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FM radio: Govt fixes net worth norm

14-July-2005
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FM radio: Govt fixes net worth norm

The Government has notified the policy for the second phase of FM radio privatisation wherein it has prescribed a minimum net worth requirement of Rs 50 lakh to 10 crore for companies bidding for licences for different centres.

For those bidding for D category centres, the net worth requirement has been pegged at Rs 50 lakh, while those bidding for C, B, A and all centres would be required to have a net worth of Rs 1 crore, Rs 2 crore, Rs 3 crore and Rs 10 crore respectively.

Permission will be granted on the basis of the One-Time Entry Fees (OTEF) quoted by the bidders through a closed tender system. The process of granting permission for new participants under phase 2 shall consist of two rounds. The first round will be for pre-qualification, and only applicants qualifying would move to the next round for making financial bids for specific channels in different cities.

Licensees of phase-I, who have actually operationalised their channels, will be given the option to migrate to the phase 2 policy regime. They will have to exercise their initial option to automatically migrate to the phase 2 policy regime in accordance with the terms and conditions of migration or continue under phase 1 or surrender their licences with one month's notice.

Also, only companies registered under the Indian Companies Act, 1956 will be eligible for bidding and obtaining permission for FM radio channels. However, subsidiaries of the applicant company, companies with same management, companies of the same group or inter-connected companies, religious and political bodies, advertising agencies and trusts, societies and non-profit organisations controlled will not be eligible.

The annual fee has been fixed at 4 per cent of the gross revenue, for the year, or 10 per cent of the reserve OTEF limit for the concerned city, whichever is higher.

Every applicant will be allowed to run only one channel per city provided the total number of channels allocated to the entity is within the overall ceiling of 15 per cent of all allocated channels in the country.

No news and current affairs programs are permitted under the policy (phase-II). Radio operators will also not be allowed to outsource any long-term production or procurement arrangement. Not more than 25 per cent of the total content can be outsourced to a single content-provider.

An entity will be permitted to network its channels only in C and D category cities within a region alone, and no two entities shall be permitted to network any of their channels in any category of cities.

It has been made mandatory for all phase 2 operators to co-locate the transmission facilities in all 90 cities. In 81 cities, the facilities will be co-located on the existing AIR/DD towers, while in the remaining nine cities, new towers will be constructed by the Ministry, through Broadcast Engineering Consultants India Ltd for the purpose.

Keeping in view the litigation generated in phase 1 and the need to encourage maximum number of bidders to take part in phase 2, the Government has decided to revoke the letters of intent of the defaulting participants of phase 1, who failed to operationalise their channels while granting them certain concessions in the phase 1 policy regime.

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