Sunday, January 08, 2006

FM Radio set for massive expansion

NEW DELHI, JAN 8 (PTI)The second phase of licensing for private FM radio has struck the right note with aggressive bidding by companies, promising over Rs 500 crore to the government in just the first round and a whole new world of variety in entertainment for the public.The government, which on Friday put on block 64 of the 338 frequencies it plans to sell in this phase, was in for a pleasant surprise as many of the players bid ambitiously for capturing airwaves in 13 top cities of the country, including Delhi, Mumbai, Bangalore, Chennai and Kolkata.And what's more, the aggressive bidding promises a good response to the four remaining rounds of bidding left, which will see the government selling stations in places like Agra, Bhopal, Jamshedpur, Varanasi, Ajmer, Aligarh, Chandigarh, Jammu, Patiala, Jodhpur, Shimla, Panaji, Kohima and Hissar.Not only did incumbents like Entertainment Network, Music Broadcast Pvt Ltd (MBPL) and Radio Mid-Day ensure entry into newer cities in this round, new ones like Anil Ambani-backed Adlabs and HT Music and Entertainment also jumped in, hoping to have a sizeable presence in the radio industry believed by many to be expanding on the lines of the telecom revolution.But what may come as a concern to some is the fact that many players bid as much as 2-3 times more than what was bid for the same cities in the first phase of licensing.However, industry players and experts strike down this concern and say the revenue share regime on a ten-year license, in contrast to the annual license fee structure in the first phase which proved disastrous for the government as well as the companies, will ensure that all stay afloat."It is a win-win deal for all -- the government, broadcasters, public as well as advertisers," Sunil Kumar, who runs a radio consultancy firm Big River Radio, told PTI. Kumar's company conducted a study before the start of the second round and has forecasted that government is likely to collect Rs 1,350 crore as One Time Entry Fee for the licenses for all 338 FM radio stations it plans to sell in 91 cities.Asked whether he felt the bidders engaged in overbidding following the optimism in the new regulatory set-up, he said this was not the case. "I feel a majority of them bid as per a business plan. And many of the players like Rajasthan Patrika had regional markets to protect," he said.Kumar said the presence of a large number of players within the same city would mean more choice for the customers and also emergence of niche programming.The optimism is difficult to miss going by the way incumbents like ENIL, which runs services under 'Radio Mirchi' brand, went about. The Times Group company, which runs FM services in Delhi, Mumbai, Kolkata, Chennai, Ahmedabad, Pune and Indore, is among the successful bidders in Bangalore, Hyderabad, Jaipur, Lucknow, Kanpur, Nagpur and Surat."We are on a great high and have bid after 12-14 months of research," Radio Mirchi CEO A P Parigi said.Asked whether the aggressive bidding could again lead to losses for companies, especially new entrants, he said: "The bidding looks rational. We hope the players have submitted them (bids) after studying the industry dynamics well.On the other hand, MBPL which runs services under 'Radio City' brand in Mumbai, Bangalore, Delhi and Lucknow, has won seven more licences in Hyderabad, Chennai, Ahmedabad, Jaipur, Nagpur, Pune and Surat. "I am thrilled with the results of the bidding process. We are already established as a long-term consistent player in four cities that we operate in. This will help us further consolidate our position as the leaders in the radio space in India," Radio City CEO Apurva Purohit said.Radio Mid-Day, in which BBC recently purchased a stake, was among the top bidders for Delhi (Rs 31.40 crore), Chennai (Rs 12.20 crore), Kolkata (Rs 3.21 crore), Ahmedabad (Rs 5.12 crore), Bangalore (Rs 15.42 crore) and Pune (5.4 c rore).Among the new players, who in no way can be dismissed as insignificant given their deep pockets and wide experience, HT Music and Entertainment is all set to hit the airwaves in Delhi, Kolkata, Mumbai and Bangalore while Adlabs in Delhi, Mumbai, Kolkata, Chennai, Hyderabad Kanpur and Bangalore.Adlabs' Rajesh Sawhney said the high bids were not much of a concern. "We were solely guided by our business plans," he pointed out.Other players who are on way to hit the air waves include the Bhaskar Group, Muthoot Finance, Kal Radio, Rajasthan Patrika and India Today group's Radio Today, which recently sold its 'Red FM' brand to a consortium that included NDTV.According to Big River Radio's Kumar, radio advertising is currently worth Rs 240 crore, which is projected to grow to a whopping Rs 1,300 crore over the next 2-3 years."In fact, advertising spend on radio is currently below two per cent of the total spend while globally the average is about 6-8 per cent," he adds.

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