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FM cos seek extension of licence term by 5 yrs
NEW DELHI: The country’s private FM radio operators on Wednesday urged the government for a “rescue package” that entails a five-year extension to their licence periods, saying it was vital for the viability of the fledgling sector and ultimately for the exchequer.

The sector has been weighed down by hefty losses, caused partly by high start-up costs, and has only six years left of the original 10-year licence period to recoup capital expenditure.

An extension of the licence period to 15 years would make the FM business, which has accumulated losses of more than Rs 2,400 crore, viable and ultimately also make a success of the proposed Phase III FM Radio Broadcasting Policy, which is currently being formulated by the government and likely to be discussed by the Cabinet. “FM radio, which reaches one-third of all Indians at no cost, has the potential to be India’s most successful media story,” said Vineet Jain, managing director of the Times of India Group, which runs the Radio Mirchi FM radio station.

“While the private sector has done all that was possible to invest in and grow the sector, it is now time for the government to urgently step in and make some policy corrections to ensure the viability and indeed the very survival of this infant industry. The logical thing to do would be an extension of the licence period to 15 years,” he added. A statement issued by FM radio owners/promoters noted that there had been reports that current policy proposals, due for discussion by the Cabinet, had so far ignored the issue of the licence period extension and it was causing “serious worry” among owners, who are beginning to feel that the radio business is one-sided in which the government makes money while businesses bleed.

The owner/promoter group offered to share the financials of the industry, including proof of accumulated losses, with the government, in a bid to show how there was little chance of getting any return on capital in the remaining six years of the licence period.

The industry feels that a quick decision on an extension will ensure the success of the Phase III FM Radio Broadcasting Policy, and ultimately encourage private players to bid for radio licences. However, without an extension, current owners of radio stations were likely to stay away from bidding, their precarious financial situation scaring off new players in the process.

“I believe that if the situation is not rectified speedily, then a number of players will stop investing in their stations and give up licences. This will have an adverse effect on Phase III licensing, much to the detriment of the listening public,” said Mid-Day Multimedia managing director Tariq Ansari.

Government’s interventions into policy to ensure viability of private players in industry sectors are not new. In the past too, the government has modified policies to revive ailing sectors and the mobile phone sector is one notable example. “At this point, the government must take a positive stance in this matter or else there might be no medium left to speak for,” said Pawan Agarwal, director of DB Corp.

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