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All Is Not Well!

The Indian media and entertainment (M&E) industry is projected to grow at 14 percent over the next five years (2016–2021), as against the 11.6 percent it grew over the last five years, as per the latest FICCI-KPMG report. Television is expected to grow at a CAGR of 14.7 percent while radio – with operationalization of new stations in both existing and new stations – at a CAGR of 16.1 percent.

However, the segment saw a fall in investment to Rs.1547.7 crore in 2016, the lowest in the past four years. The largest contribution to investment came from TV broadcasting, TV distribution, and film exhibition.

As GST is implemented from July 2017, there may be an initial adverse impact on advertising spend. In the long term, with the inclusion of entertainment tax within the ambit of GST and availability of input credits across the board, the M&E industry is expected to be a net beneficiary.

With the mandatory switching off of analog signals in Phase-IV areas by broadcasters, MSOs, and LCOs on March 31, 2017, it is highly likely that the low-income groups in semi-urban and rural areas will be denied access to cable TV viewing. DTH services are in any case out of their financial reach. This may make way for Freedish, Doordarshan’s DTH service, which for the first time in 2016-17 posted a 9.5 percent higher revenue than last year, and is now looking at keeping the flag flying and auctioning prime slots to private producers and launching new channels.

In the backdrop of this development, the Telecom Regulatory Authority of India on its part has made all efforts to regulate interconnection arrangements for broadcasting services relating to television pricing through addressable systems, which generally worked against the interest of small service providers and created entry barriers for new service providers, resulting in illusory pricing, discrimination, and non-level-playing field. To further promote competition and provide more space on broadcasting distribution networks for niche channels, the Authority has released its recommendations, facilitating sharing of infrastructure in TV broadcasting distribution sector on voluntary basis, resulting in reduced CapEx and OpEx.

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