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IMPACT Annv Spl: FM Phase III – opportunities & challenges

05-January-2012
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IMPACT Annv Spl: FM Phase III – opportunities & challenges

After years of persuasion and follow up, the Union Cabinet finally approved auctions for the third phase of FM radio privatisation on July 7, 2011, setting in process an economy for all stakeholders to tap.

As President of the Association of Radio Operators in India (AROI), I believe it was a well deserved and long due victory for radio operators across the country. The bleeding industry needed a new lease of life. A legislation opening new avenues for all operators to tap potential revenues came as exactly one.

With the passing of Phase III, new challenges and opportunities strike a pose to radio operators. While the Government expects to earn Rs 17.33 billion from auctioning the radio licenses, private FM radio operators have to be prepared for higher payouts as they have to aggressively bid for licenses through e-auctions.

Challenges aside, as a stakeholder in the industry, I believe that the legislation must be welcomed with open arms. Here’s listing seven most apparent prospects the policy brings…

FM Phase III Policy extends FM radio services to about 227 new cities, in addition to the present 86 cities, with a total of 839 new FM radio channels in 294 cities. Private FM radio operators needing funding for expansion can now look at attracting foreign capital. The Government has allowed the cap on foreign holding in the form of foreign direct investment (FDI) and foreign institutional investors (FII) to go up from 20 per cent to 26 per cent.

Radio operators can also carry news bulletins of All India Radio (AIR). Herein lies the prospect of an altogether new programming genre on private FM stations cropping up and reaching out to an untapped market.

Broadcast pertaining to categories like sporting events, traffic and weather, coverage of cultural events, festivals, examinations, results, admissions, career counseling, availability of employment opportunities, public announcements pertaining to civic amenities like electricity, water supply, natural calamities, health alerts, etc., as provided by the local administration is now treated as non-news and current affairs broadcast and is, therefore, permissible. This opens up the option of multiple genre of programming on radio stations, giving operators ample freedom to create unique radio content.

Limit on the ownership of channels at the national level allocated to an entity has been retained at 15 per cent. However, channels allotted in Jammu & Kashmir, the North Eastern states and island territories will be allowed over and above the 15 per cent national limit to incentivise the bidding for channels in such areas. This again paves the way for operators to experiment with broadcasting in the comparatively remote areas whose potential for listenership remains huge.

The Phase III policy results in coverage of all cities with a population of 100,000 and above with private FM radio channels – the benefits of which lie potent for all radio operators to reap.

The revised fee structure is now applicable for a period of three years from the date of issuance of guidelines to the existing operators in areas like Jammu and Kashmir and North Eastern states. This presents them with the power to effectively compete with the new operators and stay afloat in the very competitive radio market.

Prasar Bharati infrastructure will soon be made available at half the lease rentals for similar category cities in such areas, giving radio operators another outlet to minimise costs and maximise productivity.

In an ever changing world, the only constant remains change. With Phase III policy out, it is time for radio operators to grab the opportunities and prospects the new legislation brings and paint the picture of a prosperous and progressive radio industry.

(Anurradha Prasad is President, AROI and Chairperson & Managing Director, B.A.G. Network.)

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