Budget has negative impact, say media analysts

MUMBAI: Motilal Oswal's Inquire Equity Research (MOSt) report titled "Union budget 2003-04: a review" says that the provisions of the budget indicate that the total effective tax on set top box (STBs) imports would fall from 50.8 per cent to 45 per cent. The union budget would have an overall negative impact on broadcasters and MSOs (multi-system operators), the report adds.

Kotak Securities' research report titled "Union budget 2003-2004" maintains that the budget hasn't had any significant impact on the media sector. It has also maintained its "in-line" rating (in line with the sensex fluctuations) on Zee at a price of Rs 84.

The following are some excerpts from the analyst reports regarding the impact of the budget 2003-04 on issues related to the media sector companies:

* Higher service tax will hurt all broadcasters:

The impact of higher service tax will be negative for all broadcasters including the listed ones namely Zee Telefilms (MOSt rating of "Buy"), Television Eighteen and ETC Networks.

While the increased service tax can be passed on to cable subscribers because the increase is only by 3 per cent, it might not be easy to pass on the incremental service tax burden on advertisers due to the prevalent weakness in ad markets.

The MOSt report states that there has been stiff resistance exhibited by big advertisers like HLL, Nestle, Pepsi to pay up the 5 per cent service tax in the past. The issue had been resolved and broadcasting companies had to take some hit in absorbing service tax in some specific cases.

The MOSt Inquire analyst team believes that the increased service tax would hurt the advertising business in India even if individual broadcasters manage to pass it on to advertisers.

Kotak Securities' budget report states that Zee Telefilms will have to pass on the increased service tax to its advertisers. It adds that there is no significant bearing on BalajiTelefilms.

* Marginal cut in import duty on set top boxes a negative surprise: 

Reduction in import duty post budget 2003-04

Set Top box

CIF price

Basic duty



Landed cost

Total cost



30 per cent

16 per cent

4 per cent


56.83 per cent



25 per cent

16 per cent

4 per cent


50.8 per cent

MOSt Inquire estimates

The cut in peak customs duty will reduce the duty on imports of fully built set top boxes, albeit marginally. The expectations in the industry were of a much larger cut in duty and this clearly is a deemed negative for the industry. This also belies the optimism in industry participants that the cut in import duty on set top boxes would provide a boost to an accelerated implementation of conditional access system (CAS).

This would negatively impact the pay broadcasters, Zee Telefilms and Television Eighteen and MSOs such as Hinduja TMT, says the MOSt Inquire team.

* Reduction in corporate tax surcharge to benefit all companies:

Reduction in corporate tax surcharge from 5 per cent to 2.5 per cent would benefit all the companies, especially Zee Telefilms and Balaji Telefilms that pay high rates of tax.

Kotak Securities report adds that the real impact on receivables, profitability and turnover will be known in May 2003 when Zee will announce its results.

Foreign exchange rate US$1 = Rs 47.63 as on 5 March

Latest Reads
US$ 4.5 bn expected from IPL rights; SC recommends accounts scrutiny

The Supreme Court on Friday froze all financial transactions between the BCCI and state cricket associations by directing the apex body not to disburse any funds till it resolves to abide by the Justice RM Lodha panel recommendations on reforms by 3 December . The top court ordered that none of...

Television TV Channels Sports
TVS Tyres is co-presenter for Asian Champions Trophy 2016

Continuing its strong connect with sports, TVS Tyres has associated with Asian Champions Trophy 2016 by becoming the co-presenter. The Asian Champions Trophy is one of the premier hockey tournaments, a much sought after annual international competition promising some great hockey action. This...

Television TV Channels Sports
Q2-17: Zee Learn declares maiden interim dividend

The board of directors of the Essel group’s education company Zee Learn Limited (ZLL) have declared a first time ever dividend of 5 percent per equity share of Re 1 each for the quarter ended 30 September 2016 (Q2-17, current quarter).

Television TV Channels Factual & Documentary
Whether BARC action can stop unethical practices?

Whether businesses and industries practice their art of selling fairly although they have 'Fair Practices' training during the academic courses, workshops and several ISO and other certifications? There seems to be the fear of the lawman, and not the law in India.

Television TV Channels Viewership
TV Superhighway: beIN, Yaddo, AfricaXP have joined us, says Magine CEO Ambuj Goyal

CANNES; Magine has secured partnerships with four of the industry’s most exciting sports, documentary and entertainment content providers. Partnerships with beIN, the international media group and owner of MIRAMAX; Yaddo, the new documentary streaming service headed up by former head of The BBC’s...

Television TV Channels Factual & Documentary
Colors emerges strong on strength of Naagin I & II

MUMBAI: One of the top rated shows Naagin Season 2 helped Colors reach a top-ranking position.

Television TV Channels GECs
Pakistan Broadcasters Association to oppose PEMRA Indian content ban

MUMBAI: The Pakistan Electronic Media Regulatory Authority (PEMRA) shocked both Pakistan and Indian broadcasters when it issued an order blanking out  all Indian content from Pakistan’s television channels on 19 October.

Television TV Channels GECs
Sony Pix to telecast 'Jurassic World' on 22 October

Sony Pix will take the viewers on a thrilling, adventurous journey with cloned dinosaurs in their Billion Dollar Premiere property. The channel plans to air Jurassic World on 22 October at 1 pm and 9 pm.

Television TV Channels English Entertainment
Sony AXN scripts deal with Pinewood; buys stake in SVOD service Hopster

Folks at Sony Pictures Television (SPT) are in a celebratory mood. Not only has it signed a six-series deal with Pinewood Television but has also acquired a minority stake in the London-based video subscription service for kids content - Hopster.

Television TV Channels English Entertainment

Latest News

Load More

Sign up for our Newsletter

subscribe for latest stories