Broadcasters can relax somewhat now that the Revenue Department has ruled that commission paid to advertising agencies will not be included in the value of taxable service in respect of broadcasting services.

Broadcasting companies, slapped with a five per cent service tax in July this year, had been unsure about whether the commission to ad agencies was to be included in the taxable service.

The companies had made a representation to the finance ministry claiming that a service tax on the commission amount, if levied on both the ad agency and the broadcasters, would be tantamount to double taxation. The revenue department has now clarified that service tax is separately leviable on the commission or discounts received by the ad agencies for placing the advertisements in print or electronic media.

Usually, the gross amount paid by broadcasting agencies is indicated in the invoices raised by them on the ad agency. The commission or discount, which is usually around 15 per cent of the gross amount given to the ad agency, is deducted and the net amount payable by the ad agency to the broadcasting agency is indicated.

The finance ministry, which examined the industry‘s representations, has clarified that the value of taxable service is the amount received by the broadcaster for providing the service.

According to Ramesh Narayan, president of the Advertising Agencies Association of India, service tax had been imposed on ad agencies three years ago, an imposition which amounted to 0.75 per cent of their revenues. Agencies were not happy about the charge, which he claims is a cumbersome levy and was passed on through advertisers.

The new notification, which concerns the broadcasting companies, clearly stipulates that the 15 per cent commission due to agencies will not be included in the value of taxable service, he says.

Nickelodeon may not be a "happening" channel in India in but that is not the case everywhere. The Viacom-owned kids channel is currently running a new interactive initiative in the UK that lets viewers choose their viewing schedule via their remote control and pick the programmes they want to watch for a whole week by voting for their favorite show and then seeing it half an hour later. The initiative went into play yesterday and will run for a week.

Using an application developed by NDS Group (a News Corporation company) as part of Nickelodeon‘s successful "Watch Your Own Week" event, Nickelodeon will let its viewers vote interactively for the schedule, an NDS release says.

Viewers will be presented with three of their favourite programmes every half an hour from 8 am until 8 pm and encouraged to choose between them by presenters. Votes will be cast using the interactive application, via the BSkyB platform, which will determine what is shown next on the channel. Kids can also enter in a competition to win one of the following prizes: Playstation 2, Sony personal recordable minidisc player or a Palm Pilot personal organiser by submitting their telephone number.

Each new selection of programmes will see a fresh round of voting and Nickelodeon viewers can choose to enter a prize draw after their choice is made. Cost warnings will appear on-screen, while security systems shall ensure that only one vote is possible per session.

Kids can also vote online at www.nick.co.uk or via the telephone. Nickelodeon anticipates that over a quarter of a million votes will be received via the NDS Value@TV application during the half term special, in addition to those collected via telephone, internet and SMS. Kids are the ultimate early adopters of new technology and iTV provides a new means of connecting with them.

Nickelodeon can increase viewer retention through this innovative interactive content, which, ultimately, will result in increased revenue.

Come 1 November and French fashion channel FTV will become an encrypted feed.

Preparations for the conversion to a digital feed are on in full swing, says Rajan Kaaicker, CEO Distribution Group, Modi Entertainment Network, the channel‘s current distributer in India. According to Kaaicker, 60 per cent of the seeding operations concerning distribution of set top boxes have been completed. The full rollout is expected to be complete by 15 November, he says.

Kaaicker said Modi was using the more expensive Scientific Atlanta set tops costing roughly Rs 33,000 and had no plans to subsidise them. He however said that there would be various payment packages that would be worked out with operators. Kaaicker would not reveal how many boxes he planned to distribute across the country.

Queried as to whether distribution of the channel would be restricted post-encryption considering its niche character, Kaaicker said all-India distribution was what he was looking at as FTV was being positioned as a youth and lifestyle channel. He said currently FTV had a viewer base of 23 million and that was the viewership he expected post-encryption as well.

As to what price the channel was being offered, Kaaicker would only say it would be part of a package deal. Cable industry sources reveal that MEN is bundling FTV along with Hallmark and DD Sports, the two other channels it currently distributes along with French music channel MCM. The cost for all three channels has been put at Rs 13.15 in the metros. The sources say that for the present no price tag is being put on FTV but the costs of both DD Sports and Hallmark have been hiked and the softener as it were is that FTV comes along with the other two. According to the sources, DD Sports which was earlier priced at Rs 5.50 will now cost Rs 7.15 while Hallmark will go up from Rs 3 to Rs 6.

How the cable operators will respond to this move is still unclear though. It should be noted that representatives of two MSOs in Mumbai said they were yet to receive notification on the issue. The representative of a third MSO, while acknowledging that they had received an intimation, said a decision had yet to be taken as to whether to accept the new package rates.

The question that has no clear answer is who would be willing to pay for FTV. It seems to attract a very fragmented viewer base and that too at odd hours. One cable operator had this insight to offer though. According to him, the channel is very popular in the smaller centres for its "hot" content.

It is also true that the monies coming to FTV through ad sales is zilch and moving to a pay mode makes sense if for no other reason than the fact that a regular income source is established.

FTV beams off the Asiasat 2 satellite.