The rollout of the third phase of FM radio policy has virtually split the FM industry, with some warning that they may tune out of the whole bidding process. Though there is broad support for FM-III among large FM operators, others, mostly regional stations, are upset that the 10-year licences will not be extended. These firms do not want FM-III until contentious issues like music royalty and licence period extension are resolved.
Recently, the information and broadcasting (I&B) ministry forwarded the draft FM-III policy for Cabinet approval while virtually ruling out an extension of the licence period. ?The law ministry has not supported the idea of extending the licence period of current operators mid-way. However, we have left some scope in the FM-III draft policy to address this issue in the future,? Ambika Soni, I&B minister, had recently said.
?As an investor in the radio business, I don?t see us making money or even participating in FM-III, if several issues critical to our growth are not addressed. Why do we need FM-III when FM-II itself is difficult to sustain,? wondered a top executive of a regional FM radio firm. The radio players say that they are currently not making money and are unlikely to make money in FM-III either, due to large payments to the music industry, high licence fees and high operational expenditure.
Currently, there are around 250 private FM radio stations in the country across 90 cities. The FM-III policy envisages opening around 800 more private FM stations across 220 towns with a population of around one lakh each. The radio spectrum will be awarded based on bidding called by he I&B ministry. It will be awarded for a 10-year period, with an annual revenue-sharing formula.
Since the size of radio industry has more than doubled in last five years, the I&B ministry is not convinced about the gloomy picture painted by the radio industry. ?Even with all the problems outlined by the radio players, the sector has shown robust growth. While the government understands their challenges, it has to work within the existing laws, and therefore, FM-III will happen soon,? a senior government official involved with the radio sector told FE.
However, the radio industry apex body denies any split in the industry. When asked whether the industry is divided, Apurva Purohit, president, Association of Radio Operators for India (AROI) and CEO, Radio City said: ?No; we are not. Our concerns are the same. Their order of priority may differ from one radio firm to the other. Support for FM-III policy is one thing, participating in bidding is another.?
?When moving from FM-I to FM-II, the government had appointed the Amit Mitra committee which recommended a revenue-sharing model in FM-II as opposed to high annual licence fee regime in FM-I. That changed the dynamics of the industry. Now, we have suggested a similar approach for FM-III and we are hopeful that an independent body will second our concerns on the financial non-viability of the business under present conditions, unless they are tweaked in our favour,? said Prashant Pandey, CEO, Radio Mirchi and a representative of radio industry to the government.