Also seeks removal of excise duties on set top boxes for free to air transmission, and removal of service tax for broadcasters.
Indian media & entertainment industry has reached an estimated sise of Rs 584 billion for 2008 (as per FICCI-KPMG -- Indian Entertainment and Media Industry 2009) a growth of 12.4% over previous year.
Over 2006-2008, it has grown at CAGR of 15%. Although yet only a miniscule portion of the global pie, the potential for growth is enormous, given rising disposable incomes and changing consumption habits.
For 2008, television reached an estimated size of Rs 240.5 billion with growth at 13.8% with television homes at 70 million, print media grew at 7.6% at Rs 172.6 billion, film entertainment grew at 13.4% at Rs 109.3 billion and radio grew at 13.5% at Rs 8.4 billion. The ad spent to GDP ratio for India is low at 0.47% against of US at 1.34% and 0.54% of China.
Through 2007-2012, the Indian media & entertainment industry is likely to grow at CAGR of 11.9% against the earlier projection of 18%. Over the next 5 years i.e. 2008-2013, the growth has been lowered with television is expected to grow at 14.5% at Rs 472.6 billion with television homes projected to increase to 149 million.
Print media is expected to grow at 9% at Rs 266 billion, film entertainment is expected to grow at 9.1% at Rs 168.6 billion and radio is expected to grow at 14.2% at Rs 16.3 billion.
Industry expectation
- The industry recommends the reduction of import duty on set top boxes of 5% to NIL.
- The industry recommends reduction of excise duty on set top box for free to air transmission from 8% to nil.
- On the service tax front, the industry is demanding that parity be made between broadcasters and print media by abolishing service tax of 10.3% on broadcaster similar to that of print media.
- The industry recommends elimination of dividend distribution tax of 16.995% as it has resulted in multiple taxation of profits distributed as dividends, particularly in a case where the corporate group had a holding company and its step-down subsidiary.
- The industry recommends liberalisation of FDI norms in segments like DTH, cable and radio.
Analysts' expectation
· We do not expect any of the industry recommendations to be fulfilled except the chances of liberalisation of FDI norms as the same have also been recommended by the TRAI
Stocks to watch
Sun TV, Zee News, Zee Entertainment Enterprises
Outlook
The media & entertainment industry has seen good growth in the last few years and has a lot of untapped potentials. However, this sector is directly related to the economic growth of the country. With the GDP growth trajectory coming down, the growth rates for the industry would also come off.
Fortunately, the Primer Ministers Economic Advisory Council (PMEAC) has scaled up its outlook from the fiscal year 2009-10 from 6.5% growth project in October 2009 to 7.2% in its February 2010 review of the economy in line with the CSO's estimates.
The council expects step up in the pace of India's GDP growth to 8.2% with an upward bias in 2010-11 and return to high growth trajectory of 9.0% in 2011-12.
Also, right steps are being taken to rid the space of inefficiencies in the entertainment sector.
This can create a growth-conducive environment, and the biggest opportunity would be created by a structural shift in distribution -- digitisation of existing distribution channels, new platforms and convergence of platforms.
The shift towards digitisation would help monetise reach and higher disclosure, which would be healthy for the sector as a whole.
