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Big names likely in second round of bids for FM radio

24-August-2005
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Big names likely in second round of bids for FM radio

The second round of bidding for FM radio licences due to commence with availability of tender documents by month end, could bring big names to the table. With prospective candidates required to get their act together shortly, fund raising exercises have also got under way at select players.

Unlike television or print media, entry into FM radio consumes comparatively less capital. Its operational economics had been badly upset in the first round courtesy high licence fees brought about by an open bidding process. "Out of the 40 cities that bid in May 2000, 21 stations in 12 cities remain, all of which are in the red,'' a recent report on the entertainment industry by PriceWaterhouseCoopers and FICCI had said.

Radio Mirchi in Pune and Win 94.6 in Mumbai were forced to shut down. The FM radio industry's loss in 2003-2004 was estimated at Rs 122 crore, of which, Rs 108 crore was attributed to licence fee. The upcoming second round covers 90 towns/cities and allows for over 330 stations. Industry officials, knowing how one-upmanship among media barons had driven up fees in the first round, found comfort in the closed bid-approach mooted this time around.

They expected strong interest from Mr Anil Ambani, Mr Rajeev Chandrasekhar, HT Media and Sun TV. Also cited were Dainik Bhaskar, Entertainment Network and Radio Mid-Day. HT Media, which raised Rs 370.73 crore through a public issue, had said in its offer document that it would earmark Rs 10 crore towards radio.

Mr Ambani's name had found mention right from the time peace was brokered at Reliance and the group's telecom business was moved into his camp. The telecom business is both a facilitator and user of convergent media. Just days after settlement at Reliance, Mr Ambani had acquired controlling stake at Adlabs, the first clear signal of his group's interest in the entertainment space.

It was speculated, therefore. that radio, for Reliance, would be just another stop away. On the other hand, Mr Chandrasekhar, former Chairman and CEO of BPL Mobile, made a fortune by selling his cellular operations to Hutchison Essar. He had participated in the first round of bidding for FM licences but had not succeeded. "That bid was purely out of a passion for music. Now we are looking at the second round as a financial opportunity," Mr Chandrasekhar said, when contacted.

According to him, the bid could be made alone and without recourse to a tie-up with any broadcast partner. Radio Indigo, which he had originally built up for the first round of bidding for FM licences, had subsequently managed a few channels on the WorldSpace network before that association ended in March. "So, we have the required experience," he said.

Not everyone from the first round was keen on the second. Inquiries at Zee revealed that the media and entertainment group had no plans to bid for radio. It had done so in the first round and backed off afterwards. Television Eighteen, which had bid earlier, would not be doing so now, said Mr Raghav Behl, Managing Director of the company.

Industrialist Mr Vijay Mallya was also being linked to the second round. The talk was that he might choose to participate financially. It could not be confirmed.

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