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| indiantelevision.com's Media, Advertising &
Marketing Watch |
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| Sony, Zee blink on service tax
issue, Star stands firm |
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The Indiantelevision.com
Team
(6 September 2002 1:15 pm) |
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MUMBAI: When reports started circulating
on Wednesday that chinks were appearing in the "united stand" of broadcasters
to hold firm on the issue of who should pay the 5 per cent service
tax on ad billings, it was surprisingly national broadcaster Doordarshan
that first was cited as breaking ranks.
Yesterday the "power of one" prevailed as FMCG behemoth Hindustan
Lever Ltd (HLL) had its way on the issue with all the broadcasters,
with only Star India continuing to hold out.
Star had also pulled off Pepsi and Colgate advertisements over the
issue. At the time of posting, however, informationavailable with
indiantelevision.com indicate that while the standoff continued between
Star and HLL and Colgate, Pepsi had agreed to the lead broadcaster's
terms and the deal is expected to be signed today.
HLL's power comes from an annual Rs 1.5 billion TV ad spend that is
streets ahead of any other advertiser. By blacking out HLL, Star TV
is losing Rs 2 million every day, CNBC India has reported.
Still, Star does not look like backing down in the immediate term
at least. It's line of reasoning being that the effective rates that
HLL pays out are far lower than other advertisers due to the size
of its adspend so for it to ask for the adjustment on the service
tax as well is unacceptable.
There is an argument going round that with the Champions Trophy kick-off
on 12 September, ad spend would anyway be heading towards Set MAX
so Star is unlikely to be able to sustain its boycott. This however,
does not look like being a factor in the negotiations as neither HLL
nor Colgate are big advertisers for sports events.
What will make the difference in the end is whether HLL's threat that
putting similar monies behind a group of other channels will give
it the same effective reach is carried through.
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Lever,
Colgate ads off air on main satellite channels over service tax issue
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