“So, what are your interests?” Ask this ice breaker question to anyone and there is a high chance it is politics, sports and movies! In this era, it’s all unquestionably about entertainment and everyone loves it. It may be catching a much awaited movie at the swankiest multiplex, supporting a charismatic political candidate at a mass rally, wearing your favourite player’s sports jersey to support the game or even singing along to the latest ad jingle. The flavour of 2014 was definitely the FIFA 2014 World Cup fever that gripped everyone. Hosted by the mighty BRIC nation, Brazil, the World Cup is credited with some mind boggling numbers – 32 teams, 600,000 foreign tourists, 3 billion USD boost to the host cities’ economies, 12.6 million viewers and a 1.5 billion USD boost to the global ad industry. And the entertainment value for the fans – priceless!
Closer home, we see the Indian media & entertainment industry growing at a very fast pace. The evolving regulatory scenario, introduction of new and improved laws and increasing complexities when operating in a global environment has had a considerable impact on companies’ operations at large. The advanced legal landscape has also made it critical for the senior management to assess and address all practical business risks. Hence, fraud, bribery and corruption need to be ranked high in their boardroom agendas. EY’s recent survey, M&E Fraud Survey 2014 which comprised feedback from leading M&E organizations with a substantial footing in the India market, produced some startling insights. About 56% of the respondents agreed to an explosive uptick in fraud risks over the last two years. Close to one out of six respondents reported a higher number of cases of fraud in their organizations Talent really doesn’t come cheap but fraudsters have taken it a bit too far! According to 83% of respondents, kickbacks given for approval of talent-related and acquisition costs, carriage fees, Intellectual Property Rights (IPR) and satellite rights was another challenge faced by the industry. At least 70% of the respondents believe that false invoicing and overbilling by third parties is another serious issue faced by the industry.
Almost everyone voiced their concerns around the incorrect and unethical practices pervasive in the M&E industry, resulting in significant loss of profits and/or inflated costs. Half of respondents (52%) have rated the loss to be between 5 to 25% – which could be apocalyptic to overall profitability and sustenance. So while compliance may not have ranked very high, seems tedious; resorting to ‘quick fixes’ is not the best answer and could potentially do more harm than good.
So what can intelligent organizations do to minimize these challenges? We’re in a consumerist world and it’s safe to predict that people will never stop consuming content. The industry may see a sporadic flux around the medium depending on demographics, habits and behaviour. So it is in the best interest of M&E companies to protect them by having a robust framework of checks, controls and solutions in place. There may not be a silver bullet to eliminate business risks, but the path toward compliance is relatively simple – train your employees on anti-bribery & anti-corruption (ABAC) policies, enhance internal controls, get regular reviews by external law firms or specialist consultants, conduct background checks and due diligence and set up a whistle-blowing hotline. Let this checklist be your curtain raiser before your business says ‘it’s showtime!’