[HCDX] FM RADIO SET TO EXPLODE AS BIDDING ENDS

[Mukesh Kumar <thecosmosclub@xxxxxxxxxxx>]

[Sunday, February 05, 2006 TIMES NEWS NETWORK ]

NEW DELHI: Friday has seen the conclusion of a massive
dose of deregulation seldom seen anywhere in the
world, where mass entertainment in the shape of
private FM radio will be able to cover 350-400 million
people in the months ahead. 

The phase-II policy, which plans to allow private FM
in 91 towns and a total of 338 frequencies via
auction, resulted in 304 frequencies in almost all
these cities being won by private companies after more
than a month of hectic bidding. 

This process has attracted interest from all and
sundry. As the bidding progressed, it became apparent
that several non-media companies in addition to almost
all serious print and TV players from India as well as
many international radio operators were participating.


Apart from incumbents Radio Mirchi (a Times Group
company), Radio City (earlier part of Star group; now
held by GW Capital), Red FM (till recently an India
Today group company), Suryan (a Sun TV group firm), Go
FM (Mid-day), Win FM (independent), Aamar and Power FM
(both independent, but operated by Measat) many media
biggies participated as well Zee, Reliance, India
Today, Rajasthan Patrika, Dainik Bhaskar, Malayala
Manorama, Mathrubhoomi, Dainik Jagran, Hindustan
Times, Daily Thanthi, Jaya TV, Bag Films, Kumudam. The
bids also drew interest from big and small non-media
players like Muthoot Finance, Indigo (a Rajeev
Chandrashekhar company), some builders, and other
assorted players. 

HT with 4 stations (Delhi, Mumbai, Kolkata and
Bangalore), Mid-day with six wins (Chennai, Bangalore,
Delhi, Kolkata, Ahmedabad and Pune in addition to
their existing Mumbai) and India Today with seven
stations (three big ones Delhi, Mumbai, Kolkata and
four smaller ones) appear to have taken this route. 

Beyond this, regional newspaper groups have also
entered the fray Bhaskar has been the most aggressive,
winning 17 stations (two in Gujarat, five in
Rajasthan, three in Punjab, six in MP and Chhatisgarh
and one in Maharashtra) followed by Dainik Jagran with
eight wins (four in UP, three in Haryana, Punjab and
one in Bihar), Daily Thanthi (six in Tamil Nadu),
Malayala Manorama (four in Kerala) and Mathrubhoomi
(four in Kerala). 

Rajasthan Patrika appears to have lost out in
Rajasthan (only three wins) but has gained a foothold
in Raipur. TV companies expanding into radio include
Zee (eight wins) and Asianet (two in Kerala). 

Others like Bag Films (10 wins), Century (six),
Positive (four), and a multitude of smaller bidders
appear to have not followed any particular strategy.
What these players will do now remains to be seen. 

The amount of money that the bidders have paid to the
government would make the TV and print industry sit up
and take note. As much as Rs 1,100 crore has been paid
for the licenses. 

Sun TV (Rs 200 crore), Reliance (Rs 171 crore), Radio
Mirchi (Rs 212 crore), Radio City (Rs 124 crore),
Mid-day (Rs 97 crore), Bhaskar (Rs 51 crore) and
Hindustan Times (Rs 75 crore) are the big spenders in
phase-II and account for 85% of the total Rs 1,100
crore that the government has collected in phase-II. 

So where does the industry go from here? The process
of getting this mega exercise off the ground right
from project design and funds to project completion
and launch is expected to take anywhere from 6 months
to 18 months. The first of the new stations should be
on air by January 2007 as per some government
estimates. 

The key question that remains to be answered is
whether broadcasters will in reality launch their
operations and whether there is enough money to be
made in the business. Radio currently gets only 3% of
the overall advertising space. 

While the worldwide average for radio is 8.7%, how
much radio pulls, depends on how much privatisation
there is in a country and how aggressively its players
are able to promote themselves. 

Radio in countries like Philippines and Sri Lanka have
up to 10-12% shares and so it remains to be seen where
India will eventually settle. While phase II has
ensured widespread participation by private players,
what they do will determine how the industry grows. 

For the listener, there is now a good chance that
there will be more music choice available. 

With the biggest bug bear license fees now corrected,
nothing stops players from offering different types of
music English, old-music, dance-music, local language
music- should all become possible now. How much of
this actually translates to reality remains to be
seen. 

What are the remaining pieces of this saga? The
government still needs to work on a few issues. Since
one player is not allowed multiple channels in one
market, specialty channels/niche music formats become
difficult and hence there is lower profitability for
the entire industry. 

Multiple channels is the way media works anywhere look
at TV where 8-10 TV groups operate a bulk of the 100+
TV channels available in this country today. 

Then there is the question of tradeability of licenses
current prohibited for the first five years. Without
tradeability, there is no exit mechanism for winners.
Not allowing news and current affairs also looks out
of place in the current environment. 

All in all, however, these policy glitches can be
sorted out if the same spirit of pro-active
collaboration which went into the making of the FM
Phase II policy, persists. The policy corrected many
wrongs of the previous regime which had resulted in
very high annual licence fees. 

If the government continues its good work with further
reforms, nothing should stop the radio industry from
achieving its past glory!

http://economictimes.indiatimes.com/

Regards & 73?s
Mukesh Kumar
MUZAFFARPUR 
INDIA.




		
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