HISTORY OF INDIAN RADIO

Introduction

For more than 4 decades, the Government of India did not permit private radio stations to broadcast in India. Then history changed its course. In 1993, the Government allowed private FM operators to 'buy' blocks (chunks) on All India Radio, prepare programming content, book commercials from advertisers and broadcast the whole lot. Within 4 years, (1997-98), the FM Radio advertising and sponsorship business grew to Rs. 93 crores with Times of India's Times FM & Mid-Day Group's Radio Mid-Day becoming the main players. Then, in June 1998 the Government, through its electronic media regulatory body Prasar Bharati, decided not to renew contracts of private FM operators. Not surprisingly, the advertising revenue fell by 50% within a year!

This time, the Government gave the green light to privatize radio in India. July 6, 1999 was the historic day when the Government announced that 150 new FM channels would be licensed across 40 cities. And in 2000, the Government auctioned licenses for private FM channels to bolster the revenue. And the focus on metros was evident in the bidding. Expecting to collect Rs 800 million from auctioning 108 licenses, the government had to actually face mass withdrawal of bidders because of the huge license fee. A handful of serious bidders chose to remain.

In response to the Government's offer, many companies bid for the licenses to operate in key markets. But the going was not so easy. Many gave up, unable to shell out the high license fee. For instance, the bidding price for the Mumbai license was reportedly to the tune of Rs 9.75 crore. Others dropped out saying the business was not viable. So, in effect, the competition shrank, players consolidated and the Government extended its deadline. Today, there are roughly 10 players who will operate approximately in 37 cities across the country.

The government collected close to Rs 4.6 billion as license fee for the privately run FM radio channels in 40 cities. New Media Broadcasting, a Zee Group company, which focused mainly on the smaller towns, won the largest number of bids.

The first round of bidding - for 76 channels in 26 cities, garnered close to Rs.3.5 billion. The government got the highest bids - Rs 97.5 million from each of 10 broadcast companies - for stations in Mumbai. Interestingly, the bids for Hyderabad and Nagpur came next, each for Rs 77.2 million and Rs 74 million, respectively, while the bids for Delhi were Rs 71.2 million each radio is expected to follow the growth of the Television industry, which grew rapidly following the entry of private players Currently, FM coverage in India is restricted to just 17% of the country, compared to 89% of All India Radio (AIR).

Phase –I

·                     When India first experimented with private FM broadcasts, the small tourist destination of Goa was the fifth place in this country of one billion where private players got FM slots. The other four centers were the big metro cities like Delhi, Mumbai, Kolkata and Chennai. These were followed by stations in Hyderabad, Jaipur and Lucknow.

·                     Of the 101 licenses issued only 23 were operational

·                     Indian policy currently state that these broadcasters are assessed a One – Time Fee (OTEF), for the entire license period of 10 years. Under the Indian accounting system, this amount is amortized over the 10 year period at 10% per annum. Annual license fee for private players is either 4% or revenue share or 10% of Reserve Price, whichever is higher. The policy was changed last year.

Phase-II

·                     In FM Phase - II it began in 2005. The latest round of the long delayed opening up of private FM in India, some 338 frequencies were offered of which about 237 were sold. The Government may go for rebidding of unsold frequencies quite soon. In Phase –III of FM licensing, smaller towns and cities will be opened up for FM radio.

·                     Reliance and South Asia Fm (Sun Group) bid for most of the 91 cities, although they were allowed only 15% of the total allocated frequencies between them, they have had to surrender over 40 licenses.

Phase-III

The Phase – III is round corner with 97 FM radio frequencies on offer. One can expect these Phase – III stations to unfurl by 2009-10.

2.2           FM Radio Stations in India

Frequency (MHz)	Transmitter Power (kW)	State / Territory	Location	Station	Notes	Date

