FM radio: Just 5 days into e-auctions, govt witnesses bidding worth Rs 714 crore

Centre had pegged revenue generation from the entire auction at Rs 550 crore.

In what has left the information and broadcasting ministry a tad surprised, 80 radio channels in 55 cities across the country have ended up attracting bids worth Rs 714 crore against their aggregate reserve price of around Rs 391 crore within just five days of the Private FM Radio Phase 3 e-auction.

Enthused with the kind of bidding that is happening, the government — top sources in the I&B ministry told The Indian Express — was going to go the full distance on this auction and was in no hurry to bring down the curtains on it.

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Significantly, the Union cabinet, while clearing this e-auction in January this year, had pegged the revenue generation from the entire auction at Rs 550 crore. While that projection has already been surpassed, with a scramble for radio channels in metros and bigger cities, what is interesting is that as many as 55 channels in 14 cities have not received any bids so far.

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The kind of bids that have been received for radio channels in some cities are way higher than their reserve prices and have already sparked off a discussion in government circles on whether the reserve prices should have been kept a bit higher.

Consider these:

1. The single radio channel up for grabs in Delhi had a reserve price of Rs 31.42 crore. By the end of the fifth day of auctioning on Friday, the channel had received a bid worth Rs 105.23 crore.

2. In Mumbai, a bid worth Rs 82.72 crore has already been received against a reserve price of Rs 35.20 crore.

3. A radio channel in Bengaluru, against a reserve price of Rs 21.60 crore, has already received a bid worth Rs 54.58 crore.

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4. In Ahmedabad, a bid worth Rs 30.33 crore has been received for a channel against a reserve price of Rs 12 crore.

5. A channel in Pune has received a bid worth Rs 31.49 crore against a reserve price of Rs 14 crore. In Chennai, a bid worth Rs 29.82 crore has been received against a reserve price of Rs 12.27 crore. Having a reserve price of Rs 5.13 crore, a channel in Patna has already received a bid worth Rs 11.99 crore.

“We did not anticipate this kind of bidding to happen. At this rate, the revenue that can be generated from this auction will only go up and we are in no hurry to bring the auction to a close. We would want to generate as much revenue for the exchequer as possible from this e-auction,” an information and broadcasting ministry source said.

As per the auction guidelines, the e-auction will end only when “there is no bid submitted by any of the bidders for any channel in any city”. Also, the auction will end when the Auction Activity level is 100 per cent.

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“Currently we are operating at an auction activity level of 80 per cent. Once we raise this level to 90 per cent, bidders will want to utilise the points they have been allocated to bid more aggressively for either the same channels they have already bid for or for newer channels in newer cities. In order to utilise their points, the bidders will have to further scale up their bids once the auction activity level is raised to 100 per cent,” an official explained.

All bidders have been allocated points based on the basis of the Earnest Money Deposit they have made to participate in the auction and the government is hopeful that in a bid to utilise their points satisfactorily, they will want to bid more aggressively once the activity levels are raised.