MCD and DMRC at loggerheads for ad revenue

By Rohit Nautiyal , afaqs!, New Delhi | In OOH News | May 06, 2010
According to sources, MCD is eying a 50 per cent share in DMRC's ad revenue

Two government bodies - Municipal Corporation of Delhi (MCD) and Delhi Metro Rail Corporation (DMRC) - have been at loggerheads over the display of ads at Delhi Metro for quite some time now. A few months ago, MCD started sending notices to DMRC, media owners and advertisers, labelling the ad displays at Delhi Metro illegal. It also imposed total fines of Rs 18.5 crore on the concerned parties.

Apparently, MCD is miffed because neither does DMRC take any permission for displaying ads, nor does it share revenue. According to sources, MCD is eying a 50 per cent share in DMRC's ad revenue.

In a letter to the MCD commissioner sent on March 15, E Sreedharan, managing director, DMRC, stated that the civic body's notices to DMRC's advertising contractors and their clients are tantamount to obstruction of DMRC's operation and management (O&M) activities. He also threatened to take legal action against MCD, in case the civic body continued to obstruct DMRC's activities.

On the importance of ad revenues for DMRC, he stated in the letter, "The advertisements are an important stream of revenue and is built up in the Metro plans, as approved by the Government, so as to meet the obligation for repayment of loan, besides O&M expenses. DMRC being a railway administration is not liable to pay any tax in aid of the funds of any local authority. In view of the said section (section 184 of The Railways Act, 1989), the provision in the policy framed by MCD, relating to sharing of 50 per cent revenue earned by sister concerns in government, is not applicable to the DMRC; and the DMRC is not bound to share its revenue earned from advertisements displayed on its properties with MCD."

While there has been no solution to the problem, and no definition of what's legal or illegal is available; media owners continue to be at the receiving end. As Delhi Metro is on an expansion spree across the Capital, DMRC continues to float tenders for the new sections.

Commenting on the kind of response the tenders would receive in this situation, Mukesh Gupta, managing director, Graphisads and general secretary, Delhi Outdoor Advertisers Association (DOAA) says, "There is ambiguity in the minds of media owners; and hesitation in quoting the right rates for tenders should not come as a surprise. Also, clients are repulsed by these controversies to such an extent that they are willing to terminate the contracts."

He questions, "If media owners get ad rights after participating in a legitimate tender bid, then why should not there be someone stepping forward to safeguard our interests?"

Another media owner feels that the concerned parties need to have a dialogue to resolve the matter. Else, the losses could run into crores.

DOAA has sent a letter to DMRC, demanding a meeting to resolve these issues.

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