What Budget 2022 has for traditional media

Finance Minister Nirmala Sitharaman presented her fourth Budget on February 1, 2022. With the Indian economy projected to be on the path of recovery amid the Covid-19 pandemic, all eyes were on how the government balances out its annual budgetary plan for the upcoming year. The Budget had nothing to offer to the media and entertainment industry especially for the sectors including broadcast, print, and Out-Of-Home (OOH).

While the OOH industry was expecting relief packages, standardization of law and tax reduction, the print industry was hoping for a waiver in the customs duty percentage on newsprints that result in a sizable reduction in cost for publishers. Also, the broadcast industry was seeking relief from regulatory pressure and infrastructure status for the industry. Additionally, there was no mention of the radio industry and cinema. 

Experts say there was no direct benefit for the broadcast, OOH, Print industry, however, they expect the focus on the infrastructure, digital ecosystem and AVGC Task Force is a positive sign for the industry. The industry players, were, however, expecting some government support for a faster recovery.

According to Punit Goenka, MD & CEO, Zee Entertainment Enterprises Ltd, the holistic focus on broad-based economic recovery in the Union Budget, with a huge emphasis on job creation and digital ecosystem of the country, is positive for India Inc. at large. “The steps announced to build domestic capacity for the Animation, Visual-Effects, Gaming and Comics segment will certainly help enhance capabilities, enabling the Country to compete more effectively at a global stage. An extension in the credit line guarantee scheme is also a welcome move, which will provide some much-needed relief to the relevant sectors which were impacted due to the pandemic,” Goenka added. 

The OOH industry, which was expecting a reduction in GST, relief packages, a concession for CapEx for Digital OOH, has no mention in the budget. However, industry players feel that the focus on infrastructure and announcement about the National Highways will result in healthy growth for the sector.  

Atul Shrivastava, Group CEO & Executive Director at Laqshya Media Group, reacting to the Budget that the Union Budget underlined the government’s focus on long-term growth. Shrivastava added, “As India’s economic growth is estimated to be 9.2% in the upcoming financial year so it would be good for all the industry and with overall growth, we are sure advertising & media will also show remarkable growth which was low due to the pandemic in the last couple of years. As announced the National Highways to be expanded by 25,000 km under PM Gati Shakti mission. Highways are adding a new dimension to the growth of the OOH industry as advertising on the Highways is emerging as a very strong choice for brand building for many categories.” 

Karan Taurani, SVP, Elara Capital said that the Union Budget has a positive impact on digital media and content consumption. “It will continue to push video consumption growth backed by increased penetration in smaller towns. Also, the shift from traditional media to digital media will become more rampant; as traditional media has largely moved away from urban towards rural consumption", Taurani said.

Speaking about the other sectors of the media and entertainment industry, Taurani further added that the Union Budget 2022 had a strong focus on digital push and digital consumption. “Challenges for traditional media persists as there was no announcement made to protect their interests despite a big negative impact for COVID, as the pandemic led to trends accelerating towards digital in a big way.”

He further added, “There was no relaxation on the license fees or royalty for the radio industry, no financial grant or tax benefit for the traditional media which has seen a sharp decline over last two years and still struggles to get back to pre-Covid levels and no reduction in GST for cinema ticket prices, despite cinema being one of the most impacted medium during the pandemic.” 

However, Taurani continues to believe that TV and cinema remain to be the preferred forms of the traditional medium in the entertainment sector which will co-exist in the near term and continue to grow at a healthy rate even after breaching pre-Covid levels. 

“Growth for TV media companies can be even stronger if they are able to execute well on digital strategy whereas growth in cinema will be driven by expansion of new screens and large scale cinematic content. Other traditional mediums like print and radio will need to reinvent their business models or push hard in terms of transition to digital ad media consumption on digital remains to be on the rise", he said.

Stating similar thoughts, Nitin Menon, Co-founders of NV Capital, shared that the only thing FM has done that she has given is the AVGC Task Force. “We were expecting some reduction on GST for the exhibition industry but there was no mention of the industry. In the case of broadcasting, NTO 2.0 is the major issue that the sector is facing, while I am not sure if it was possible to address in the budget. But reducing compliances in the broadcast industry was necessary.” He further added, “FM could have given some relief to the exhibition industry which was the worst hit due to COVID-19.”