Advertisers ink long-term deals to pre-empt IBF levy

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Mumbai, Jan 7: Advertisers have devised a new way to skirt the Indian Broadcasting Foundation (IBF) proposed 25% surcharge on advertising contracts with broadcasters. Two networks—Star India and INX Networks— recently signed long-term deals with advertisers, and both say if the surcharge is implemented within the terms of the new contracts, advertisers won’t be charged extra.

Star TV India, for the first time in its history, recently signed a two-year contract with Airtel. Paritosh Joshi, its president of ad sales, said, “We should not put additional liabilities on advertisers that are committing volumes. As far as the Airtel deal is concerned, I don’t think we will charge them the extra levy if the IBF proposal is implemented.”

Prior to this, INX Network inked three-year advertising contracts with Vodafone, Future Group and RIL. Probal Gaanguly, group director, ad sales, INX Media, said, “These advertisers are our platinum members and the contracts we have signed with them are not flexible. Therefore, if the IBF surcharge is implemented, we will honour existing contracts.”

Last year, when IBF proposed the 25% surcharge citing rising input costs, advertisers threatened to boycott TV channels. In an attempt to seek reconciliation, IBF and Advertising Agencies Association of India set up a committee to come up with a solution. The panel is yet to give a final verdict.

Not everyone, though, is gung-ho about long-term deals. Joy Chakraborty, head of network sales, Zee Network, said, “It is a sign of weakness. An advertising contract for eight to nine months is more than enough.”