Owners of private radio stations call for rescue policy, as they have suffered losses to the tune of Rs 2,400 crore over the past five years; urge I&B Ministry to review the current 10-year-term

The private FM Radio industry urgently requires a rescue policy, which entails extending the licence period by five years to a 15-year period so as to make the business viable and make a success of the proposed Phase III FM Radio Broadcasting Policy.

So far, promoters have funded One Time Entry Fee (OTEF), capital expenditure and accumulated losses to the tune of over Rs 2,400 crore with no return on capital in sight. The situation is especially critical as only six years are left on the current 10-year licence term and there is not enough time to get a reasonable return. It is crucial this decision is taken by the Union Government at the earliest so that the Phase III FM Radio Broadcasting Policy, which is being formulated, does not turn into a disaster.

One-sided business

As per reports, this critical point of the radio licence extension has been ignored in the current Phase III proposals, which are to be discussed by the Union Cabinet shortly. This is causing serious worry among owners, who are beginning to feel the radio business is one-sided where the government makes money, but the radio companies are subjected to huge losses.

Hence, promoters of radio stations have strongly conveyed to the Union Information and Broadcasting (I&B) Ministry recently that the government must not take Phase III bidding for granted without the rescue policy, entailing an extension of the licence period in place.

Though the I&B Ministry might seem to benefit from a quick announcement of Phase III without any licence
extension, it would end up losing because it is unlikely the owners of the companiesu00a0 holding licenses and who have incurred huge losses, would even consider bidding if the extension of licence fee term is not provided.

New players' worry

Even newer players would look at the condition of the current players and stay away from the bidding process.

Can the government afford this loss of licence fee revenue from Phase III?

Vineet Jain, Managing Director, The Times of India Group, said, "It has been my firm belief since we first entered the sector, that FM radio, which reaches one-third of all Indians at no cost, has the potential to be India's most successful media story. However, while the private sector has done all that was possible to invest in and grow the sector, it is now time for the government to urgently step in and make some policy corrections to ensure the very survival of this infant industry. The logical thing to do would be an extension of the license period to 15 years."u00a0u00a0u00a0u00a0

Tariq Ansari, Managing Director, MiD DAY Multimedia,u00a0 said, "I believe if the situation is not rectified speedily then a number of players will stop investing in their stations and give up licences. This will have an adverse effect on Phase III licensing, much to the detriment of the listening public. FM Radio has brought free entertainment to the masses through a revolutionary experiment in public-private partnership. To allow it to fail in this way would not be in the national interest."

No returns

The owners have agreed to share the financials of the industry and show proof of the accumulated losses and how there is no chance of any return on capital in the remaining six-year of licence.u00a0

Pawan Agarwal, director, Dainik Bhaskar Group, said, "It is a matter of grave concern that despite being an extremely popular and meaningful medium, radio isn't being given the opportunity for growth. The Phase III of licensing would be meaningless if the licence term is not extended from 10 to 15 years. The government must take a positive stance in this matter or else there might be no medium left to speak for."

270
Number of private radio stations in India as of February 2009

3 July 2001
India's first private FM channel went on air in Bangalore