MUMBAI: Some good news for the private FM radio players as Telecom Dispute Settlement Appellate Tribunal (Tdsat) has directed the government to firm up its views on radio broadcast policy by 4 July. In the interim, status quo prevails.
The status quo has been interpreted by the industry as not having to pay annual licence fee that gets due on 29 April for some cities like Mumbai, Delhi, Kolkata and Bangalore.
A Tdsat bench today provided this short-term reprieve for the private FM radio players on a petition filed by a group of FM radio broadcasters, including Radio Today Broadcasting, Music Broadcast Pvt Ltd and Entertainment Network who run FM stations in various cities under the brand name Red FM, Radio City and Radio Mirchi respectively.
It had been alleged in the petition that government inaction or delay on sector regulator's suggestions on radio broadcast policy was resulting in financial losses for the private players.
The government counsel today submitted before Tdsat that the information and broadcasting ministry has almost firmed up a radio broadcast policy paper, which has been circulated amongst various relevant ministries for feedback before it is taken to the cabinet for a final approval.
After this submission, Tdsat postponed the hearing to 4 July and directed the government to finalise its views on the matter by then.
Today's Tdsat development is being seen as a succor. A senior executive of a FM radio company said that the status quo mentioned by the tribunal would mean that hefty licence fee in advance for the full year would not have to be coughed up by most major players.
Annual renewal fee is calculated as the original price at which the license had been auctioned in a city plus an annual 15 per cent hike. For example, each of the Mumbai FM stations went for approximately Rs. 120 million apiece, while an original Delhi licence cost slightly over Rs. 90 million.
Industry players are alleging that the present regulatory framework of licence fee, coupled with other factors, is financially bleeding the FM ventures as ad revenues generated from the stations are not adequate to sustain the business.
A couple of closure notices in Pune and Lucknow have been also served by Radio Mirchi and Radio City.
The industry is lobbying, amongst other things, for revenue share model, akin to that prevailing in the telecom sector, and permission to attract foreign investment.
I&B minister Jaipal Reddy recently said that his ministry has taken a decision to allow 20 per cent FDI in FM radio ventures that will also include investments by FIIs. This, however, has to get a formal Cabinet nod.
The draft policy paper circulated by the ministry has suggested a complex formula to switch over to revenue share regime. The details are not yet available with Indiantelevision.com.
