The Telegraph
Since 1st March, 1999
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FM channels want end to licence raj

New Delhi, July 14: Private FM radio players are lobbying hard with the Union information and broadcasting ministry to ask a task force to look into a revenue-sharing arrangement, moving away from the current regime of licence fees.

In successive presentations, Radio Today, Millennium Broadcast, Radio Mirchi and others have told the government that the high licence fees — the licences were auctioned last year — have rendered their businesses unviable.

Ministry sources said the government was reluctant to alter the licence fee regime right away but might yet be forced to look into the demands. The task force is expected to be constituted by the end of the month.

In a presentation to I&B officials last week, the FM radio players said advertisement revenues have not taken off the way they were expected to when they bid for the licences. Radio gets only 1.5 per cent of the total advertising revenues.

However, ministry officials pointed out, in Mumbai, four of five FM radio players had paid the second year’s licence fees till April, totalling Rs 44.85 crore. In the other three metros, Delhi has three FM channels, Calcutta four and Chennai two. There are 22 FM stations in 11 cities.

In their presentation, the FM players said a revenue-sharing model could be considered along the lines of the mobile telephony business. New licences for FM radios should be issued only on a revenue-sharing basis. The industry is of the view that the advertising pie would grow larger with more FM players entering the business.

They cited the instance of television to illustrate the point. Before the advent of cable television channels, they pointed out, advertising in the medium was much less than what it is now.

But even as the FM players lobby for the revenue-sharing arrangement, differences have cropped up among them with Music Broadcast India (which runs Radio City in Delhi), alleged to be a “shell” company of STAR. STAR is the content provider for the FM station. The FM players want the government to enforce its guidelines for foreign investment in FM radio strictly. Under current rules, there can be up to 20 per cent foreign investment in FM radio companies.

A third issue the industry wants the government task force to look into is expanding the ambit of FM programmes to allow for news broadcasts. I&B minister Ravi Shankar Prasad is on record as saying he is not against the idea in principle but the ministry will have to consider the issue alongside others.

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