Third phase of FM radio auctions begins

The third phase of FM radio auctions got underway on Monday, with 135 frequencies up for grabs across 69 cities. In all, 21 companies are participating.

That included the Sun Group's Red FM, permitted on Sunday by the high court in Delhi to be part of the bid process. The Chennai-based group had petitioned when its channel was barred due to lack of security clearance from the government.

The legal wrangles in the run-up have some reason. "The third phase of auctions permits an operator to hold multiple frequencies in a city. It also allows networking, that is, for an operator to optimise costs by not having to set up a live studio in every city and the use of news and current affairs from Prasar Bharathi,"said Nisha Narayanan, chief operating officer, Red FM. "This will enable operators to grow."

At least Rs 500-600 crores are expected to be invested in this auction round, significantly more than that spent by operators in the first and second phases.

With 245 stations, the private FM radio market in India is pegged at Rs 1,600 crore. While the sector initially showed promise, the lack of a clear differentiator in content has stunted growth rates. "Music is the only driving force for an FM station. How long can you hook listeners with this?" asked Jwalant Swaroop, chief executive officer, Sakal Media Group. "The phase three auctions were in the waiting for a long time and now that it has begun, it should open up the market." Adding: "Including news has been a long-standing demand of operators, whether taken from (government-owned) Prasar Bharati or not. This should increase stickiness for a station and improve advertising prospects, too."

Operators putting in their bids can do so for a maximum of 52 channels. In other words, those like the Sun Group, which has 47 channels already or the Reliance ADAG Group which operates 45 stations, are handicapped, persons in the know said. Radio City, part of the Jagran group, has 20 stations. Radio Mirchi, part of the Bennett, Coleman & Company-promoted ENIL, has 32.

Prashant Panday, CEO of ENIL and Apurva Purohit, CEO of Radio City, were not available for their views pertaining to the national cap.

Beside new frequencies, renewal of the existing 245 radio licences will also come up during the auction process, experts said.These 21 licenses are already operating under an extension, to expire on September 30.