A Challenge To Media Industry Tax Leaders: Buckle In, And Step Up
It’s no secret that tax professionals who work in media companies are busier, and likely facing greater challenges, than perhaps ever before. Between continually shifting tax laws and codes, new legislation introduced on a regular basis and constant change within the media industry itself, tax leaders must stay on top of myriad tax issues that affect their companies.
Add to an already complicated set of tax issues affecting the media industry the fact that Big Tech — massive companies like Facebook, Google, Amazon and Microsoft — continues to flex its muscles and lengthen its tentacles, creating a trickle-down effect reaching the local level and affecting broadcasters, print publications, and digital outlets — in ways these businesses may have never foreseen.
MFM launched its inaugural Media Tax Summit in early March of this year. Its objective was to go beyond the traditional discussions of tax regulation changes. During the two-day event, several experts offered key recommendations on how financial leaders can continue to be vital to their organizations. The bottom line: it’s going to take continuing education, a lot of nose to the grindstone, and even some street smarts.
Dan McGuire, partner, state and local tax, KPMG LLP, moderated the “CFO Panel — Expectations for Successful Media Tax Department” session on Day One of the summit. He was joined by Lucy Rutishauser, executive vice president and CFO of Sinclair Broadcast Group; Steve Gibson, vice president and CFO of The Washington Post; and Beth Bramowski, chief accounting officer and controller at Audacy Inc., who shared their collective wisdom. McGuire reported on this panel for the July/August issue of MFM’s member publication, The Financial Manager, currently available on the MFM website.
First, tax professionals must be both detail-oriented and willing to look beyond what they think is their traditional tax role, with a wider view toward comprehending the overall direction of their company and the entire media industry. Both roles can be daunting, but are equally important for the financial health of a media company. The C-suite is always on the lookout for tax team leaders who can multitask and juggle, and smart tax leaders will embrace this challenge.
To be considered a high performer, a tax leader must first study and understand the executive leadership’s expectations for the tax team. Rutishauser explained: “First and foremost, it’s about ensuring accurate books and records, timely filings, compliance and defending the audits, as well as providing support, recommendations and value-add in regards to transactions and deal structures.” She added that speed, accuracy, quality of work and value-add across the company are key qualities for tax leaders to instill in their teams.
Outside of tax organizations within companies, the panelists pointed to tax authorities, both domestic and international, who have attempted to broaden the tax base in response to the expanding reach of media companies — all of which have been exacerbated by the increasing power of Big Tech.
There are ways to confront new or expanded taxes on digital services, products and even advertising, they said, but it requires continual education around the media landscape, determining the potential application of these taxes and the ability to quickly assess, interpret and communicate their impact on the enterprise and its end users.
The second takeaway from the panel: communication is key. While thoroughly comprehending tax matters is important, it’s even more critical to be able to articulate — both verbally and in print — exactly how tax transactions will work within a company. As Bramowski explained: “Not only does it demonstrate [a tax leader’s] mastery of the topic, but it builds confidence across the organization to gain broader support of the tax strategies and plans.” Demonstrating the ability to communicate with crystal clarity can raise the reputation of the tax team with the C-suite.
Gibson, who commented that “truly understanding the business activities and the goals of the business owners puts the tax team in the position of being a trusted advisor,” echoed that sentiment. He added that a tax leader’s ability to distill often-complex and intimidating rules and regulations into understandable action steps often results in the internal support and approval needed to move forward.
The panel wrapped with its presenters making the case for individuals to consider a career as a tax professional, despite the challenges highlighted throughout the summit. If a person is accounting- and tax-minded, that niche of the media industry offers countless challenges and opportunities.
Gibson encouraged, “As the complexity and globalization of business continues to escalate, tax provides you with the opportunity to become a subject-matter expert in a field that is increasingly at the center of planning and decision-making.” Bramowski added, “The ideas that can come from a highly effective tax organization that can benefit a company’s bottom line and fuel their strategic growth are endless.”
Since last March, much has escalated on the tax front within the media industry. Even as the summit was underway, a new piece of legislation was likely already conceived, and perhaps being drafted, to protect and bolster local media against Big Tech’s increasing ability to foster misinformation and siphon advertising dollars from struggling local newspapers and broadcast media. As John Eggerton reported in Multichannel News on July 23, the Local Journalism Sustainability Act of 2021 (H.R. 7640) would provide tax credits for hiring more journalists, for taxpayers subscribing to media outlets, and for small businesses that support local media via advertising spend.
The bill was introduced on July 16 by Senator Maria Cantwell (D-Wash.), chair of the Senate Commerce Committee, along with Senators Mark Kelly (D-Ariz.), and Ron Wyden (D-Ore.). The goal of the bill, according to its text, is to “revive and sustain trusted local media,” in which broadcast TV and radio play a central role. “The strength of our democracy is based in truth and transparency, and local newsrooms are on the ground in our communities asking the critical questions, countering misinformation, and telling our stories,” stated Cantwell. “We have to protect these vital parts of our communities, because once they’re gone, they’re gone.”
NAB President Gordon Smith said the association applauds the act’s introduction. And on Aug. 9, in a show of solidarity, all 50 state broadcaster associations sent a letter to Senate leadership, requesting they pass the bill, stating the bill “would provide local newsrooms a lifeline that would enable them to sustain, and in some cases, significantly improve the critical public service these local media outlets provide their communities.”
As Gibson pointed out during the Tax Summit, tax considerations are of increasing importance in corporate decision-making. The Local Journalism and Sustainability Act of 2021 is just the latest in a long list of examples.
This topic is certain to be discussed during MFM’s Media Outlook 2022, scheduled as a virtual program on Oct. 19 and 20. The working title for the second of the two sessions on the first day is “Biden Administration Tax Agenda.” Media Outlook 2022 is free for all MFM members in good standing; the discounted never-member rate includes a one-year trial membership.
Mary M. Collins is president and CEO of the Media Financial Management Association and its BCCA subsidiary, the media industry’s credit association. She can be reached at [email protected] and via the association’s LinkedIn, Facebook, Instagram and Twitter accounts.