Union Budget expectations: Print, radio and television

The airwaves sensed serious Sturm und Drang in 2020, with the radio sector being one of the hardest hit. The pandemic and the already existing economic crisis compounded radio players’ struggle, but never let the unfortunate situation break their spirits. Similarly, print and television mediums, too, have had their share of troubles. However, the hope of a new day brings its own set of expectations. Players are now placing their set of demands and appeals after a grim year that has been. The industry’s eyes are now all sparkled with anticipation as they await the upcoming 2021 Union Budget. Presented by finance minister Nirmala Sitharaman on 1 February, the budget might just prove to be a huge respite for the industry.

Print media appeals   

Newspapers, however old, are still considered to be one of the most credible forms of journalism. Being the second-largest platform for Indian advertising, the medium is a caregiver to hundreds of its employees. However, publishers are facing an unprecedented threat, with myriads of newspapers shutting shop and advertising rates dropping tremendously. The 20% hike in newspaper costs in the last three months have had publishers panic-stricken. At last, their only hope is that the Government help bail them out of this impending doom.  

Recently, INS put forth five demands before the government. Of this, one is an appeal for the removal of 5% customs duty on newsprint. Speaking of the same, M V Shreyams Kumar, managing director, Mathrubhumi Group, says, “The publishers of newspapers and magazines are already under tremendous financial pressure and the Government decision to propose a cut of 5% in custom duty is a crucial step undertaken for its survival. The industry has urged the government to support its concerns and we are hopeful about the government considering our demands.”    

However, this is merely one of the five demands proposed by the INS. Kumar has his fingers crossed about the Government considering the other four demands too, which are very crucial for the medium at this point.     

Talking about how much of a help it will be, should the government give in to these demands, Kumar said, “It is very essential that newsprint survives through these tough times. The demands made to the government will play a game-changer role in the revival of the industry on the whole.”

Impact on the radio industry  

Red FM, which received 30-35% of its overall revenue from government ad spends, had seen a decline of 22-25% which dropped further in the pandemic. Even then, the government was still amongst the top three categories that were advertising.   

On the other hand, Mirchi states that the share of government ad spends was only about 15%. “We believe this is the right share that the government should have in our revenues. I see this number being hit, maybe not in FY22, but surely in the years to follow. In FY22, the government may continue to remain tight-fisted because of its own revenue constraints,” said Prashant Panday, managing director and CEO, Mirchi, foreseeing the future of Government spends in the medium.   

“The Government spends are always a cushion for the advertising and media industry and we hope they will increase its budgets and spends for a traditional medium like radio, which supported the government initiatives and messages immensely during the time of lockdown and thereafter also,” added Nisha Narayanan, director and COO, Red FM and Magic FM.  

Although radio advertising suffered a great deal, there were signs of revival in the second half of 2020, though not at par with pre-Covid levels. Needless to say, the growth of the industry is entirely dependent upon the macroeconomic factors and on the revival of industries that were impacted most by the pandemic. Speaking about what can be done to help these categories which indirectly boost advertising, Narayanan of Red FM says, “As far as radio advertising is concerned, sectors like retail, real estate, entertainment and hospitality, lifestyle and apparel, education, auto, among others, faced tough times. If some benefits are extended to these or the ones which provide the raw material for these and they can share the benefits to end consumers, advertising can see a revival.”   

Panday, on the other hand, requests the Government to waive off the license fee for the financial year FY21. “Because of the government’s actions, most advertisers were shut down for the duration of the lockdown. Even after the lockdown was lifted, the business of advertisers has not yet returned to normalcy. Radio broadcasters depend almost entirely on advertisers for their income. We, therefore, urge the FM to give relief to radio broadcasters in the forthcoming budget,” he said.    

Should the government extend some benefits to help increase the disposable income of the consumers, the increase in demand and supply activity would also add to the sustainability of radio.  

Like most marketing rates, the current GST for radio advertising also stands at 18% and players are expecting this rate to be brought down to the 5% slab. Although GST rates are not addressed by the Union Budget, players believe that doing so would make the medium more price competitive, even for small businesses to advertise and garner more business in the upcoming financial year.   

The medium’s last-mile connectivity happens to be one of its fondest characteristics, for the dissemination of indigenous news, especially for everything related to the government. As the time to make a difference is nearing, players are hoping that the government gives back to the medium through ways such as relief on license fees, Prasar Bharati rental, BECIL rentals and charges and higher advertising spends.   

Suggestions by the electronic media   

Although the television medium has suffered the least compared to the rest, it has demands of its own. Taxations have never been easy on any sector, big and small alike. However, the medium finds it essential to address the ever-increasing cess as a tax component. “It would be preferable to increase the base tax rates instead of the opaque method of increasing by the cess route,” says S Sundaram, group CFO, Republic Media Network.   

Talking about the possible steps that the government can take to make to make the television medium more efficacious, Sundaram pens down a few suggestions, that in his view, would go a long way in ameliorating the medium:

• All media which is in the 18% GST slab should be pared down to 12%, as the bulk of the input services are outside the GST ambit  

• Measures for skill development and providing an ecosystem to showcase its capability as an advantageous service provider  

• A comprehensive approach of convergence, by discarding the compartmentalisation of electronic media into linear TV or OTT   

Every medium has advantages of its own and is an essential component which upholds the country’s economy. However, the much-awaited fate of the most popular mediums is yet to be decided by the upcoming Union Budget, which players are keenly looking forward to. With fingers crossed, the industry can only anticipate what the near future would be.   

(Courtesy: Campaign India)