Cable TV
Entertainment tax: MSOs & LCOs must collect & pay, HC halts Delhi ‘action’
MUMBAI: The Delhi High Court has held that MSOs (multi-system operators) and LCOs (local cable operators) distributing television signals to subscribers directly are liable to collect and pay entertainment to the government.
The court’s decision came on pleas filed by four MSOs – Hathway Cable and Datacom Ltd, DEN Networks Ltd, IndusInd Media and Communications and SITI Cable Network Ltd. They had moved the court challenging the levy of entertainment tax and vires of the Delhi Entertainment and Betting Tax Rules.
The four had sought quashing of the Delhi government’s 17 December, 2012, circular and show cause notices issued in January 2014 directing them to deposit tax beginning April 2013. Delhi had threatened to halt cable TV transmission of the MSOs by closing their headends. The government had stated that the assessment of the MSOs bared that they had been indulging in tax fraud in crore since April 2013.
A bench of justices Sanjeev Sachdeva and Badar Durrez Ahemed, however, quashed the Delhi government’s December 2012 circular and show-cause notices served by its Department of Entertainment Tax asking the MSOs to to pay entertainment tax or face action.
Terming the circular as “without any authority of law”, the bench said, “To be clear, MSOs to the extent that they directly provide cable service to the subscribers without the intervention of any LCO (local cable operator), would be regarded as the proprietors under Section 7(1) and would be liable to collect and pay the entertainment tax to the government,” PTI reported.
“However, where the MSOs provide the service through the LCOs, the individual LCOs having its own subscriber networks, would be regarded as the proprietors in respect of their individual networks and would be liable to collect the entertainment tax and pay the same to the government.”
The court made it clear that as far as the assessments related to deposition to tax to the department are concerned, the MSOs “would have to take their own remedies against the assessment orders and/or appellate orders in view of the decision arrived at in this case”.
MUMBAI: When margins wobble, liquidity talks and in Q3 FY25-26, cash did most of the talking. Den Networks Limited closed the December quarter with consolidated revenue of Rs.251 crore, marginally higher than the previous quarter but down 4 per cent year-on-year, even as profitability stayed resilient on the back of strong cash reserves and disciplined cost control.
Subscription income softened to Rs.98 crore, slipping 3 per cent sequentially and 14 per cent from last year, while placement and marketing income offered some cheer, rising 15 per cent quarter-on-quarter to Rs.148 crore. Total costs climbed faster than revenue, up 7 per cent QoQ to Rs.238 crore, driven largely by higher content costs and operating expenses. As a result, EBITDA dropped sharply to Rs.13 crore from Rs.19 crore in Q2 and Rs.28 crore a year ago, pulling margins down to 5 per cent.
Yet, the bottom line refused to blink. Profit after tax stood at Rs.40 crore, up 15 per cent sequentially and only marginally lower than last year’s Rs.42 crore. A healthy Rs.57 crore in other income helped cushion operating pressure, keeping profit before tax at Rs.48 crore, broadly stable quarter-on-quarter despite the tougher cost environment.
The real headline-grabber, however, sits on the balance sheet. The company remains debt-free, with cash and cash equivalents swelling to Rs.3,279 crore as of December 31, 2025. Net worth rose to Rs.3,748 crore, while online collections accounted for 97 per cent of total receipts, underscoring strong cash discipline across operations, including subsidiaries.
In short, while Q3 showed signs of operating strain, the financial backbone remains solid. With zero gross debt, steady profits and a formidable cash war chest, the company enters the next quarter with flexibility firmly on its side proving that in uncertain markets, balance sheet strength can be the best growth strategy.
