The Hindu : Business : FM radio on comeback trail?

Online edition of India's National Newspaper
Monday, Apr 18, 2005

Business

Business

FM radio on comeback trail?

Foreign players evince interest

Industry feels that the FDI limit of 20 per cent will not have any immediate bearing.

In fine tune: With many new channels on offer FM radio sets are now in great demand.

THE HUMBLE FM radio seems set to make a comeback in India, despite all the noise generated by the latest technology in the Indian entertainment industry like digital technology and multimedia.

Reeling under a license fee regime, radio stations such as Radio City Lucknow, Radio Mirchi Pune and Win 94.6 Mumbai closed down in 2004 due to mounting losses. Out of the 40 cities that bid in May 2000, a total of 21 stations in 12 cities remain and all of them are in the red, according to a PricewaterhouseCoopers (PwC) study on the Indian entertainment industry.

Figures released by the Telecom Regulatory Authority of India (TRAI) indicate that FM radio suffered a loss of Rs. 122 crores in 2003-04 against a loss of Rs. 118 crores in the previous year.

However, that could all change in the near future. International players too have evinced keen interest in the FM radio industry with the Richard Branson-owned Virgin Group having signed a memorandum of understanding with Hindustan Times, although the industry feels that the foreign direct investment (FDI) limit of 20 per cent will not have any immediate bearing on the industry.

Prashant Pande, Chief Operating Officer, Radio Mirchi, said, "The FM radio industry is not looking for any favours; we are only looking for a level-playing field. All we are saying is that TRAI recommendations be implemented. There is no licence fee in any other media segment and if this issue is corrected, there is no reason why the industry would not achieve the figures projected by the ministry."

Speaking at FICCI-Frames 2005 last week, Jaipal Reddy, Union Minister for Information and Broadcasting, said more than 300 private radio stations could be permitted under a more liberal policy package that the government was considering. He said the emphasis of the new package would be on growth and not revenue.

The government in 2004 had requested the TRAI to recommend and assist in formulating radio policies and it had on its part floated several consultation papers.

In all its recommendations, the TRAI's intention is to rationalise the license fee structure to bring about a revolution in radio broadcasting. Ambar Basu, Chief Financial Officer, Radio City, said, "There is a wonderful opportunity waiting for the industry and we are very hopeful because this time the minister has been clear about addressing issues of the industry."

PwC said the radio industry was set to boom after regulatory corrections, which were expected soon.

Ramnath Subbu

in Mumbai

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