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28 firms apply in first batch of Phase III FM radio, new players show interest

MUMBAI: The government has received applications from 28 companies for the first batch of e-auction of 135 private FM radio channels in 69 cities as part of Phase III expansion.

Interestingly, there are 13 applicants from new players who want to enter the FM radio market. Some of them come from diverse backgrounds like shipping and real estate while others are regional-language television broadcasters.

The 28 applicants have cumulatively submitted earnest money deposit (EMD) of about Rs 316.91 crore (Rs 3.17 billion).

The deadline closed at 5 pm on 27 March for taking part in the e-auction for 69 existing cities of Phase II. The auctions are expected to take place in May 2015.

Existing FMThe existing FM radio operators who have applied include:  Reliance Broadcast Network Ltd (Big FM), Entertainment Network India Ltd (Radio Mirchi), HT Media Ltd (Fever FM), DB Corp (MY FM), Matrubhumi Printing & Publishing Co Ltd (Club FM), Next Radio Ltd (Radio One), Music Broadcast Pvt Ltd (Radio City), Rajasthan Patrika Pvt Ltd (Tadka FM), South Asia FM Ltd and Kal Radio Ltd, a subsidiary of Sun Network ( which operates S FM), Sun TV Network Ltd also operates FM radio stations, Digital Radio Mumbai Broadcasting (Red FM in Mumbai), Digital Radio Delhi Broadcasting (Red FM in Delhi), Malar Publications Ltd (Hello FM), and Pudhari Publications Pvt Ltd (Tomato FM).

Those who have not applied for the first batch of auctions are TV Today’s Oye FM, BAG Films and Media’s Radio Dhamaal and Clear Media’s Hit FM.

Incidentally, TV Today has signed an MoU with ENIL to unload its radio assets.

Phase III new

The new applicants come from diverse backgrounds. They include: Shahi Shipping Ltd, AM Television Pvt Ltd (a broadcasting company based in Guwahati), Odisha Television Ltd (runs TV broadcast business in Odisha and parent company also controls Ortel Communications), Pratidin FM Pvt Ltd (recently incorporated by Pratidin Television & Publications Pvt Ltd, Venus Autoworks (an automobile dealer in Bhubaneswar),  Abhijit Realtors & Infraventures Pvt Ltd (a real-estate company based in Nagpur), Sarthak Films Pvt Ltd (part of Sarthak Entertainment), Renderlive Films and Entertainment (a broadcasting and publication company), Embassy Nirman Pvt Ltd (a Kolkata-based real-estate company), Nirmal Sagar Buildcon (a construction company from Jaipur), Abir Buildcon Pvt Ltd (a real-estate company from Raipiur), Remi Overseas Pvt Ltd ( an automobile equipment company from Gujarat), and Sunplant Broadcasting Pvt Ltd (parent company Sunplant Group has interests in agriculture and construction).

The Ministry of Information and Broadcasting will verify whether the applications fulfil the requirements prescribed in the Notice Inviting Applications (NIA) and then release the list of pre-qualified bidders.

Threat to existing players?

With many of the new applicants coming from backgrounds like real estate, will there be disruptions in bidding?

ENIL MD and CEO Prashant Panday says, “Radio is a local medium. So ideally, a good of national and local players should exist in every market. I think there is very little space left, however, since the auction process favours the ‘rich’ companies. As you know, the reserve prices are so high that in most markets, small local players simply cannot expect to win.  It has been shown over time that radio needs specialists. It needs people who have passion for the medium. It cannot be the ‘second business’ for a real estate or a shipping company. That’s what the experience of Phase II has shown.”

“The new players would need some solid understanding before they start bidding. Otherwise, it will not only spoil the game but also the industry,” says MY FM CEO Harrish M Bhatia.

Existing broadcasters state that with the new entrants, there could be an increase in the bidding price as some players might get more aggressive, resulting in the existing players’ calculations going haywire.

Radio Tadka CEO Alok Sharma believes that there will be many companies that won’t be able to run the stations and will spoil the industry by absorbing the resources of other radio companies in the city.

“They won’t have much impact in metro cities, but in small towns where radio stations have word-of-mouth publicity, it could affect small players as the non-serious players will get the rates slashed and fragment the share of new advertisers further.”

Radio Tadka, meanwhile, will focus mainly on Madhya Pradesh and Rajasthan, markets where it already has a presence.

Many of the new entrants, however, are all small regional players who might not invest too much in the auction and could pick up a frequency or two.

A positive for the existing players is that large media groups like Zee and Network18 have not yet decided to enter the private FM radio segment and have not applied to bid in these auctions.

Opportunity for new players

Some of the applicants include real estate and construction companies that come with no radio experience. One reason for this could be the increase in spends by the real estate sector on radio, to create an effective reach.

As reported earlier by TelevisionPost.com, the real estate sector in 2014 had increased spends on radio by 26 per cent. In fact, radio broadcasters state that real estate has always been a growth driver for radio and has grown steadily year on year. This and the rising real estate prices in most big cities as well as small cities under development could provide an impetus for real estate companies to launch their own private radio stations to attract consumers and advertisers. For the record, there already is a real estate channel in the TV space titled Spin TV.

On the other hand, many companies already have a presence in the regional broadcast or publishing space. In order to stabilise and increase their presence in the markets further, the launch of a radio station could help.