93.5 MHz		Andhra Pradesh	Hyderabad	South Asia FM (Red FM)
93.5 MHz		Andhra Pradesh	Rajahmundry	Sun Networks (Red FM)
93.5 MHz		Andhra Pradesh	Tirupati	Kal Radio Ltd. (Red FM)
93.5 MHz		Andhra Pradesh	Vijayawada	Kal Radio Ltd. (Red FM)
93.5 MHz		Andhra Pradesh	Visakhapatnam	South Asia FM (Red FM)
93.5 MHz		Andhra Pradesh	Warangal	Kal Radio Ltd. (Red FM)
93.5 MHz		Assam	Guwahati [Gauhati]	South Asia FM (Red FM)
93.5 MHz		Delhi	Delhi	Red FM
93.5 MHz		Gujarat	Ahmedabad	South Asia FM (Red FM)
93.5 MHz		Gujarat	Rajkot	South Asia FM (Red FM)
93.5 MHz		Jharkhand	Jamshedpur	Kal Radio Ltd. (Red FM)
93.5 MHz		Karnataka	Bengalaru [Bangalore]	South Asia FM (Red FM)
93.5 MHz		Karnataka	Gulbarga	Kal Radio Ltd (Red FM)
93.5 MHz		Karnataka	Mangalore	Kal Radio Ltd. (Red FM)
93.5 MHz		Karnataka	Mysore	Kal Radio Ltd. (Red FM)
93.5 MHz		Kerala	Kannur [Cannanore]	Kal Radio Ltd. (Red FM)
93.5 MHz		Kerala	Kochi [Cochin]	Kal Radio Ltd. (Red FM)
93.5 MHz		Kerala	Kozhikode [Calicut]	South Asia FM (Red FM)
93.5 MHz		Kerala	Thiruvananthapuram [Trivandrum]	Red FM
93.5 MHz		Kerala	Thrissur	Kal Radio Ltd. (Red FM)
93.5 MHz		Madhya Pradesh	Bhopal	South Asia FM (Red FM)
93.5 MHz		Madhya Pradesh	Indore	Sun TV Network (Red FM)
93.5 MHz		Madhya Pradesh	Jabalpur	South Asia FM (Red FM)
93.5 MHz		Maharashtra	Aurangabad	South Asia FM (Red FM)
93.5 MHz		Maharashtra	Mumbai [Bombay]	Red FM
93.5 MHz		Maharashtra	Nagpur	South Asia FM (Red FM)
93.5 MHz		Maharashtra	Nasik [Nashik]	South Asia FM (Red FM)
93.5 MHz		Maharashtra	Pune [Poona]	South Asia FM (Red FM)
93.5 MHz		Meghalaya	Shillong	Red FM
93.5 MHz		Orissa	Bhubaneshwar	South Asia FM (Red FM)
93.5 MHz		Puducherri [Pondicherry]	Pondicherry	Kal Radio (Red FM)
93.5 MHz		Rajasthan	Jaipur	South Asia FM (Red FM)
93.5 MHz		Sikkim	Gangtok	South Asia FM (Red FM)
93.5 MHz	20 kW	Tamil Nadu	Chennai [Madras]	Suryan FM
93.5 MHz	10 kW	Tamil Nadu	Coimbatore	Suryan FM
93.5 MHz		Tamil Nadu	Madurai	Suryan FM
93.5 MHz		Tamil Nadu	Tiruchirapalli	Kal Radio Ltd (Red FM)
93.5 MHz		Tamil Nadu	Tirunelveli	Suryan FM
93.5 MHz		Tamil Nadu	Tuticorin [Thoothukudi]	Suryan FM
93.5 MHz		Uttar Pradesh	Allahabad	South Asia FM (Red FM)
93.5 MHz		Uttar Pradesh	Kanpur	South Asia FM (Red FM)
93.5 MHz		Uttar Pradesh	Lucknow	South Asia FM (Red FM)
93.5 MHz		Uttar Pradesh	Varanasi [Benares]	South Asia FM (Red FM)
93.5 MHz		West Bengal	Asansol	Kal Radio Ltd (Red FM)
93.5 MHz		West Bengal	Kolkata [Calcutta]	Red FM

2.3    License Fee and Revenue Sharing Model

          Currently, FM players pay annual license fees, which go up by 15 per cent every year. Private FM radio sector would shift to a revenue-sharing model from the existing license fee regime. However, revenue-sharing also exists in the media sector. The objective is to “make FM radio a success story”. It’s better to keep the revenue-sharing figure low than to have a failed project. There has been debate on whether to recommend a revenue-sharing structure or a fixed amount for a period of 10 years; it is firm on revenue-sharing now. Revenue-sharing will follow payment of a one-time entry fee through a process of bidding. Revenue-sharing figure is quite low at around 4 %.

          While the private FM players had sought revenue-sharing in the band of 2-2.5 per cent, the panel has fixed it at 4 per cent.

2.4    Setting Up of New Radio Stations

        After the second round of privatization, the number of FM radio stations targeted is around 300 to 400. The panel also suggested that players wanting to enter the sector in the second round of licensing need to have a technical viability clearance by a financial institution on the financial viability of the project. It has also recommended to the government to release additional spectrum for the use of FM radio companies so that the number of companies operating in one centre can go up.

2.5    Future of Radio Industry

          FM Radio can play its part in building a stronger business future for India. Providing free-to-air local broadcasts of music and entertainment, helpful information - traffic advisories, community announcements and public service messages provide a real value-added service. But at current levels of advertising support, each radio station is reeling under the brutal financial impact of high costs. With more players in the fray the FM radio industry would grow and also enhance the government’s yield from licensing radio naturally.

          The new India deserves an active private FM radio sector. It can provide a level playing field with benefits for listeners, for advertisers, employment & career options. Spearhead the government objective of growing the FM radio business in India. With the government ready to reduce the license fees it will help in attracting new players like reliance which had earlier backed out only due to the entry fees. Also government allowing foreign players to enter the Indian market it will help the industry grow. Virgin group has already started exploring the Indian market for suitable partners. Various radio stations are coming up with IPO for example Radio Mirchi thus helping them expand.

          The future looks bright as the reach of radio is expected to raise post the increase in the number and quality of players in the industry. It is on the basis of these key drivers of growth, it is being predicted that radio's share in the total advertising pie will see an increase in the medium term. There are an estimated 150 million radio sets across the country. The Rs 1.6 billion industry is reported to be growing by 31 per cent every year and should touch the Rs 6.2 billion by 2007, with revenue rising at 23 per cent annually. Also, though radio has only a 2 per cent share in the Rs 6,000 crore Indian advertising markets, advertising spending is expected to amount to Rs. 500 crore this year.