SECTOR FOCUS: RESURGING FM RADIO
• Phase-II of FM Radio: 338 frequencies for radio stations 91 cities were on block • The government awards 280 licenses for a total sum of $205 million • Sun, Adlabs, HT Music, ENIL emerge as the leaders with nationwide footprint • Government introduces new revenue-sharing model Radio, once perceived as a dying medium, got a new life with the emergence of FM Radio. The public broadcaster All India Radio took the lead in introducing FM radio stations in February 1995. In 1999, the government opened up the industry to private companies. While they established themselves in India’s major cities, they couldn’t build a profitable business because of the high license fee structure. The government has now changed the fee structure to make FM radio a more viable business. And it has authorized the set up of FM radio in 91 cities across the country in a “Phase II” rollout. As a result, companies ranging from the obvious media ones to unlikely real estate firms, have bid and won Phase II licences.
FM Radio Phase-II: Radio Revived
FM Radio, so far restricted to a few cities in India, is set to become a nationwide industry. The Government of India has just concluded the five rounds of bidding for 10-year licenses in 91 cities across the country. The Phase-II bidding process attracted greater interest
compared with the first phase in 1999. Phase I participants, such as New Delhi-based Living Media India Limited and Mumbai-based Midday Multimedia Limited popularized FM in large metropolitan cities and paved the way for Phase II. With the relaxing of the licensing regime, the winners of new licences under Phase II, are looking to get a slice of the FM market predicted by The IndusView to grow to 125 million in 2010 from $25 million last year.
FM Radio Phase-II: The Bidding Process
The government had put total 338 frequencies in 91 cities on the block as part of phase-II compared to 21 licenses (currently operational) allotted in the first phase in 1999, and all the 91 cities were classified in A-plus, A, B, C and D categories. The private FM Radio companies bidding for these licenses won 280 out of these 338 frequencies offered for a total sum of $205 million (Rs. 907 crore) of one time entry fee (OTEF). There were no takers for the remaining 60 frequencies. The government is expected to get $51.3 million (Rs. 227 crore) more from the migration fee also from the existing players to shift their 21 licenses of first phase in to Phase II. A total of 85 private players, not only media companies but also some real estate developers, were shortlisted for bidding, based on the pre-qualification bids invited in September 2005 by the Information and Broadcasting Ministry. After the all five rounds of bidding, south India’s television network Sun Group bidding through its two companies—Kal Radio Private Limited and South Asia FM Private Limited has managed to win total 67 frequencies. It already has four operating stations taking the total tally to 71. It will, however, have to give up a good number of these frequencies due to the maximum 15% restriction. Government norms stipulate that no individual company should own more than 15% of the total radio stations. That works out to no more than 45 radio station. Similarly, Adlabs Films, a part of ADAE Group formed by Anil Ambani who broke away from the largest private Indian company Reliance Industries, will have to surrender some of their 56 station licences won following the Phase II awards. Total Frequencies Frequencies Cities for Bidding Allotted 13 21 17 64 76 66 54 63 48 Amount ($ mln) 121.67 18.93 4.68 Amount (Rs. Cr) 538.39 83.75 20.7
Category A-Plus & A Cities North India East India
West India South India Total
21 19 91
68 64 338
62 53 280
19.67 40.00 205.08
87.06 177.56 907.46
Round-I of Phase-II: The Big Cities on the Block
58 radio stations spread across 13 cities, including the four metros—Delhi, Mumbai, Kolkata,...
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