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Time is ripe for FM Phase III rollout, but is the industry ready?

Time is ripe for FM Phase III rollout, but is the industry ready?

Author | Robin Thomas | Friday, Apr 02,2010 8:22 AM

Time is ripe for FM Phase III rollout, but is the industry ready?

It’s now just a matter of time when the Government will announce its FM Phase III policies. The Phase III rollout will see the addition of another 700 FM stations to the already existing 200 private FM stations in India. Phase III is expected to fuel the growth of the Indian radio industry by allowing broadcasters to expand their footprint and offer advertisers greater reach across the country. While the time may be ripe for FM phase III rollout, there are mixed reactions from industry players on whether the industry is really ready to participate in the bidding of phase III nevertheless, it also depends on the policies which would determine whether it would be wise enough to participate in the bidding. There is another section which wants the music royalties and other issues resolved before the phase III is announced.

The Radio Investors Forum for instance had recently met the Minister for Information & Broadcasting, Ambika Soni and communicated the serious concerns facing the industry and regarding the FM Phase III policy. The statement of that meeting reads, “The Radio Investor's Forum has met with the Minister for Information & Broadcasting and communicated our serious concerns regarding the present initiative regarding Phase III of the FM policy. While supporting Phase 3 in principle, we have suggested that an independent and transparent evaluation of the business viability of the existing FM radio industry be conducted before launching the new phase. This will ensure that existing operators will continue to serve the large listening public and build positive investor response to the new proposed licences. In the absence of this evaluation and remedial measures, we will not be in a position to support the initiative of the government. The Minister appreciated the suggestion regarding an independent evaluation and directed her Secretariat to proceed on that front immediately.”

exchange4media finds out from industry players whether the industry is ready for Phase III rollout?

What they say:

According to Apurva Purohit, CEO, Radio City & President, AROI, “Frankly the FM industry has been ready for the Phase 3 policy announcement for the last 2 years! We have given our inputs, TRAI has given its recommendations more than a year and a half ago and we have been waiting for the MIB officials to move ahead ever since.”

Prashant Panday, CEO, Radio Mirchi explained, “No, the radio industry is not ready for FM phase III. The issues continue. Music Royalty is stuck exactly where it has been for several years. We are now requesting the Minister of HRD to get a special sitting of the Copyright Board for as many days continuously as needed to sort out the royalty issue before Phase III is announced. The issue raised by the Radio Investor’s Forum – extension of the license fee from 10 years to 15 years is not sorted out yet. The financial position of the entire radio industry is in a perilous state. Who is going to bid if Phase III is announced?”

Tarun Katial, CEO, Reliance Media World Limited said, “We haven’t received any communication from the ministry on phase III announcement this far and are awaiting official communication on the same. We believe that phase III will fuel the growth of this industry as it allows broadcasters to expand their footprint and offer advertisers greater reach across the country. The ability to deliver increased advertiser expectations will be significantly enhanced with the potential opening up of news, current affairs and live sports to private FM broadcasters. Similarly, music royalties, multiple frequencies and the extension of licence term from 10 to 15 years are issues that need adressal. We look forward to opportunities that phase III promises to deliver which will enable us to create more value for our clients and listeners alike.”

Harrish M. Bhatia, COO – MY FM 94.3 (Synergy Media Entertainment Ltd) noted, “The Phase III is definitely an awaited development but the industry still has a lot of issues which need to be resolved along with the licensing.”

Nisha Narayanan, Senior Vice President, Red FM stated, “With the economic downturn and certain unresolved issues, it’s not been smooth sailing for the radio industry, therefore I don’t think the FM industry is ready for Phase III, unless some of the issues we have been talking about are resolved. It is precisely to tackle these issues that the Investor’s Forum has been established where fundamental issues from an investor’s point of view are going to be taken up.”

The right time:

Purohit of Radio City observed, “There are mixed views on this from different operators. We at Radio City believe that the policy rollout needs to happen fast if the industry has to grow. Multiple frequencies and news availability will give the medium variety, depth and richness in content, which will further fuel its reach and hence its revenues. Networking will help manage costs better. If the policy keeps getting delayed the industry will stagnate.”

Panday of Radio Mirchi said, “The issues have to be sorted out first. If they are not sorted out, how will the bleeding radio industry participate?? There may be a situation that almost no one bids for the new licenses and it just puts a big blot on the privatization program of the MIB. What is today touted as a success of the MIB may also turn into a failure. It won’t take the government too long to understand the criticality of the issues on hand. We are confident the MIB will resolve all issues before Phase III is announced.”

Katial of Big FM said, “The time is most definitely right, the medium ready to usher a new revolution in entertainment...the FM Radio industry will welcome the new guidelines being proposed like allowing news and current affairs etc. But issues like extension of license term from 10 to 15 years, rationalization of music royalties are issues that need redressal.”

So, will they participate in the bidding?

Purohit said, “For us to bid for the next round of licenses we will have to carefully evaluate the business model yet again in the context of the non resolution of the music royalty issue. For successfully bidding of new licenses I certainly see music royalty as a major stumbling block.”

Panday said, “No, we will not go ahead with bidding. We simply can’t. We cannot willingly get into loss making expansions.”

Narayanan said, “We are open, but will take a final call after seeing the policy in that respect and are hopeful that some of the issues regarding royalties, etc. are addressed. It’s too early to comment on our plans right now.”

Bhatia of MY FM on the other hand said, “Only if the industry is coming together for it, but, standalone, NO.”

Music royalty continues to remain one of the stumbling block for a successful phase III or a viable radio business but, industry players are divided on phase III. There is a school of thought which believes that it will all depend on the finalized policy for phase III but, there is another school of thought which believes that unless music royalty not resolved it would not be wise to enter into phase III. However increase in FDI, allowing multiple frequencies per city, allowing news and current affairs from multiple sources, increasing the license period from the current 10 yrs to 15 yrs, concessions to North East markets, resolving the royalty issue and reduction in Prasar Bharati rentals which are some of the key issues concerning the radio industry today that needs to be resolved at the earliest to ensure viability of the industry.

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