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Tax Reform’s Impact on Media: What Changed?

June 14th, 2018   ||    by Callie Wheeler   ||    No Comments

It’s an important question: What was tax reform’s impact on media after Trump’s Tax Cuts and Jobs Act (TCJA) went into effect? The TCJA was the first significant tax reform in the last 30 years, with some comparing it to President Reagan’s Tax Reform Act. While many individual taxpayers were quickly checking the implications as they prepared for tax season, media companies have been doing the same.

Media: the Biggest Winners?

A reduced corporate tax rate is the big headline coming out of President Trump’s tax reform. According to the National Law Review, media companies could make billions from the 40 percent reduction in taxes (the rate was reduced from 35 to 21 percent). The publication notes that most big players in the media industry—Disney, Comcast, and 21st Century Fox, for example—operate as corporations, meaning they previously paid one of the highest effective tax rates.

There are other deductions available to large media companies—including the deduction of dividends received from foreign corporations by U.S. shareholders—but overall, the message is simple. Large media companies stand to benefit from the TCJA.

Other Media Industry Impacts

What about smaller media companies, including broadcasters and niche media groups? These groups may in fact benefit from other changes brought on by the reform. Dollar limits for equipment purchases (like cameras, sound equipment, and more) were nearly doubled to 1 million dollars, according to Forbes. Depending on their businesses, some media companies purchase vehicles for use and may find MarketWatch’s outline of new bonus depreciation for work vehicles helpful.

Making the Most of the Reform

Some have pointed out that the TCJA comes at a great time for the media industry, with tax reform’s impact on media providing a break during uncertain times. As advertisers and broadcasters alike adapt to a new television landscape full of OTT competition, fears of cord-cutting, resilience in live TV, and other changes, media companies can do more than simply take the tax breaks where they can get them.

Investing in technological advances like automated buying creates opportunity to compete, save money, and stay relevant. As advertisers continue to see the value of local television in reaching their consumers, local television broadcasters can leverage that interest through automated buying’s efficiency (in both time and cost) and data-driven targeting power.

This combination of local reach and insight with efficient placement creates room for profitability. While the tax cuts are great news, a long-term strategy to make the most of those savings is even better.

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