With a combined war chest of at least Rs 3,000 crore, private radio firms are gearing up to bid aggressively in the upcoming FM-III auctions for 806 stations across 283 towns. These include existing radio firms from media groups like Jagran, Bhaskar, HT Media, Sun TV Network, Reliance Broadcast Network (RBNL) and Entertainment Network (ENIL). These firms currently run half of the 245 operational FM stations in the country.
?We are waiting to see the fineprint of the FM-III policy. The business plans will depend on what the policy says on various financial parameters,? a top executive of a leading FM station said.
As reported by FE earlier, the group of ministers on FM-III has recommended e-auctions for the slots on the lines of the 3G spectrum. The radio licences will be granted for a 15-year period as opposed to the current 10-year period. The base price for FM-III bidding will be the highest amount paid by an operator under FM-II policy in 2006.
Analysts tracking the radio sector say the fight will be for stations in the top two dozen towns which includes the metros, mini-metros and important state capitals. This is because the FM-III draft policy allows existing operators to own multiple stations in a city. This provision was absent in the FM-II policy, in which 280 out of 338 stations were awarded to bidders generating Rs 1,144 crore of revenue to the government.
?We are not yet into the cost-benefit analysis for FM-III but one thing is sure: The fight for stations will be in the top-30 towns where returns are highest. Also, it is crucial for existing operators to know if their licence period gets a five-year extension,?Apurva Purohit, CEO, Music Broadcast Pvt Ltd, which operates Radio City, told FE.
However, planning for FM-III is currently on the drawing boards of most radio broadcasters. ?Owning another station in a city is crucial for the financial health of top players. It will give them better valuations and command on advertisers. Also, some players would want to get into newer towns too,? said Sunil Kumar of Bigriver Radio, a radio consultancy firm. When contacted, top executives of some of the leading FM radio firms declined comment saying it was too early to get into the financials. However, according to sector analysts, between Sun Network, ENIL, RBNL, HT Media and Jagran, at least Rs 1,500 crore of cash is available for utilisation on FM-III bidding and other expansion projects. ?Be it Sun, Jagran, HT or others, they have recently got foreign investments worth around Rs 900 crore. A good part of this amount will go for FM-III as owning more FM stations will be beneficial for them,? a senior executive in a brokerage firm said.
Experts say Delhi, Mumbai, Bangalore, Chennai, Nagpur, Pune, Chandigarh, and Jaipur are among towns which will witness fierce bidding in FM-III. ?The A-plus and the A-category towns during the FM-II auction in January-February of 2006 generated 61% of the overall revenues from the auction of 280 stations. Also, Delhi (Rs 31.4 crore), Mumbai (Rs 35 crore), Bangalore (Rs 21 crore) and Chandigarh (Rs 15 crore) generated record bids.
This trend may repeat in FM-III,? an analyst with a leading media consultancy said.