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FM operators seek 5-year extension of radio licence
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Under pressure from investors and promoters over mounting financial losses, several radio companies have asked the government to extend their existing 10-year radio licences (2006 to 2015) by another five years (till 2020) before announcing the policy for the third-phase of private FM radio broadcasting (FM-III).

The combined loss for the 250 operational FM radio stations is said to be over Rs 500 crore in the last four years alone. Extending the licensing period by five years, according to radio broadcasters, will help them get higher valuation for their businesses from investors, who otherwise are not willing to put in money due to growing financial losses.

The government plans to auction around 800 FM radio frequencies (each frequency is equivalent of one FM radio channel) in the FM-III policy, which is expected to be announced in January 2010, according to government sources.

Currently, around 40 radio companies hold licences for operating FM radio stations in the country. These operators bagged the licences in 2006 after an auctioning process, collectively paying around Rs 1,300 crore as ‘one-time entry fees’ (OTEF).

However, with only six years remaining before their licences expire and most radio broadcasters facing losses, extending the licence-period may provide some relief, sources in the radio industry say.“Once the OTEF is amortised to over 15 years instead of 10 years now, the radio industry will become lucrative for investment due to the increased time-based valuation,” says Vineet Singh Hukmani, MD, Radio Mid-Day (West) India, that operates its FM radio service under the brand name of RadioOne 94.3 FM.

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