Even as markets continue to remain jittery on weak global cues,a 100-day countdown has begun for the radio firms,including ENIL (Radio Mirchi),RBNL (Big FM),MBPL (Radio City) and South Asia FM,to mobilise around R1,000 crore to bid in the first round of e-auction for the third phase of FM radio expansion (FM-III). It is learnt that at least 40 channels in top 30 towns will go for e-auctions in the first round,along with 33 stations in Jammu and Kashmir and the North-East. The first batch of stations will be in those towns which are already exposed to private FM radio services. Therefore,they are expected to see stiff competition between radio firms,resulting in cost escalation. This is because the FM-III policy allows operators to own more than one station in a town. According to the calculations made by some radio consultants,the 40 stations in metros and major towns are expected to push the collective cost of FM-III licence to around R800-R1,000 crore. This is also because of the high minimum reserve price for these 40 stations,which fall in the A+,A and B category towns under the FM-III policy. If realised,this would not only exceed the governments expectations by almost 150 per cent but would virtually double the cost of FM licences in key cities,including Delhi,Mumbai,Hyderabad,Bangalore,Nagpur and Pune. According to officials in the Information and Broadcasting (I&B) Ministry,the process is on for putting in place the mechanisms to conduct the e-auction. The Union Cabinet had recently approved the FM-III policy under which 839 FM stations across 294 towns will be auctioned. The auctions should take place by year-end, Ambika Soni,I&B minister told FE. By October,the I&B ministry is likely to issue a notice inviting applications for participation in the auction and by December or January next year the e-auctions will be conducted by an independent agency under the governments supervision. Auction shall be conducted by an independent expert agency and the process is on to obtain the necessary clearances. The finer aspects of FM-III e-auctions will be supervised by at least three government committees, a government official said. The I&B ministry is also expected to issue a detailed information memorandum by September which will offer information to the prospective bidders to participate,and also indicating the cities to be taken up in each batch also with their respective reserve prices,sources said. But with weak markets and practical difficulties in raising money for radio business,financing the FM-III expansion of leading radio firms would be a challenge,experts tracking the radio sector said. Every existing FM operators wants another stations in Mumbai and Delhi among A+ towns and Bengaluru,Hyderabad,Lucknow and Pune in the A category towns,therefore they will go all out,which could virtually double the license cost in these cities, said a senior media consultant who is advising some of the leading FM operators on FM-III bidding.
