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Govt. mulls revenue share for 2nd round of FM licences

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By Team Posted on : 21 Apr 2003 08:30 pm

NEW DELHI: The government is contemplating going in for revenue sharing with the licence holders of the second round of licences for FM radio.
The process of second round of licences is likely to begin post July by when the government expects the first round of licencees would have started their operations in various part of the country.

According to a senior information and broadcasting ministry official, the second round of FM radio licences would be given out after the process is initiated post July, by when other aspects of the licensing would also be finalised.

The official also indicated that if the government goes in for revenue sharing during the second round of licencing, a migration package, a la telecom, would be devised for the existing players too.

Licence holders, including MBPL-Star, Radio Mirchi from the Times group and Radio Today from the India Today Group are expected to start their operation in Delhi soon

In recent times the private radio FM players have been grumbling that the losses have been increasing, owing to high licence fee (given out after an open auction) and low revenues.

Radio City chief Sumantra Dutta had told several months back that if the losses keep mounting then its associate, MBPL, may have to give up the licence in cities like Lucknow, Prime Minister's Vajpayee's consituency. Radio City had paid Rs 750 million towards the license fee and the station doesn't make more than Rs 1 million per month.

Meanwhile, the private FM radio stations submitted their balance sheets to India's information & broadcasting ministry on 16 April and, according to government sources, the industry has reported a combined loss of Rs 1.2 billion against revenues of Rs 0.5 million.

The industry had made a presentation to the I&B minister Ravi Shankar Prasad in the first week of this month. In their presentation, the industry had advocated for shifting towards a revenue sharing model and relaxation on license fee payment. The industry had claimed that the revenues are not adequate and hence, the high license fee is not justified. The ministry had asked them to present their financial reports in two weeks time to support their cause.

The FM players are required to submit the license fee for the second year by the 30 April. If the ministry fails to come to a mutual agreement with the private FM industry on time, the industry had pointed out that some of the smaller players may have to shut down operations very soon.

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