FM Radio Panel Plays FDI Tune, Wants Licensing Reprogrammed

New Delhi | Updated: Sep 18 2003, 05:30am hrs
Although a formal report is yet to be out, the expert committee on FM radio has reached a broad consensus on recommending a revision in the foreign investment norms and lifting restriction on news broadcast. The committee, headed by Ficci secretary general Amit Mitra, is also in favour of bidding for one-time entry fee for the second phase of private FM, according to sources. In the first phase, bidding was done for licence fee, thereby making it quite steep. Many players after bidding high for the licence fee even left the business.

Significantly, the view of the committee is that foreign investment norms in FM radio should be on par with print and television. In both print (news and current affairs) and TV news channels uplinking from India, foreign direct investment (FDI) up to 26 per cent is allowed. In private FM, only up to 20 per cent foreign institutional investment (FII) is permitted. If the expert committee recommendations are accep-ted by the government, FDI up to 26 per cent could be permitted in private FM radio ventures too.

Also, while news and current affairs programmes cannot be beamed on private FM stations now, the committee is likely to recommend to the government that such a restriction is illogical. In sensitive areas such as Srinagar and the north-east, there may be some cap on beaming news, however, with certain members having reservation about allowing news in private FM. The existing private FM players have been lobbying hard with the government to permit news.

The current players have also been grudging the steep licence fee, even as they themselves had bid high for the same in the first phase of FM privatisation. However, the expert committee has taken into account these concerns and are likely to suggest a bidding/auction process for one-time entry fee, according to sources. The licence fee (on an annualised basis) for 10 years would either be a fixed amount or would be worked out on a revenue-sharing basis. A committee member pointed out that the objective behind bidding for one-time entry fee as against the earlier practice of auction of licence is to keep the long-term outgo in the form of licence fee reasonable.

As per current norms, a licencee in Mumbai had to pay Rs 9.75 crore and in Delhi Rs 7.12 crore for the first year of operation, with the licence fee going up by 15 per cent every year. The players also paid bank guarantee, valid for 10 years, equivalent to the first years licence fee.

Besides recommending norms for the second phase of privatisation, the committee is working out a migration package for the existing licencees. Its a tricky job, said a source, as the migration mechanism would involve plenty of legal issues.

In the next phase of private FM radio, around 300 to 400 channels are expected to come up.

Currently, there are 22 private FM stations across the country.

The expert committee on FM radio, which was told to submit its report by September 30, has now sought time till October 31. While the committee is headed by Mr Mitra, it has technical experts, radio professionals and law firm representatives as members. The information and broadcasting ministry had advised formation of this committee last month for recommending guidelines for the second phase of private FM radio. Once the report is submitted to the I&B ministry, it will be sent to the Union Cabinet for approval. The I&B ministry is ready to take a bold and liberal view of things, sources said.