We look forward to the TRAI resolving the industry's problems: Gautam Radia

By , agencyfaqs! | In
Last updated : April 29, 2004
Millennium Broadcast's WIN 94.6 FM is winding up operations for the second time in a year, bringing to the forefront the contentious issue of license fees

It was 11 months ago that Millennium Broadcast's WIN 94.6 FM first went off air. The day was May 27, 2003, and the reason for pulling the shutters down was the company's inability to cough up the annual license fee for the second year of operation - which stood at Rs 11.25 crore. WIN, however, did manage to bounce back on July 3, 2003, but the threat of closure always loomed large over the Salagaocar Group-promoted FM station in the eventuality of the company being unable to shell out the fee for the third year as well. For WIN - considered to be the smaller of the five players in the city, which includes big wigs such as Entertainment Network India's Radio Mirchi (part of Bennett, Coleman & Company), India Today Group's RED FM, Mid Day's Go 92.5 FM and Music Broadcast's Radio City, which has contracted STAR India to provide content as well as sales and marketing support - the choices were limited: pay or fold up.

Putting all speculation over the station's fate to rest, executives at WIN have opted for the latter option, choosing to go off air today at 11.00 am sharp. In other words, radio sets in Mumbai will cease to crackle with the sound of WIN 94.6 FM. The question is, is the closure for good? Gautam Radia, CEO, Millennium Broadcast, while choosing to evade the question, simply says, "We look forward to the TRAI resolving the problems of the industry."

For the beleaguered private FM industry in the country, the Telecom Regulatory Authority of India (TRAI) seems to be the only recourse. The body was commissioned to monitor the sector at the start of this year, and predictably, it has quite a task at hand. The key issue, of course, is the rationalization of license fees - the movement to a revenue-sharing model as opposed to a flat down payment, which has hitherto crippled the industry. According to industry estimates, in the city of Mumbai, all five stations put together account for about Rs 2.5 to Rs 3 crore of monthly revenue. "And when compared to the escalating license fees, not to mention the cost of running a radio station, the revenue earned is not even a fraction of the amount spent," says an executive with a station in Mumbai.

Which is why when the Government put the ambitious Radio Broadcast Policy Committee in place last year (under the stewardship of FICCI secretary general Amit Mitra) to provide recommendations on the second phase of privatisation, the industry heaved a sigh of relief. For once, it seemed that the Government was keen on bringing in much-needed change in the industry. As Prashant Panday, COO, Radio Mirchi, had indicated in an earlier interview with agencyfaqs!, "We are convinced that the Government is interested in a successful rollout of radio in this country."

The Mitra Committee made important recommendations including 26 per cent foreign direct investment (FDI) in radio, revenue sharing at 4 per cent of gross earnings, broadcast of news and current affairs programmes and the appointment of an interim regulator. Subsequently, the TRAI was brought into the picture early this year, with the body drafting a consultation paper about a month ago, which dwelt at length on the second phase of privatisation. The important point, however, made by the TRAI was the deferment of payment of annual license fees this year till a final decision on the recommendations of the Mitra Committee was taken. But, according to media reports, the I&B Ministry does not seem too keen on deferring payment of license fees owing to the on-going elections. Reports citing government officials indicate that the Ministry would require a cabinet okay for the postponement, which would invariably be questioned by opposition parties. The second major hurdle to deferment is a loss of revenue to the Government, which it seems unprepared for.

Anticipating these bottlenecks, Radio Mirchi had moved the Bombay High Court last week seeking a stay on the Government encashing its bank guarantee in the wake of non-payment of license fees within seven days from April 29 - the day when operational licenses come up for renewal in Mumbai. FM players have been fighting hard to defer payments till the time the new Government is formed and the matter is looked at afresh. And above all, the recommendations of the Mitra Committee are adhered to.

However, with no light visible yet at the end of the tunnel, and the spectre of closure having raised its ugly head once again, it is to be seen whether the remaining FM players dig in and fight. © 2004 agencyfaqs!

First Published : April 29, 2004
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© 2004 agencyfaqs!