New broadcast operators seek tax moratorium to break-even
In view of the harsh economic environment and poor power supply across the country, newly licenced broadcast operators have sued for a period of moratorium before they could begin to meet their obligations to the National Broadcasting Commission (NBC). The operators seek no less than five years’ tax -break before NBC could come down hard on any violator.
The appeal comes on the heels of an NBC management threatening to withdraw radio and TV licences recently granted to some operators. The fist deadline for the licence withdrawal was last March, but which has been fixed again for June 31, 2017.
Director General of National Broadcasting Commission (NBC), Mallam Is’haq Modibbo Kawu, talked tough when he recently addressed the media. He spoke on the issue of over 50 broadcast stations across the country, which had outstanding licensing fees to pay.
Kawu noted that the amount the private and public broadcast institutions owe the NBC, over N5 billion, as license renewal fees, was too colossal to ignore, the reason it was necessary to hand the affected broadcast stations an ultimatum to pay up the license renewal fees to the NBC or suffer the same fate as some 54 television and radio stations, which had their licensees revoked for failing to pay up within a 60-day window that was earlier granted them.
The NBC had, in a widely circulated publication, revoked 54 broadcast licensees from among the 72 licenses that were reportedly awarded by former President Goodluck Jonathan a few weeks to the end of his administration. The NBC said the licenses were revoked for lack of fees’ renew.
Some of the organisations, which had their licensees revoked include New Ideas Communications Ltd (Abakaliki), Kevin Ejiofor Associates Ltd. (Enugu), Crown Integrated Pull Ltd (Ondo), Salama Radio Media Ltd (Kafanchan), Dazzling Communications Ltd (Yenagoa/Onitsha) and BOB TV Ltd (Enugu), believed to be owned by the late Nollywood filmmaker Amaka Igwe.
But at that media briefing, held at the commission’s headquarter in Abuja, Kawu warned that if the defaulting stations failed to pay up by March 31, “The NBC will have no other choice but to move and close down the stations.”
Kawu had maintained that the commission had observed a persistent pattern of refusal to pay license fees, saying, “License fees are in arrears; while some of these stations even had the temerity to write NBC, the regulatory institution, saying the amount they were obliged to pay is too much, and consequently telling us how much they were willing to pay, and even adding the time they were going to pay such sums.
“In truth, a pattern of gross indiscipline and misbehaviour has been central to the relationship, which many of the licensees had established in the past with the NBC.”
Also, the DG complained that many stations have failed to give the mandatory ‘six months prior information to the commission before the expiration of their licenses,’ adding that some stations have also been failing to notify the commission on their intention to continue as licensee or not.
However, the DG said all that would stop, as NBC would insist that stations “write to seek renewal of their licensees and also turn in their Annual Reports for NBC to carry out the obligatory assessment of what constitutes a percentage of the annual turnover that they are also obliged to pay the commission.”
Although the issue of the non-payment of license fees dominated the briefing, the other issues at stake were the illegal and rampant use of transmission power by stations, which he said has largely resulted in frequency clashes across Nigeria and the failure by some stations to install aviation-warning lights on their masts as required. The DG warned stations that have not complied to do so without delay.
NEWS of revocation order sent shivers down the spine of defaulting stations. While some made arrangement to meet the March 31 deadline, others called up their contacts at the NBC to ask for some more time to meet the obligation.
But it wasn’t just those who defaulted in paying the license fees that the NBC boss barked at. He also warned holders of “another 120 licensees who had paid for and acquired licenses’ to activate their license within two years or ‘have their license withdrawn for failing to go on air.
A provision of the act establishing NBC empowers it to revoke any broadcast license that is not put to use two years after it was issued. NBC’s DG is relying on it to revoke defaulting licenses.
“Frequencies cannot be held indefinitely by individuals. We are delighted that Nigerians are investing in setting up radio and television stations. They create jobs, open up accesses for content producers to showcase talents and are contributing to national development. But no one has a right to hold on to allocated frequencies indefinitely, when the resource itself is finite and there are other people waiting and ready to make use of those frequencies,” Mallam Kawu said.
However, in reaction to the threat of revocation by the NBC, Chairman of Broadcasting Organisation of Nigeria (BON), Mr. John Momoh, pleaded for more time for the defaulting broadcast stations to renew their licenses. Momoh, also Chairman of Channels Television, lamented that broadcast stations were generally going through hard time as some of them were increasingly finding it difficult to maintain their stations and pay salaries as a result of the rising cost of operations.
“I can confirm that there is high level of compliance. I think the revocation order worked because we have had representations from most of the broadcast stations and I think there is generally an awareness that it is a lawful obligation that they have to meet.”
BUT there are broadcast owners who argue that the NBC may have to review the licensing fee and indeed most of the stipulated fines in view of the harsh operating environment.
“It is too high,” argues Managing Director of R2TV and Ibadan-based R2FM, Mr. Greg Odutayo. “Some stations are barely surviving. They hardly break even because of the huge cost of operations. See the amount we spend on alternative power and maintaining equipments. It is so colossal that at the end of the day you don’t have enough to pay salaries not to talk of paying licensing fees. I am strongly of the opinion that the licensing fee should be reviewed since what we do is mostly public service.”
Odutayo added that the other option may be a situation where the commission could “grant a period of moratorium of say, five years, before stations can be asked to pay fees. TV and radio business is capital intensive. The earliest time to break even is five to six years and that is because time is needed to acquire equipment, create content, build the brand and attract audience. You don’t just set out and begin to make profit. The NBC must appreciate that fact and may be allow the stations sometime before they begin to ask them to pay mandatory fees. The operating environment is harsh.”
Indeed, the issue of harsh operating environment ran through most of the views expressed by some broadcast owners. Most of the operators are of the view that a conducive operating environment by the government for independent broadcast owners is needed. They canvassed the need for government to grant them tax relief on their operations and on purchase of equipment, as a way of cushioning the effect.
Notable filmmaker and Managing Director of Abuja-based Teen Africa Television, Mr. Charles Novia, said the first thing that government needs to address is the issue of power supply.
“Imagine the cost to broadcast for 24 hours everyday and on non-stop generators, too?” he lamented. “Power is a problem. Once the government can solve that issue, 70 per cent of the nation’s business problems would be solved.”
Novia, whose Teen Africa Television is due for launch soon, noted that there has to be tax breaks for film and television companies in the light of operating challenges, adding, “Let the government look into that.”
Odutayo also harped on the need for there to be some tax relief and for the licensing fee to be reduced, as the huge cost of operations would make most broadcast stations to close shop.
According to him, “The money we commit to our operations alone is so much. I run both a television and radio stations and I know how much I spend on diesel and electricity on just the radio station in Ibadan. We spend close to N500,000 monthly to power our generators in Ibadan and commit so much in dollars most times to upgrade our equipments. We have not talked about staff salaries, rent and other expenses. So, these issues are really crippling the industry.”
Indeed for Odutayo and other broadcast owners, there is so much that is wrong with the broadcasting landscape that makes operations difficult.