CapitalMarket.com - Media: Give required push to digitalization
Pre Budget 2012-13 Friday, March 09, 2012 20:02 Hrs IST
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PRE BUDGET REPORTS

Media: Give required push to digitalization

Current Status

The current fiscal started off on a positive note for Media and entertainment sector companies. However slowdown in the economy and high inflationary environment resulted in slowdown in ad revenue. The sector witnessed a significant slowdown in advertising revenue in Q3FY12 as FMCG companies reported dismal ad spend growth in Q3 FY12 at 4% as against 20% growth in Q3 FY11. To compensate for lower ad growth, media companies shifted focus to subscription revenues, with broadcasting companies gaining from digitization whereas print companies resorted to higher cover prices.

The media & entertainment sector is taking the next leap with digitization coming to its fold. As more than 70 mn analog TV homes in the country get digitized by 2014, a drastic turnaround in the business fortunes of the MSO businesses and also expect DTH to latch on to half of these subscribers. The digitalization will also see jump in subscription revenue of broadcaster, which till now mostly depend on ad revenue for its growth. For successful implementation of the digitalization, the government will announced major steps, as it is utmost necessary for successful implementation of digitlization.

Industry Expectation

  • Removal of customs duty on Set-Top Boxes
  • Raise FDI limits in cable operations (currently 49%), DTH (currently 49%), broadcasting (currently 26%), print media (currently 26%) and FM Radio (currently 20%).
  • Grant infrastructure status to cable distribution sector
  • Reduction on DTH services (multiple tax issues), removal on advertising in broadcasting

Analyst Expectation

  • Expect duty to be eliminated on set top box.
  • FDI limit is likely to be increased for cable operation and DTH operator.

Stocks to watch

Dish TV, Den Network, Hathway Cable

Outlook

The Budget is expected address the issues of digitization, as the country shift from analog cable TV to digital. Steps for smooth transition along with reduction of duty on set-top boxes are expected. The budget assumes greater significance in the light of the digitization mandate proposed by the government, which has a timeline of July 2012 for the metro cities. From digitalization the government may generate additional revenues of Rs 80 crore as the under-declaration of cable TV revenues decrease and analog cable TV subscribers come under the addressable digital medium. The coming budget looks promising for media and entertainment sector.
Others
4  Food Processing: Retain option to pay excise duty at 1% without Cenvat Credit
4  Real Estate: Double limit on interest on home loan for self occupied property to Rs 3.0 lakh p.a.
4  Stock brokers: Abolish Security Transaction tax
4  Pesticides and Agrochemicals: Cut Excise duty on Pesticides to 4%
4  Tractor: Remove excise duty on tractor parts produced in one plant & used in other plant
4  Power: Remove customs duty on coal
4  Tea: Introduce concession import tariff for specific Tea Machines
4  Consumer Durables: Hike abatement on MRP based excise duty on home appliances to 45%
4  Medical Equipments: Exempt excise duty on Endovascular stents
4  Cigarettes: Amend the existing excise slab of filter Cigarettes
4  Secondary Copper Producers: Remove customs duty on copper Scrap
4  Government Fisc: Fiscal deficit for FY2013 may be pegged at 5.2%
4  Aluminum: Cut customs duty on coal tar pitch
4  Auto Components: TUDS for auto component industry is the need of the hour
4  Indian Railways: Passenger fares also set to rise
4  Gem and Jewellery: Remove customs duty on worked coral, and excise duty on branded jewellery
4  Coffee: Cut import duty to 5% on coffee equipments
4  Steel: Increase customs duty on steel, and remove them on coking coal
4  Natural Gas: Bestow Declared goods status, remove customs duty on LNG / Natural gas
4  Cement: Opt for specific or advalorem excise duty but not both, and cut excise incidence
4  Textiles: Cut excise duty on MMF, and increase TUFS allocation
4  Oil drilling and Allied Services: Bestow infrastructure status & remove NCCD on crude oil
4  Two & Three Wheeler: Retain excise duties at 10%
4  Paints: Cut customs duty on Tio2 from 10% to 7.5%
4  Commercial Vehicle: Remove additional tax of Rs 10,000 on chassis fitted with engines on vehicles transporting over 13 people
4  Sugar: Decontrol, with removal of 10% levy obligation
4  Fertilizer: Hike Urea prices and bring it under Nutrient Based Subsidy Scheme
4  Alloy Steel: Hike customs duty on output, and remove them on inputs
4  Glass and Glass Products: Abolish customs duty on Soda Ash
4  Bank Fixed Deposits: Reduce Duration of Bank Tax Saving FDs to 3 Years
4  Media: Give required push to digitalization
4  Solvent Extraction: Raise the import duty on RBD Palmolein to at least 16.5%
4  Leather & Leather Products: Cut excise duty on footwear to 0% & on leather goods to 5%
4  Textile Machinery: Remove TUFS benefit for imported second-hand textile machinery
4  Man Made Fibres; If excise duty on MMF is cut, ensure corresponding reduction on inputs too
4  Passenger Vehicle: Reduce the excise duty and remove additional tax on large cars
4  Mutual Funds: Include ELSS as an eligible tax saving instrument under DTC
4  Retail: Allow FDI in multi brand retail
4  Education: Increase budget allocation for education, and grant infrastructure Status
4  Hotels: Provide infrastructure status
4  FMCG: Implement Direct Tax Code, and pave way for GST implementation
4  Telecom: Finalize 2G spectrum bidding process, clarify on the spectrum prices
4  Ready Made Garments: Remove 10% Excise Duty on Branded Garments
4  Dyes and pigments: Retain customs duty on dyestuffs at current levels
4  Chemicals: Remove Customs Duty on Liquefied Natural Gas and Naphtha
4  Insurance: Increase FDI ceiling to 49%.
4  Computer – Software: Extend tax benefit under STPI
4  Ferro Alloys: Hike customs duty on Ferro alloys, and remove them on inputs
4  Chlor Alkali: implement GST at the earliest
4  Refineries; Ensure full coverage of crude, MS, HSD, ATF & Natural Gas under GST
4  Power plant Equipments: Levy customs duty on mega and UMPP project imports
4  Motor Starters: Cut excise duty for agriculture use to 5%
4  Pharma: Remove anomaly of higher excise duty on APIs than formulations
4  Paper: Increase customs duty on paper and remove customs duty on coal
4  Tyres: Allow duty free import of 1 lakh tonne of natural rubber