1,78,580 crore by 2018, with a compounded average growth rate (CAGR) of 14.2%—as per a report released by Federation of Indian Chambers of Commerce & Industry (FICCI) and advisory firm KPMG. By the end of 2014, the industry is expected to stand at R1,03,900 crore. As per Vats, the contribution of the media and entertainment sector to India's gross domestic product (GDP) is under 1%, whereas it is 2.5% in most other countries. Vats says that pricing anomalies, digitisation and discrepancies in clearance mechanisms are matters of concern, and the industry could flourish if these issues are resolved.

"The regulatory policy framework especially with regard to broadcasting is a concern every one of my colleagues has voiced—whether at informal platforms or on formal forums. A more democratic approach towards catering to India's pluralist society and seeking people's views to delivering self-regulated content would be far more preferable," asserts Vats. Vats observes that both the government and the new Prime Minister have demonstrated an "evolved" approach in their election strategy. Since this government understands the changing pulse of the nation and macro-trends, a similar thought process could be expected in terms of media and entertainment regulation as well.

Sunil Lulla, president, corporate brand development at Bennett, Coleman and Co. Ltd. (BCCL) said that the new government must further its embrace towards self regulation in all matters of media and communication. "It should liberalise (foreign) investment in news on television to 49%. It should ensure that news is permitted on radio. Digitisation of cable must continue with a stringent follow-through on subscriber declaration. What is the point of taxing the common man's source of entertainment which is already priced the lowest in the world?" he asks.

As per Lulla, the industry self regulatory body— the Advertising Standards Council of India (ASCI)—should continue to be supported by the government and its activities should be further strengthened, by strong action by both the government and the courts. Lulla further says that there should be one body for administration of this sector, and there shouldn't be interference in marketplace related activities, such as the advertising cap which restricts broadcasters from making full use of inventory. There should be transparency in all aspects related to licensing, he adds.

Vats believes that general concerns revolve around the transparency and accessibility of concerned officials in the value chain. Quick turnaround time is what the entertainment industry is looking for, as far as licences and permissions are concerned. "The Broadcast Audience Research Council is slated to come into force by October this year. We hope that will indeed happen so that the broadcasting industry will inch closer to overcoming ad cap hurdles and establish clean next practices in the media and entertainment industry."

Foreign broadcast networks have their own concerns. Al Jazeera, the Doha based broadcaster, owned by Al Jazeera Media Network says that for an international news organisation like it, a smoother visa process and accreditation is important.

"We hope that the new government will find faster and easier ways, of ensuring access for international journalists," says Anmol Saxena, bureau chief, Al Jazeera English, "We are also hoping that the new government will continue the digitisation push."

Direct to home (DTH) companies say that they are already reeling under exorbitant licence fees, coupled with other taxes. Cable digitisation, on the other hand, is still under way which is why the market has not reached its true potential. Harit Nagpal, managing director and chief executive officer at Tata Sky said that hyper-competition is ensuring the availability of all possible content at dirt cheap prices. "Yet this sector has a ministry and a regulator," he says. The DTH companies would expect a tightening of controls on the content distribution side. Nagpal says, "One third of our revenue, not profits, is taken away by the licence fee, entertainment tax and service tax." He questions the double taxation that DTH companies are put through. "We are the only category that pays tax on the same service, both to the states and the central government. While we are not questioning the government's right to tax, rationalising the licence fees to 6% from 10% and abatement of service tax till GST (goods and service tax) is introduced will help," he says.

Shashi Sinha, chief executive officer of IPG Mediabrands says that he hopes that the new regime will put its weight behind the activities of the Broadcast Audience Research Council (BARC), the body instituted to bring in a new system of television ratings in India. He adds that ASCI has for long kept a check on errant advertising in India, and its rulings on television ads have been given due legitimacy by law in the form of the Cable TV Networks (Regulation) Act. Sinha hopes that the government would give a similar legal push to the regulation of advertising in the print and digital medium.

Radio has seen its share of roadblocks. In July 2013, Trai had proposed increasing the FDI limit for private FM radio broadcasting to 49% in a consultation paper. The move was to ensure better participation in the next phase of auctions—phase 3. However neither the auctions, nor the proposed FDI limit has materialised, says Asheesh Chatterjee, chief financial officer of Reliance Broadcast Network Ltd which runs 92.7 Big FM.

In the phase 3 auction, 839 new FM stations were expected to come up; expanding the coverage of FM radio to 313 cities from 87. Chatterjee also refers to contentious points in the Phase 3 guidelines. For instance, radio operators are allowed to run news and current affairs, but the sourcing of such content should happen through the government owned Prasar Bharti. Also radio operators can cover sports content—live events of local importance but the guidelines remains vague in terms of interpretation.

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