The auctioning of new FM radio licences has hit another wrong frequency. The Information and Broadcasting Ministry sources say the Phase 3 auctions may now only begin by end of August.
For radio stations keen on tuning into newer towns, this comes as another setback to their expansion plans.
According to an I&B Ministry source, a new post of Joint Secretary is being created to handle digitisation and FM phase 3 licensing. "This has been agreed by the Department of Expenditure and is going to Cabinet for approval," said the source.
Already, the FM radio expansion plan has run into many delays. The Union Cabinet had approved the proposal for granting new FM radio licences to private players in July 2011, and said the process would be completed before the end of this fiscal. Later, it got postponed to April 2012.
The repeated delay of the auction process has turned many radio players wary of the entire process.
Mr Harrish Bhatia, CEO, MY FM, says: "For the last six years, we have been waiting for Phase 3, while the Government has not moved an inch. I don't know where we are heading, there are far too many ambiguities."
Radio One, a joint venture between Mid Day Multimedia and BBC Worldwide, had been hoping to expand into three more cities – Hyderabad, Chandigarh and either Allahabad or Kochi – through phase 3 auction.
Currently they are present in seven cities.
It was banking on increasing its ad revenue through expansions.
"Three per cent of total media advertising revenue comes from radio. The auction could mean taking this figure to 7-8 per cent," said Mr Vineet Singh Hukmani, MD, Radio One.
92.7 Big FM, which is present across 45 cities, is another interested player.
"Whichever cities we missed in phase 2 will be targeted this time round. Ahmadabad, Pune, Jaipur and southern markets, is what we are eyeing," said Mr Rabe T. Iyer, Business Head, 92.7 Big FM.
According to estimates put out by a FICCI-KPMG, Media and Entertainment report 2012, the radio industry is expected to grow at 16 per cent CAGR till Phase 3 stations start operations. Post Phase 3, the industry is expected to grow at a CAGR of 22 per cent.
Correspondingly, radio's share of media ad spends is expected to increase from around four per cent currently to five per cent in 2016.
The report puts the expected post bidding capital requirement of the industry at Rs 750-1,100 crore and pegs the Government earning from the auction at Rs 1,683 crore.
Once Phase 3 kicks in, FM services are expected to reach another 227 new cities, in addition to the present 86 cities.