Govt allows FDI in private FM radio; says no to news
Friday July 1 2005 00:00 IST
PTI
NEW DELHI: Launching a major expansion programme for private FM radio
services, the government allowed 20 per cent foreign direct investment
in
the sector on Thursday and decided on a revenue share regime against
the
existing licence fee structure to allow a total of 330 stations in 90
cities.
The Union Cabinet, which met here to thrash out the policy framework
for the
second phase of FM radio licensing, however, decided to continue the
ban on
news and current affairs.
"Time has come for revival of radio in the country and the government
has
planned a huge expansion of the private FM radio network which will
lead to
generation of employment and opportunities and encourage talent,"
Information and Broadcasting Minister S Jaipal Reddy told reporters
here.
"Even as we have decided to allow FDI at the existing 20 per cent cap
for
FIIS, OCBs and NRIs, there will be no news permitted on private FM
channels
under the present regime," the Minister said.
The licence fee regime adopted in the first phase proved to be
disastrous
for the growth of FM radio sector where of the 108 frequencies put on
bid,
only 21 were operational, two of which have also given notice to close
down.
Reddy said the operators will now have to shell four per cent of their
revenue as annual licence fee, adding that existing operators will also
be
allowed to migrate to the new regime and there "would be no
black-listing"
of any player.
Bidding for the second phase will start in about a month's time, he
said,
observing that "the government has not looked at the revenue aspect at
all"
while framing the new policy. "The idea is to encourage expansion of
radio
in the private sector," he said.
Asked about broadcast of news and current affairs, he said, "We have
not
looked at this aspect at all... I am not saying no... Actually I have
not
taken a decision on this aspect as several issues have to be looked
into
before taking a view."
Reddy said in framing the new policy, the government had accepted most
of
the recommendations of the radio broadcast policy committee under the
chairmanship of FICCI's Amit Mitra as well as that of broadcast
regulator
TRAI.
He said in the second phase, the cities would be divided into four
broad
categories -- A, B, C and D -- starting from the metros and flowing
down to
the smaller ones.
The number of operators in the a category (metros) will be restricted
to
about 10-11 players while in B cities it will be six, four in C and two
in D
towns.
"The new players will have to pay a one-time entry fee through close
bidding
process, and each successful bidder will pay as per his bid amount,"
Reddy
said, explaining the manner in which the second phase licences will be
awarded.
Existing operators will have to pay the average bid amount of new
players.
"The government will not black-list any player on the basis of ongoing
litigation in various courts... We will allow everyone to participate
in the
new bidding process," he added.
Observing that competition will be a key element under the new regime,
Reddy
said "no private radio can only run on film music. They have to
generate
their own content to survive."
Reddy said the government plans to set up a quasi-judicial regulatory
authority to deal with disputes, pending which the ministry will have
regulatory powers.
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