The Union Cabinet’s go ahead to the FM phase III auctions has indeed resulted in a bright atmosphere across radio stations. While most leading broadcasters are happy with the move and await the auctions eagerly, there are some who feel that there are still some issues plaguing the auctioning process which might be a hindrance in its success.
In a chat with Radioandmusic.com, Radio City CEO Apurva Purohitexplains why the road is only positive ahead for the broadcasters and the way forward now.
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The Union Cabinet has given its nod to FM phase III auctions. What does it signify for the radio industry?
This was the final sanction all of us were waiting for, and there is clear indication that the government means business and is serious about supporting the FM industry to expand and reach every part of the country. Clearly for the industry it removes the last roadblock that was coming in the way of FM growing to eight per cent of the advertising pie, which is good for us. For the government, the common man and the small town businesses who need cost effective advertising options, it is good news that FM will finally be available in all one lakh plus towns.
But is this indeed a big move as the Cabinet has only given its nod to the policy, and the issues that were plaguing earlier haven’t been resolved yet?
The Phase III policy had the support of the entire industry, and Cabinet giving the go ahead means that the rollout which has been delayed for two years can now finally happen. It is certainly big news. There are no pending issues as far as Phase III is concerned, and we are all happy with the movement forward.
The issue of channel spacing has also been postponed to a later date. Do you think that is the viable option? Why?
In our minds any discussion on reduction of channel spacing is an irrelevant one at the moment. The only thing any such conversation can do is delay the more important aspect which is unacceptable to us. In any case P Chidambaram has clarified that it will get picked up at a later date when feasibility studies have been conducted, which is absolutely the right thing to do since there are likely to be technical challenges with the reduction.
What are the challenges that the auctions still face?
According to me, the e-auction mechanism is a fair and transparent one so there is nothing wrong with it, however setting any kind of artificial bench marks by fixing the minimum reserve price as the highest is the wrong thing to do. At best the government should not set a minimum reserve price or keep it as the average of what players paid in Phase II. Players should be allowed to bid according to their business plan forecasts. In a fair market place scenario, finally it should be left to the players on how sensibly they will behave.
Will the phase III auctions be viable for C and D category towns as well, considering the high entry fees?
If the players can operate on prices which are built on business exigencies, then of course the C and D category towns are very viable. In fact with networking and other aspects, they are attractive from a cost perspective too.
According to you, what should be the next step for the govt going forward?
Firstly the government should give an extension to the Phase II players who have built this industry and seen it through its thick and thin by five years, and give them a total license term of 15 years which is equivalent to the term approved in Phase III. And this should be done at pro rata or average of Phase II prices. This will ensure that both the economic mood and outlook for the industry is positive amongst current and new investors and there is renewed interest in taking this medium forward. This will clearly create the right environment for Phase III bidding as well as a momentum for a brighter future and higher growth for the industry. In the final analysis, success of Phase III is something that all constituents want and this will only happen if the government creates the right environment in partnership with the industry which it did in Phase II.
