Sunday, July 03, 2005

CII applauds government for FM Radio reforms

New Delhi: The Confederation of Indian Industry has applauded the Government’s decision to move to a revenue sharing model for the country’s FM radio sector. CII believes that this decision coupled with bidding for 330 new FM radio licences and 20 percent FDI in FM radio sector would usher in a new era for radio across the country.

Appreciating the efforts of the Information and Broadcasting Minister Jaipal Reddy in bringing this much needed second phase FM radio reforms, CII said that migrating to revenue sharing model and new licences would spread FM radio growth and activate private players to invest into the sector. In the new regime the FM radio operators would have to shell out four percent percent of their revenue as annual licence fees and this decision would prevent FM radio stations from closing down. Currently, there are 21 private FM stations in 12 cities and most of them are in red in view of the high license fee.

The Government’s fresh radio package would energise the expansion of FM radio in the country. We appreciate the regulatory corrections which would result in more growth, more revenue, new employment across the country,” said CII.

At the same time, CII feels that news and current affairs should also be allowed in the FM Radio in the country, keeping up with the changes happening in the media sector.

Speaking at FICCI-Frames 2005 last week, Jaipal Reddy said more than 300 private radio stations could be permitted under a more liberal policy package that the government was considering. He said the emphasis of the new package would be on growth and not revenue.

The government in 2004 had requested the TRAI to recommend and assist in formulating radio policies and it had on its part floated several consultation papers.

In all its recommendations, the TRAI’s intention is to rationalise the license fee structure to bring about a revolution in radio broadcasting. Ambar Basu, Chief Financial Officer, Radio City, said, “There is a wonderful opportunity waiting for the industry and we are very hopeful because this time the minister has been clear about addressing issues of the industry.”

PwC said the radio industry was set to boom after regulatory corrections, which were expected soon.

Reeling under a license fee regime, radio stations such as Radio City Lucknow, Radio Mirchi Pune and Win 94.6 Mumbai closed down in 2004 due to mounting losses. Out of the 40 cities that bid in May 2000, a total of 21 stations in 12 cities remain and all of them are in the red, according to a PricewaterhouseCoopers (PwC) study on the Indian entertainment industry.

Figures released by the Telecom Regulatory Authority of India (TRAI) indicate that FM radio suffered a loss of Rs. 122 crores in 2003-04 against a loss of Rs. 118 crores in the previous year.