Television

FM radio panel moots 26% FDI, news programming

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NEW DELHI: This could turn out to be music to the ears of the financially beleaguered private players in the FM radio sector.

 

In what may amount to radical changes (if the Indian government accepts the report that is), a task force on FM radio broadcast policy has suggested that private players be allowed to air news and current affairs programming and also attract foreign investment up to 26 per cent as per norms prevalent in the news segment of the print and electronic media.



The task force, set up by the information and broadcasting ministry under the chairmanship of Ficci secretary-general Dr Amit Mitra, has recommended a revenue sharing arrangement (annually 4 per cent) along with an entry fee for private operators in FM broadcasting instead of the fixed license fee regime and a pre-qualification round to adjudge bidders' viability.



At present, private FM radio stations are not allowed to broadcast news and current affairs programmes (except stock, weather and traffic reports) and neither can they solicit foreign investment. Only foreign financial institutions (FIIs) are allowed to make portfolio investments presently in private FM radio ventures as per the Reserve Bank of India guidelines.



The Mitra panel submitted its report to the government this morning.



Reiterating what indiantelevision.com had written in the past, I&B minister Ravi Shankar Prasad, after receiving the report from Dr Mitra, said, "Some of the suggestions of the panel if made implementable would need a green signal from the Union cabinet."



The minister also said that the government would take about a month's time to study the various recommendations of the task force that has mooted setting up of a broadcast regulatory authority too. "Pending the creation of a regulator, a non-statutory committee should be set up, which has terms and reference similar to what the Regulator would have," the panel has said. Buttressing its argument, the panel pointed out that the formal creation of stock markets regulator Securities and Exchange Board of India (SEBI) was "preceded by such a (non-statutory) committee."



Explaining the time that would be consumed by the government to take a final view on the report, I&B ministry secretary Pawan Chopra explained various recommendations and amendments suggested would need the involvement of and feedback from other ministries like home and departments of telecom and space. "This is likely to take time before the amendments to be made can be taken before the Cabinet," he added.



However, Prasad assured that it would be the government's endeavour to expedite the report as soon as possible. But it needs bearing in mind that in the past also various committees had submitted reports, including one on restructuring Doordarshan to make it financially viable, all of which have gathered dust in the I&B ministry.



Dwelling on the suggestion of revenue sharing instead of license fee model being adopted now, Dr Mitra said that initially the task force expects the government may take a hit of Rs. 500-600 million. "But in the long run, the government stands to gain from revenue sharing," he added.



The FM radio task force has suggested a cap of 26 per cent on FDI (including that on foreign debt funding, NRI and overseas corporate bodies).



In a view that can be termed divergent from that held by the government, the committee has also recommended allocation of multiple licenses in the same city, permission for networking by the same broadcaster on several stations and removal of the co-location condition for making this sector viable.



"In light of the fact that networking can significantly reduce capital expenditure and operating expenditure of a broadcast station (specially in small cities), we recommend that networking be permitted. We believe that the market mechanism will ensure differentiation of content reflecting listener's choice," the panel has observed, adding, "The number of frequencies that an entity, directly or indirectly, may hold in a particular centre, be restricted to three or 33 per cent of the total licenses available in the centre band) whichever is less."



Also, for migration to the new regime, the committee has come out with a cut-off date of 24 July, 2003, while recommending that bidders not be blacklisted for new licenses on the basis of their default in the first phase.



Making a case for release of more frequencies and/or optimum use of available frequencies, the FM radio panel has suggested that in every city, certain frequencies should be "reserved for niche channels, to be tendered separately with a low reserve fee and low revenue share percentage."



In this connection the panel has pointed out, "Such niche channels will be initially required in A+, A and B category (as per socio-economic clasification) towns.The committee also strongly urges the government to consider releasing additional frequencies to encourage such niche channels."



The government set up this committee over three months back The panel comprised Dilip Chennoy (CII), Kiran Karnik (NASCOM), radio personality Ameen Sayani , wireless adviser P.K. Garg, AIR engineer-in-chief K.M.Paul, KRP Verma, CMD of BECIL, Shardul Shroff of Amirchand Mangal Das, Ms Noreen Naqvi, DDG (prog.) in AIR and Mahua Pal, director in the I&B ministry.



The terms of reference of the panel were the following:



(i) Determining a transparent and effective bidding /auction process to be adopted for allotment of frequencies.



(ii) Assessment of a viable licensee fee structure for the various cities (one time entry fee, fixed license fees, revenue sharing etc.) to be based on clearly defined parameters.



(iii) Suggestions regarding extent of foreign equity participation in private FM in order to make them economically more viable/sustainable while also keeping in mind regimes in other sectors and requirements of national security.



(iv) Study the desirability and legal implications of making modifications in licensing regime of Phase-I licensees should a different licensing regime be proposed for phase-II.



(v) Suggestions for improvement in content being broadcast and considering the inclusion of news.



(vi) Examining the possibility of having non-commercial, non-advertisement driven channels, to be operated/licensed by the same commercial broadcasters; terms & conditions thereof; consideration of whether type of content of these channels could include subjects related to the heritage and culture of India.



(vii) Recommendations for a code of conduct in programming matters and method of strict enforcement for violations thereof.



(viii) Assessment of whether co-location is necessary and desirable and if found otherwise, approach to be adopted in the metros, where co-located set ups involving huge investments stand operationalised.



(ix) Determining the legal implications of the regime that may be proposed vis--vis the existing one.



(x) Formulating draft bidding documents and contract/license agreement.



(xi) Other matters as may be referred to the Committee from time to time.

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