Copyright Board reduces royalties in radio on intl criteria

The radio industry got a fillip today as the royalties it pays to music companies were substantially reduced by the Copyright Board. The Board directed that radio companies would have to pay two per cent of their net advertising revenues to music providers. Till now, radio companies were paying royalties on an hourly rate which was around Rs 850 per hour of broadcast.

“Music royalties has been an issue for a while now and this is sure to bring some respite to the industry. With Phase III on the anvil, the timing couldn’t have been better. If the music royalty issue is sorted, it will further fuel Phase III growth for the FM radio industry and allow broadcasters to deepen footprint while offering advertisers a greater reach,” said Soumen Ghosh Choudhury, business head, 92.7 BIG FM. “All over the world, owners of copyright charge licence fee as a percentage of net advertising revenues and not as a per needle hour rate,” the Copyright Board said in its order. Shares of media companies, especially those in the radio business, were in the spotlight briefly after reports suggested that the Copyright Board has resolved the music royalty issue with the operators.

“The order brings the Indian music royalty regime in line with the global trends. In all countries where radio has developed well, the music royalty is of the order of nil to four per cent. Our request had been for one per cent, but we respect the Copyright Board’s order of two per cent of net advertising revenues. From around Rs 100 crore that the radio broadcasters were accruing, the burden will now come down to around Rs 14 crore,” said Prashant Panday, ED and CEO, ENIL.

“This decision will change the entire business model of radio companies. It will improve the profitability of several radio stations in smaller towns. This, in turn, will lead to increased enthusiasm in the upcoming bidding for Phase III licences,” said Ashish Pherwani, associate director (advisory services), Ernst & Young.

ENIL shares closed nearly flat at Rs 237.95 after being as high as nine per cent. Tips rose two per cent to Rs 45 after rising eight per cent. Reliance Broadcast Network gained four per cent to end at Rs 89.50, while Sun TV was down 1.3 per cent to close at Rs 466.65. Saregama lost almost 2.5 per cent to Rs 147 after climbing four per cent.

TV Today was down 2.85 per cent to finish at Rs 85.25 and Mid-Day Multimedia was down 3.9 per cent to end at Rs 34.45. HT Media closed down 1.5 per cent at Rs 166.75.