Govt should rationalise prices for FM radio auctions: Experts

With only 25 per cent of the frequencies being sold on offer in the second batch of the phase 3 FM radio auctions, industry experts today said the government needs to rationalise the reserve prices to make it economically viable for the players to bid for new stations.
"There is no economic viability for players in buying the channels put on auction. The reserve prices are high. The costs that players have to pay to Prasar Bharti is also high making it difficult for them to do business," Entertainment Network India (ENIL) Managing Director and CEO Prashant Panday said at the FICCI Frames here.

ENIL, the radio broadcasting arm of Bennett & Coleman that operates Radio Mirchi, was one of the few bidders in the electronic auction held between October to December last year and won 21 licenses for Rs 51.3 crore.
"ENIL bought the smaller frequencies where we found economic viability. Since we have a bigger base, we could afford to bid at that cost. There is a lot which the government needs to do. It has to open up the spectrum," he said.
Panday noted that a city like Jabalpur, which has a population of 10 lakh, has 4 licenses while Mumbai, with a population of 2 crore has only 9 licenses.

"The government can allow 50 stations to come in and also consider cutting the reserve price. It can also bring in more formats" he said.

The second batch of the phase 3 FM radio auctions proved to be a damp squib with the government selling just 66 frequencies in 48 cities from 266 frequencies in 92 cities put up for auction.
The Phase-3 auction, which started in July 2015, is expected to rake in an estimated USD 390 million in revenue to the government, with over 800 frequencies up for auction in third- and fourth-tier towns (in 294 cities).
According to the FICCI KPMG report, high reserve prices in comparison to the market potential in smaller cities have resulted in low interest levels, leading to a large number of unsold frequencies in category B and C cities.

Echoing Panday's views, DB Corp's radio arm My FM CEO Harrish Bhatia said, "today the challenge is from radio governance itself. If we have to penetrate into more cities, many issues need to be tackled."
He said, in small towns, the government is charging one time frequency cost (OTF) which is one time for 15 years.
"It is necessary to streamline the process if we want radio to become a mass medium," Bhatia added.