Friday, May 03, 2013

High reserve fee to make FM e-auction unviable, Radio Mirchi CEO says

The radio industry has raised concerns over the new FM phase III policy, saying that ascending e-auction and high reserve fee would make the process financially unviable and kill content plurality. The stakeholders have also objected to the news and current affairs policy, which restricts buying news only from All India Radio.

While stakeholders agree that e-auction brings in transparency and ascending e-auctions may be a useful policy for spectrum and coal mine allotment, there are misgivings that the same process may be detrimental for media. "The radio industry prefers e-tendering methodology so players can take a shot at the bid depending on their own programming format and business model," said Prashant Pandey, chief executive, Radio Mirchi. 

Industry stakeholders pointed out that the ascending e-auction was adopted in 2000 and only 22 of the 120 frequencies were taken, while e-tendering done in phase II was far more successful with 245 of the 350-odd licences being taken in 2006. 

Radio channel heads say that the method of phase III auction was in contradiction with Trai's observations that there should be more variety in content on radio. The industry has also on several occasions raised the issue of high reserve price especially, following the 3G auction debacle. 

Sources said the reserve price that has been fixed is too high and will make 60% of the 839 licences financially unviable. "The government has already seen how a high reserve price completely killed the telecom sector and we fear the same could happen with radio as well," a radio channel head said. The reserve price has been fixed at the highest bid received from that city or area in 2006 during the phase II auction. 

The industry is concerned by the fact that the auction is being conducted in conditions of scarcity. "The government has not implemented Trai's recommendation of reducing space between channels to allow more channels in each market. This would give the public different kinds of content in established markets because Delhi for instance can have 18 radio channels instead of the current 9 and make it financially viable for the radio stations," a source said.