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Radio Operators contemplate no bidding in Phase 3 unless MIB addresses core issues

10-June-2009
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Radio Operators contemplate no bidding in Phase 3 unless MIB addresses core issues

The Association of Radio Operators in India (AROI) has tabled its issues with the Ministry of Information & Broadcasting (MIB) over the last three months stating categorically that unless various issues such as music royalty cost, cost of renting Prasar Bharti infrastructure and so on, that are challenging the growth of the radio FM industry are not addressed, the key operators would not bid for the Phase 3 of radio FM licenses. The FM players have reiterated this positioning.

Come clean on music royalty says AROI:

Apurva Purohit, CEO Radio City and President AROI said that Phase-III auction will be a non-starter unless the ongoing music royalty row is solved, and either economic environment becomes more conducive or the government takes steps to help the fledgling FM industry.

Uday Chawla, Secretary General, AROI, confirmed that existing private operators have officially taken a position of not participating in Phase III, unless certain basic anomalies are resolved. He said, “The fledgling and nascent private FM radio industry owes its existence to the initiative of the MIB to create a unique example of encouraging private enterprise to build an industry, which internationally has proven to be a major source of news and entertainment, besides providing tremendous employment opportunities.”

The AROI officials explained that the private FM radio industry contributed over Rs 100 crore per annum to the government through license fee payments and rentals. To achieve these results, the industry has invested heavily, by way of license bids or one-time entry fee (OTEF) of Rs 1180 crore and further capital expenditure of around Rs 750 crore, to set up new radio stations. Several companies have raised debt to fund this heavy investment.

Chawla explained, “High music royalty continues to be an impediment to short term survival and long term potential of private FM industry. Combined with the government stand to not allow news and current affairs, there is no way out till a reasonable solution is reached. The limit of 10-year period of license has also proved to be commercially unviable.”

Industry Says

Prashant Panday, CEO, Radio Mirchi, stated, “We believe that the issues of music royalty cost should get sorted out before the auctions happen. Nevertheless, we are in favour of FM phase III and its other recommendations.”

Amritendu Roy, Business Head, Friends FM observed, “We are a member of AROI and we stand by whatever the AROI has proposed. If it is refusing to participate in the FM phase III bidding, so be it. However, if the government pays no heed to the proposal and goes ahead with the phase III policy, then we would definitely see what we can do next.”

Dilip Dugar, Vice-President, Radio Misty noted, “We have not received any official statement from AROI on this but we are a part of the AROI, and we will participate in the FM phase III bidding. Music royalty is a big issue and should be sorted out at the soonest so that the Indian radio industry grows.”

While the MIB has been “cooperative” in trying to resolve the royalty issue, the matter is subjudice under Copyright Board, which comes under the preview of Ministry of HRD. There is an expectation in both radio and music that the Board will be able to find a reasonable solution within three months.

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