The auction for private FM radio Phase III began on Monday. With the high court clearing the way for the Sun Group to participate in the e-auction, 135 frequencies in 69 cities are being auctioned over the next two-three days.
However, much of the action was restricted to the top 10-12 cities, with private FM players bidding for licences in cities such as Chennai, Delhi, Hyderabad, Bangalore and Mumbai. “Based on the buying pattern, smaller cities and towns did not turn out to be an attractive proposition for private FM players on day one,” said a senior executive of a private FM player.
The highest bidding price of a station in Phase II has been set as the minimum bidding price this year. For example, in Phase II, Rs 31.42 crore was the highest price that a broadcaster had paid to acquire a station in Delhi. In phase III, Rs 31.42 is the minimum bidding price. Similarly, Rs 35.2 crore was the highest price that a broadcaster paid for a station in Mumbai. In Phase III Rs 35.2 crore. is the minimum price. However in Phase II, the licences were given for a period of 10 years and in Phase III, the tenure has been increased to 15 years.
In all, 831 FM radio channels will be auctioned.
In addition to acquiring new channels, 245 existing radio licences, of which 21 are running under an extension and are set to expire on September 30, are being renewed. The renewal fees of existing licensees too is determined in the auctions.
The government is expected to earn Rs 550 crore as revenue from the new licences. Vineet Singh Hukmani, MD, Radio One, says that since his firm already has a good presence in the seven metros, the game plan will be to consolidate in large cities. “We would expand our presence from seven big cities to 10,” Hukmani says. Tarun Katial, CEO, Reliance Broadcast Network, is pleased his firm can venture into new cities and towns. “We have always lived by the motto of being the largest network and will continue to do so even during the Phase III auction,” Katial says.
According to Apurva Purohit, CEO, Radio City, her firm will bid for some stations.
Jehil Thakkar, head, media and entertainment, KPMG, new players, mainly regional print companies, are expected to jump on the bandwagon. “The first set of bidders will comprise existing networks such as Radio Mirchi, Red FM, Big FM and the Dainik Jagran Group which recently acquired Radio City, who will bid for a pan-India presence while another group would include regional print players who want to consolidate regional presence,” Thakkar says.
CVL Srinivas, CEO, GroupM, South Asia, points out that while the auctions will allow private radio companies to expand their reach, FM broadcasters should be allowed to broadcast news and current affairs apart.