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Tuesday, Jul 13, 2004

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TV channels worry over dues as media accounts switch hands

Nithya Subramanian

New Delhi , July 12

A NUMBER of high-profile media accounts have switched hands in recent months, and this has become a cause for concern for broadcasters who are worried about the timely recovery of their advertising dues.

For instance, the media buying account of BPL Mobile shifted from Madison Advertising to Carat India, Bharti moved its account from Carat to Madison, ICICI Prudential Life Insurance appointed Mindshare as it new Agency on Record (AOR), moving away from Initiative Media, and World Gold Council moved its Rs 10-crore media business to Starcom from Mindshare.

The Indian Broadcasting Foundation (IBF), the apex body for broadcasters, held a meeting with the Advertising Agencies' Association of India (AAAI) to discuss the issue. "Normally, agencies get a 75-day credit period to pay up. But with advertising accounts moving so furiously, we want to ensure that all outstanding dues are cleared in time and there is no passing the buck," said an official in the broadcasting industry.

The AAAI is expected to convey this to its member-agencies as well. "An agency can be blacklisted if there are repeated defaults. However, this seldom happens," said the source. The IBF and the AAAI had, sometime back, set up a joint body to take up such issues.

The IBF also reiterated that the service tax would have to borne by the advertiser and should be calculated on the total deal. Some of the big advertising spenders have been refusing to pay up the tax and want it to be part of the total advertising package. "We have already issued a circular to this effect and ads of advertisers who do not comply will not be carried," said the sources.

However, the recent hike in service tax from 8 per cent to 10 per cent is unlikely to have a major impact on the industry as this could be offset against excise and customs duty on goods produced or imported by the advertisers. Advertising agencies may have to juggle with the media plans of their clients if they want to derive optimum value from the investments.

"The next big spending season is the forthcoming festival time. By then, we will know the exact implication of the service tax," said a media planner.

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