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20 per cent FDI not a great leap for radio, say industry leaders

25-April-2005
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20 per cent FDI not a great leap for radio, say industry leaders

As the Information and Broadcasting Ministry is working on allowing a 20 per cent FDI in the private FM space, the ban in news and current affairs programmes still stays.

Said Prashant Pandey, COO, Radio Mirchi, "The Ministry is yet to formalise the policy package for private FM radio. While there have been promises of 20 per cent FDI, the policy package is yet to be approved by the cabinet and the various ministries. The 20 per cent FDI is a welcome move because it would allow us to raise more money for ourselves, but the crux of the issue was never investment. It is not investment that would sustain the private FM space, but revenue. If it is not a profitable venture, why would any foreign investor consider it seriously? Plus, there are still miles to go before the actual implementation begins."

Pandey added, "In the fast-paced world of today, more and more people consume news while they are on the move. It makes sense for radio stations to deliver news on politics and current affairs because there is a market for it. Why should current affairs be the prerogative of only the government-owned radio station?"

Meanwhile, Sumantra Dutta, former CEO of Radio City, asserted that 20 per cent FDI still falls short of the 26 per cent that is allowed in other sectors. He said, "FM stations were angling for a 26 per cent FDI cut, as is allowed in all the other sectors. Why should radio be singled out? The policy per say, has not yet been implemented and it has to get approval from the cabinet. There is no fixed time frame given for the entire process. S Jaipal Reddy has stated in a public forum that the ministry is in favour of a revenue sharing structure for the radio industry, but it does not signify what kind of a revenue sharing settlement it would be. Again, there is no mention of when the new policy would come into play."

Dutta said, "The ban on news and current affairs is not a logical one. Having pioneered the cause of private FM in the country, I feel that players in this space ought to be given the choice of putting across a plethora of offerings which they deem fit. Why not news? Radio is perhaps, the best local medium and it could provide cutting edge localised news."

Shariq Patel, Station Head, Go 92.5, said that he would like to know, exactly by when the new policy comes into play. He said, "Under the present system, Foreign Institutional Investment (FII) up to 20 per cent of the equity capital is allowed in any private FM radio company, while FDI is not permitted. Sure, a 20 per cent FDI cut is good enough. After all something is better than nothing. But when can we expect implementation? The policy is yet to be approved by the cabinet. It's still doing rounds on various fronts."

As for the ban on news and current affairs, Patel said, "It's illogical. We need to ensure more of choices for the masses by making varied content possible. That's the day when private FM would come on its own."

Dutta said that it's only with Phase 2, the radio revolution would begin in this country. With more stations being set up, the government ought to ensure that no other technical obligations ought to hamper the growth of FM players such as co-allocation of towers. After all, a few lessons ought to be learnt from Phase 1, which has shown that limited availability of resources in this arena has delayed the process of starting stations.

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