Mumbai: Having witnessed a massive drop in ad volumes due to the Covid-19 crisis, there is a growing chorus of media voices demanding immediate clearance of advertising dues by the Directorate of Advertising and Visual Publicity (DAVP) and other state-owned bodies to help companies tide over cash flow problems and avert possible job losses.

Top media officials say the move will help the industry sustain itself at a time when advertisers aren’t spending, payments due from corporates are stuck, supply chains — like in the case of print newspapers — have been disrupted and traditional drivers of media consumption, sports and live entertainment, have all but ground to a halt.

DAVP is the nodal agency of the central government for advertising by various ministries and organisations, including public sector undertakings (PSUs) and autonomous bodies.

“I would request the government at this stage to consider clearing all the dues of various departments, ministries and PSUs towards advertising agencies, which would include dues to print, TV, radio, OOH, events etc., on an urgent basis,” Ashish Bhasin, president of Advertising Agencies Association of India, told ET.

As per various industry estimates, DAVP owes between ₹1,500 and ₹1,800 crore to various media companies. A large chunk of this – ₹800-900 crore – is owed to the print industry alone. Overall, government advertising constitutes about 5% of print media’s annual ad revenues.

“Payments from the government are erratic at best. But given that many businesses are not in the condition to pay on time, the government should step up and clear its dues. It will buy us time to get back on our feet,” said a top executive of a print publication.

Media companies are staring at a major cash crunch as many advertising categories have either stopped or deferred their campaigns.

“The biggest issue in the next few months for media industry is going to be cash flows. While our businesses are in good shape, the lockdown is going to impact advertising revenues. At such a time, we urge the government to help the sector by clearing dues as soon as possible and help the sector survive,” said Apurva Purohit, president, Jagran Group. “Radio industry and the Indian Newspaper Society are in talks with the government to get a faster resolution.”

“In these critical and uncertain times, newspaper revenue is under pressure. Any government move to release dues would surely be of help. Newspaper industry would look forward to a cash flow at this time, since costs are being borne in spite of little or no revenue,” added Satyajit Sen Gupta, chief corporate sales and marketing officer, Dainik Bhaskar Group.

Last month, the radio industry, under the aegis of the Association of Radio Operations for India (AROI) had appealed to the government for a slew of reforms including restoration of government advertising on radio to normal levels and payment of government dues on advertising from DAVP, National Film Development Corporation and Bharat Sanchar Nigam Ltd.

Prashant Panday, MD and CEO, Entertainment Network India (ENIL), a BCCL company which operates Radio Mirchi, said radio broadcasters are supporting the government by carrying out social messaging and other campaigns, but the government hasn’t yet cleared last year’s dues. “In some cases, the payments are stuck since the last 12 months, some even since last two years. Also, DAVP reduced advertising on radio significantly in the last fiscal. I hope for the sake of the sector, they scale it up to earlier levels,” he said.

Industry experts feel there is a severe need for liquidity at this moment and cash recovery from government would be a big help.

“The least the government should consider doing is to clear its dues as soon as possible and help with income-tax refunds stuck with them for years,” said Bhasin, who is also CEO, Asia-Pacific and chairman — India for Dentsu Aegis Network.

Source Article