RadioandMusic
| 14 Dec 2019
Budget wishlist: Tax relief, royalty figure high for FM players

MUMBAI: With the Union Budget just 10 days away, FM radio players in the country are ready with their wishlists - of long pending requests and some new suggestions that will help the fledgling industry to tide over the tough times and emerge a strong media player in the year ahead. Reduction in service tax, implementation of Trai's reforms like multiple licenses per city and rationalising of the license fee structure figure high on the agenda set out by some of the industry's foremost leaders as well as the representing body, the Association of Radio Operators of India. We present here their take and suggestions for the new government -

Red FM COO Abraham Thomas -

The radio industry is at a stage where it is poised for greater growth and penetration in the years to come. To make this industry conducive for operators, we are hopeful that the government will look at implementing the reforms suggested by Trai. Reforms such as allowing multiple licenses per city, will not only make it less risky for players to experiment with different formats, but will also offer a wider choice to the listeners.

With the penetration of radio in smaller cities, the dynamics of operating radio are changing. The challenge for operators is to align costs with the revenues in these markets so as to be sustainable. Disproportionately high music royalty fees are hurting the profitability of the industry. It's imperative that we look for a mutually acceptable solution.

We are hopeful that the new government will look into the pending matters concerning the radio industry and resolve them at the earliest.

Fever 104 FM National Marketing & Promotions Head Neeraj Chaturvedi -

The most imperative need is for de-regulation in order for the industry to develop. Of course, issues like permissions to broadcast news and current affairs, as also tax issues are areas where we are hopeful of changes.

Yes, We are hopeful that the change in political scenario will bode well for the FM industry. At this point in time, the policy implications of Phase III hold more promise for the radio industry. We are looking forward to the new I & B minister making an announcement soon about the Phase III.

Big FM COO Tarun Katial -

We expect reduction in service tax, especially given that the radio industry is still at its infancy and has great employment and media opportunities in the semi-urban and rural markets. In addition, we need a lowering of income tax rates to the radio industry.

Eight year tax holiday to FM radio operators. Radio broadcasting should be removed from the ambit of service tax, just like print media.

Fringe Benefit Tax is a non deductible expense. If a concession in the qualifying rates is provided to radio operators, it would really provide a competitive advantage and a boost to the Radio industry.

Print media is kept outside the ambit of service tax and the same benefit should be extended to radio as well, if we want to establish a level playing field. If not, the local advantage extended by radio as a medium will diminish. Additionally, radio operators are required to pay license fees on four per cent of gross revenues wherein, gross revenues include service tax, resulting in double taxation, this needs to reduce.

Also, to defer payment of the annual revenue sharing licence fee given the market slowdown.

We are optimistic and are hoping that the radio industry is given the consideration that it deserves, especially considering the employment that is going to generate…

My FM COO Harrish M Bhatia -

The music royalty being paid to various music industry labels through PPL by different radio stations needs to be addressed to on priority. The royalty given by the radio industry currently ranges between 15-70 per cent of the total revenue of the radio stations. On the other hand, in more advanced countries, the royalty given to music labels is between two to six per cent of the total revenue of radio channels. In India, the radio industry today generates about Rs 5.5 billion in revenue out of which about Rs one billion is paid as music royalty. We suggest that the royalty be lowered to a smaller percentage than the present 15-70 per cent of the revenue in the interest of the radio industry. We should move to revenue sharing model than the fixed sharing basis.

The other issue which the Finance Minister needs to address is the annual licensing fee of radio channels which needs to be lowered from four per cent of the total revenue generated at present.

Since the new government has been recently formed, it is too early for them to meet our demands. We're expecting too much from them. But at the same time we want the government to be more empathizing towards the industry 
If we look at the political scenario, it has not really changed. The congress led UPA alliance has won again and has more or less the same people holding offices. The new I & B minister, soon after taking up charge wanted to start with the third phase of radio licensing. The industry regulatory reforms should be implemented as soon as possible for the growth of Radio Industry 

A Service tax exemption will be a major boost for Radio Industry, just like Print industry.

Tax holidays for Radio Stations in the Tier 2 and Tier 3 cities. Post the licenses were given out in the second phase, it was quite some time before the stations were handed over to make them operational. And we had hired the man power for long enough before they could kick off work & turn stations operational. Hence the tax holiday would help the Radio growth in the Tier 2 and 3 cities immensely.

ENIL CEO Prashant Panday -

Really, our discussions with the Finance Ministry are routed through the MIB. There are several demands of the radio industry that are under consideration of the MIB. Some of these will required eventual clearance from the Finance Ministry. These are listed as under:

a) Extension of the Phase II license by a period of five years – from 10 years to 15 years. The government knows very well that all radio broadcasters are in serious financial trouble and are unable to even break-even, leave aside make decent ROIs.

b) Moratorium on the annual license fees paid by radio broadcasters for a period of 3 years. As is well known, the economic downturn has created even more losses for radio companies than in the past. In this period of trouble, a helping hand from the government is badly needed by the radio industry

c) Reducing the cost structure in the radio industry. Specifically, reducing the rentals charged by Prasar Bharati for their tower, land etc.

d) We have been requesting that the radio industry should be considered as a core priority sector. Banks should be encouraged to lend to the industry and the same should be considered under the priority sector lending norms of banks.

e) Given the financial health of the radio industry, the Minister of Finance should consider waiving off of Service Tax from the radio sector – at least for a few years.

The MIB has been one of the most responsive ministries ever. We have seen a lot of support from them in the past as well. We remain hopeful of their support as always. They gave birth to the private FM industry – I am confident that they will help it grow into adolescence.

Association of Radio Operators of India secretary general Uday Chawla

From the finance minister, the AROI is seeking low rate of interest on land, lower custom duty on transmitters and studio set ups, as well as a tax holiday for Tier 2 and Tier 3 cities.

In addition to what the I&B ministry has agreed in the phase 3 proposals, the AROI seeks increase in license period by 15 years to make the business more commercially viable for the FM operators, permission to broadcast news not only from All India Radion but other sources as well. The FM operators are ready to mutually agree on regulations to be followed while broadcasting news if permitted to use other sources of news. The AROI also seeks a level playing field with other media in the country.

AROI's suggestion to HRD Minsiter Kapil Sibal is to resolve the copyright issues and solve the music royalty issue between the music industry and FM industry.