Friday, July 01, 2005

Govt allows FDI in private FM radio; says no to news

Friday July 1 2005 00:00 IST
NEW DELHI: Launching a major expansion programme for private FM radio services, the government allowed 20 per cent foreign direct investment in the sector on Thursday and decided on a revenue share regime against the existing licence fee structure to allow a total of 330 stations in 90 cities.
The Union Cabinet, which met here to thrash out the policy framework for the second phase of FM radio licensing, however, decided to continue the ban on news and current affairs.
"Time has come for revival of radio in the country and the government has planned a huge expansion of the private FM radio network which will lead to generation of employment and opportunities and encourage talent," Information and Broadcasting Minister S Jaipal Reddy told reporters here.
"Even as we have decided to allow FDI at the existing 20 per cent cap for FIIS, OCBs and NRIs, there will be no news permitted on private FM channels under the present regime," the Minister said.
The licence fee regime adopted in the first phase proved to be disastrous for the growth of FM radio sector where of the 108 frequencies put on bid, only 21 were operational, two of which have also given notice to close down.
Reddy said the operators will now have to shell four per cent of their revenue as annual licence fee, adding that existing operators will also be allowed to migrate to the new regime and there "would be no black-listing" of any player.
Bidding for the second phase will start in about a month's time, he said, observing that "the government has not looked at the revenue aspect at all" while framing the new policy. "The idea is to encourage expansion of radio in the private sector," he said.
Asked about broadcast of news and current affairs, he said, "We have not looked at this aspect at all... I am not saying no... Actually I have not taken a decision on this aspect as several issues have to be looked into before taking a view."
Reddy said in framing the new policy, the government had accepted most of the recommendations of the radio broadcast policy committee under the chairmanship of FICCI's Amit Mitra as well as that of broadcast regulator TRAI.
He said in the second phase, the cities would be divided into four broad categories -- A, B, C and D -- starting from the metros and flowing down to the smaller ones.
The number of operators in the a category (metros) will be restricted to about 10-11 players while in B cities it will be six, four in C and two in D towns.
"The new players will have to pay a one-time entry fee through close bidding process, and each successful bidder will pay as per his bid amount," Reddy said, explaining the manner in which the second phase licences will be awarded.
Existing operators will have to pay the average bid amount of new players.
"The government will not black-list any player on the basis of ongoing litigation in various courts... We will allow everyone to participate in the new bidding process," he added.
Observing that competition will be a key element under the new regime, Reddy said "no private radio can only run on film music. They have to generate their own content to survive."
Reddy said the government plans to set up a quasi-judicial regulatory authority to deal with disputes, pending which the ministry will have regulatory powers.

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