Tax regime change unlikely to benefit media companies

MUMBAI: A recent JP Morgan report titled "Budget FY04 Preview - easy on consumers, harsh on corporates" says the media sector will receive a positive impetus from a drop in the duties of set-top boxes (STBs). The report adds that a change in the tax regime is unlikely to affect media companies.


The positive impetus for the media sector is likely to come from the drop in the duties of set top boxes, says the JP Morgan report. This, it says, will likely reduce the prices of such boxes considerably, as a lead-in to the higher penetration of the conditional access system.

The report explores the impact of the budget on certain issues which are related to the media sector.

Foreign limit on DTH (direct to home): The report states that the limit is likely to be increased but not by a huge margin as CAS is being implemented. 

Duty on STBs: This duty is likely to come down from 50 per cent to around 16 per cent. The STB prices would come down and this would provide an impetus to the adoption of STBs by the consumers. Zee Telefilms would be positively impacted by the same. However, the report maintains its overweight status on the Zee Telefilms scrip at a price level of Rs 84.80. 

Change in corporate tax: The report expects that the marginal tax rate will be changed to 30 per cent. The impact will be minimal as the listed entertainment companies are paying taxes at this rate.

In summary, the report expects the budget to be easy on consumers and harsh on corporates. It adds that the major considerations for this year's budget are likely to be: 

(1) the high fiscal deficit;

(2) key state elections in 2003 and federal elections in 2004; 

(3) global uncertainty and

(4) a comfortable liquidity situation with low interest rates.

* Given the proximity to elections, the government will likely dole out sops to consumers in terms of lower effective taxation. These include higher exemption limits, abolition of tax on dividend and, possibly, the removal of long-term capital gains tax. This has to be compensated elsewhere, given the high fiscal deficit levels.

* For corporations, the budget should reduce import tariffs, which could be negative for commodity companies. There could be a roadmap to increase effective taxation rates through reduction in exemptions, which could hurt low tax-paying companies.

* On excise, there should be further rationalization, which should be a long-term positive.

* Further efforts at fiscal consolidation through reduction in the government's borrowing costs by buybacks of government debt at lower-than-market rates could be a short-term sentiment dampener-especially for the banking sector.

* The government could work at giving further incentives to investments in infrastructure by raising money through voluntary disclosure schemes-a long-term positive.

* Given that the equity market has been more or less flat over the past month, there does not seem to be a build up of excessive optimism in the market pre-budget. However, we believe that the chances of a major post-budget rally are not too great either, given the likelihood of the budget's possible negative implications for corporate India. Additionally, the possibility of a conflict in the Middle East will continue to weigh on the stock market in coming weeks.

Latest Reads
Discovery bags nine sponsors for Battle Ops

Battle Ops, Discovery Communications India’s (DCIN) integrated television and digital offering, has received a resounding response from the advertiser community. The show, which will premiere on Discovery Channel and Veer on 26th January, has already sold out with nine sponsors on board.

Television TV Channels Specialised and Niche
Splash and assemblage entertainment begin production on norm of the north sequel

Assemblage Entertainment, the feature-film focused CGI animation studio has begun production on the sequel of 2016 theatrical feature film Norm of the North, along with Splash Entertainment, Lionsgate and Dream Factory In many first-of-its times, it is unprecedented that an independent animated...

Television Production House Film Production
Vijendra Singh, Indian Boxing Champion associates with Pokerbaazi, one of India’s pioneer online poker platforms has signed Vijender Singh as its new brand ambassador. Prior to roping in Indian professional boxer, Indian film star, actor, and model, Sunny Leone was the face of the brand. By roping in boxing champion Vijeder Singh as its brand...

Television TV Channels Sports
COLORS INFINITY serves an intoxicating concoction of bollywood Besties, Gossip, Games

Make Saturday nights your date night with some of your favorite Bollywood best-friends, as COLORS INFINITY brings to you the latest season of the popular homegrown chat show Jeep presents BFFs with Vogue powered by Motorola and beauty partner, starting Saturday January 20, 2018 at 8pm on...

Television TV Channels English Entertainment
Experience first-hand India's historic Military Operation in a gripping new documentary

On 18 September 2016, four Jaish-e-Mohammad terrorists attacked an Indian Army Garrison in the town of Uri, Jammu and Kashmir. 19 Indian soldiers were martyred in the Fidayeen attack. Eleven days later

Television Production House Fiction
578 players to go under the hammer for IPL auction

The much-anticipated VIVO IPL 2018 player auction list is out with 578 players up for grabs. This big pool of cricketers, which comprises 360 Indians, will go under the hammer in Bengaluru on 27 and 28 January, 2018.

Television TV Channels Sports
BARC panel tampering: first arrests made

The Cyber Crime Police in Bengaluru, acting on a complaint filed by the Broadcast Research Council of India (BARC), has arrested five people allegedly for trying to tamper with the television viewership data generated and reported by BARC every week.

Television TV Channels Viewership
Cautious investments serve MTV Beats well

MUMBAI: When digital media made it easy for people to listen to songs anywhere anytime, it sounded like the death knell for music channels on TV. Years later, however, they continue to survive.

Television TV Channels Music and Youth
Comedy Central sets pace for ultimate celebration with over 100 hours of non-stop FRIENDS ultra marathon for its 6th birthday

Birthdays and New Years are great occasions to make resolutions for participating in marathons. However, this is one marathon which calls for hanging up your running shoes and grabbing the best spot in front of the telly with a bowl of munchies to keep you going because, for the first time ever in...

Television TV Channels English Entertainment

Latest News

Load More

Sign up for our Newsletter

subscribe for latest stories