FM players to split revenue in Phase-II

Phase-II of the privatisation of FM Radio is slated to begin in February '03, reports Sudha Nagraj in New Delhi. It will take the revenue-share path, and not the license-fee route of Phase-I.I&B minister Sushma Swaraj told ET, During the first phase, some players pulled out. We learnt a lot of lessons and we will not repeat these mistakes. For the second phase, we will adopt the revenue-sharing model. The second phase would be across 75 cities (70 plus those left over from phase I) and is likely to include bigger cities and state capitals. The Spectrum Management Committee has been at work, earmarking the frequencies for commercial broadcast while reserving some bands for public service broadcast (the I&B Ministry plans to introduce FM radio in university campuses next year). In the commercial segment, FM players have been saying again and again that the licence fee model involves cost escalation --so much so that licence fee alone eats into 65 % of the operating costs. The phase I model allows a 10-year licence term with 15 % increase every year, after initial payment of Rs 1.25 crore. In contrast a revenue sharing model would call for a one-time licence fee followed by a percentage of revenue earned every year. This is a fair model as it is market-related, says an analyst. During the first phase of the privatisation which began in 2000, the government had opened up 40 cities for the service. It received 37 bids, two of which were denied security clearance. Of the remaining 35, 25 have completed all formalities. At present 11 FM stations --5 in Mumbai, and one each in Ahmedabad, Indore, Pune, Lucknow, Bangalore and Vishakapatnam are actually up and running. The rest are expected to be on air early next year. However, the process has had its share of hiccups. At first some bidders did not pay up the advance fee, litigation followed, then there was a problem co-locating towers in metros and finally some licence holders even pulled out. It was difficult striking a balance. Serious players had to be encouraged, but the government was also not in a position to lose out. It was an uphill task as non-serious players came in and raised the bid amount... recalls Mrs Swaraj. However she claims that there has been no adverse impact on the privatisation process -- the government has not lost revenues, we earned Rs 118.83 crore from the licence fee.

FM players to split revenue in Phase-II

Phase-II of the privatisation of FM Radio is slated to begin in February ’03, reports Sudha Nagraj in New Delhi. It will take the revenue-share path, and not the license-fee route of Phase-I.

More from our Partners

Popular Categories

Hot on Web

In Case you missed it

Top Searched Companies

Latest News

Download ET APP

Follow us on

become a member