The coronavirus epidemic is having a huge effect on industries across India, including the Media and Entertainment (M&E) industry. Public gatherings have been banned, and theatres, cinemas, music festivals, plays, and concerts have been closed or cancelled indefinitely as a result of the virus’ introduction to lockdowns in all nations.
The Bollywood industry was hit hard almost instantly with movie theatres closing across the country and new releases being postponed.
The pandemic’s effects on these industries could include reduced attendance at film festivals and music concerts, delays in film distribution, delayed or cancelled movie releases, and a reduction in on-location filming.
Production companies, music labels, filmmakers, musicians, and theatre owners, among others, would most likely suffer financial consequences for months, if not years.
The Indian M&E sector reached Rs 1.82 trillion (US$25.7 billion) in 2019, according to a FICCI survey (a growth of 9 percent over 2018). According to the survey, India’s M&E sector is projected to reach Rs 2.4 trillion (US$34 billion) by 2022, with a CAGR of 10%.
However, these estimates were made before the effect of Covid-19, and according to CRISIL, the Indian M&E industry’s revenue is expected to drop by 16 percent, or Rs 25,000 crore, to Rs 1.3 lakh crore in the current fiscal year. The M&E sector’s profitability is projected to be negatively impacted by this overall decrease in sales.
Various laws and regulations that will have a major effect on the M&E sector both before and after the lockdown:
The M&E workforce is said to be split into two categories. One category consists of workers who are hired on a permanent basis known as “Permanent staffs”, by broadcasters, production houses, and also management firms. The temporary staff and freelancers, on the other hand, are hired on a project-by-project basis. Both are affected differently by the covid-19 pandemic because they have different regulations.
General laws such as the Payment of Wages Act of 1937, the Equal Remuneration Act of 1952, the Employees Provident Fund Act of 1952, and others apply to Permanent Employees. Despite the fact that these laws strongly regulate the sector’s jobs, they do not anticipate any situation such as a pandemic, which would be a once-in-a-lifetime case. As a result, compliance with these general laws does not immediately cease under such circumstances.
The Ministry of Home Affairs (MHA) issued an order on March 29, 2020, directing States and Union Territories to take steps to ensure that all employers pay their employees without deduction for the period their businesses are closed during the lockdown. However, this order was later withdrawn by MHA on May 17, 2020.
“Contractual staffs” are usually freelancers who are part of the cast and crew of the project for which they are hired. Their jobs is regulated by a contract between the employee and the employer. They are usually charged on a regular basis or when such goals are met in terms of project progress or deliverables.
The Indian Contract Act of 1872 governs such contract. This community makes up the majority of the workers in the M&E industry, and they are the ones who are most negatively impacted by the cancellation of shoots and events. Journalists and other staff of the news media are being laid off as a result of employment problems in the print and electronic media.
- Contractual Issues
Contractual commitments have been affected as a result of the emergency lockout steps. The most significant effect is non-performance of contractual obligations.
Since the M&E sector is so reliant on contracts, non-performance of contractual obligations as a result of the lockdown is bound to have a greater effect.
It has been impacted by the doctrines of Force Majeure and Frustration:
Force Majeure – In literal meaning, it means “superior or irresistible force.” This definition means that the parties will avoid fulfilling their obligations if a force outside the parties’ control prevents the contract from being fulfilled. Although the term is not incorporated into Indian laws, it is recognised in Indian courts. A boilerplate clause dealing with Force Majeure is used in almost all contracts.
Doctrine of Frustation – Section 56 of the Indian Contract Act of 1872 governs the Doctrine of Frustration. According to the clause, if a contractual arrangement becomes impossible or unconstitutional due to an incident that could not be avoided, the contract becomes void.
This doctrine has been interpreted by the Supreme Court of India to suggest that impossibility does not only apply to physical or literal impossibility, but also to mere absurdity in the eyes of the parties.
The risk of non-performance, bad performance, delay, and non-payment is increased as a result of the disruptive effect of a global pandemic resulting in the shutdown of workforces, closing of borders, and forced work from home arrangements. Physical agreements are proving difficult to implement it.
Cancellation of film launches, premieres, and events raises a slew of practical issues, including possible refunds, swaps, and contractual obligations, especially for interested parties such as sponsors, broadcasters, and ticketholders who may have invested large sums of money and are now facing confusion and losses.
Some contracts directly resolve these concerns in their terms, while in others, contractual concepts such as dissatisfaction would control the parties’ rights.
Although businesses purchase insurance to shield themselves from business disruption, such plans do not always cover pandemics like Covid-19.
According to insurers, business interruption coverage kicks in only if the insured property sustains physical harm as a result of a covered peril such as fire or earthquake, which does not compensate damages resulting from a pandemic such as COVID 19.
In the Indian M&E industry, General Liability Insurance is the most common form of insurance. It safeguards companies against a variety of risks, including those posed by third parties. This insurance is important because it can cover project delays caused by unexpected circumstances.
It’s important to remember that not all of these insurance schemes cover pandemics; in reality, pandemics are often excluded. Apart from that cast insurance are insurances which includes any additional costs incurred if a cast member’s illness, death, or disability causes the film to be delayed, interrupted, or cancelled.
This is especially useful in the current pandemic because it’s possible that any of the cast may be infected, causing the film to be cancelled or delayed even after the lockdown is lifted.
The demand for risk management in legal aspects will increase as the film industry is confronted with a slew of new legal problems and is forced to rethink operating procedures. The legal profession is dealing with the pandemic’s harsh effects, which include office and court closures, social alienation, and dealing with a virtual workforce.
The well-fortified walls of resistance, on the other hand, have been broken at breakneck pace. In order to provide much-needed legal support to its clients in times of crisis, the legal profession was able to recognise the need to shift the status quo and embrace a must-do mentality.
Various industries and sectors have undergone digital transformations over time, but the Indian legal industry had barely noticed, and digital usage was more of an exception than the rule.
The coronavirus is causing this to change. It serves as a rapid, detailed, top-to-bottom reimagining of the legal industry. Technology’s capacity and ability to support modern models of structures and processes has already been demonstrated.
It is recommended that we actively develop our skills and keep our eyes open to new paradigm changes in our workplaces.
Consumer behavior is expected to evolve quickly as the world adjusts to a new standard. Lockdown has fuelled demand for at-home content, resulting in massive increases in television and digital services, which is expected to continue in the future.
Social distancing norms will survive well after the lockdown ends, at least as long as the pandemic continues, and this will have an effect on how the M&E sector operates. There are a few things that could happen, given the economic uncertainty caused by Covid-19, contracts and contractual agreements will need to be renegotiated at all levels.
As production houses and content creators must account for social distancing norms when filming, the manner and method of content creation can shift. Several components of content could be produced digitally, reducing the need for human interaction.
The type of content produced will adapt to accommodate the audience who consumes it through the internet on various devices. The live event and event management industries are expected to suffer the most as laws prevent large gatherings.
Overall, M&E companies will need to adjust to emerging developments following COVID 19, which will have a significant effect on how business is conducted and revenue is produced. This would have a significant effect on the framework of prospective deals and revenue sources.
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