[cr-india] UPDATES: Radio related developments in India

[Frederick Noronha]

FROM Studio Systems, January-February 2002 issue.

STAR RADIO NOT TO SUPPLY FM CONTENT FOR NAGPUR AND PATNA: Star Radio will
not sing tunes in Nagpur and Patna. Music Broadcast Pvt Ltd, a P K Mittal
company, has decided to surrender two of its six FM radio licences citing
reasons of commercial non-viability. Rupert Murdoch's Star Radio is
contracted to supply content and undertake the marketing of the FM radio
stations of Music Broadcast.

The licence fee for Patna is Rs 4.75 crore, while that for Nagpur is Rs
7.4 crore. Of this, Music Broadcast has already paid up about Rs 75 lakh
for both cities as earnest money which it is likely to lose.

Out of the six cities where Music Broadcast-Star had planned to have FM
radio stations, Bangalore and Lucknow are already on air. Mumbai is next
in the line which is to be followed by Delhi.

In the two operational radio stations, Star has made a sizable investment
of about Rs 30 crore in programming. The licence fee for both the cities
amounts to about Rs 12.5 crore.

PRASAR BHARATI OFFERS PACKAGE DEAL TO FM PLAYERS: Prasar Bharati has
offered a total solution package to private FM radio licencees in Mumbai,
without specifying the commercial terms. The offer was made at a meeting
between Prasar Bharati and FM officials. The commercial terms of the
solution package will be indicated once the FM players show willingness in
such an offer. The next meeting between the two parties will probably
fetch an answer from the private FM players.

AIR OFFERS COMPLETE SOLUTION TO FM PLAYERS: Although Prasar Bharati signed
agreements with private FM radio players for co-location of their
transmitters on All India RAdio towers in all metros except Mumbai, now it
has decided to offer a complete solution package in Mumbai as well.

Those with licences for Mumbai are Entertainment Network, Radio Today,
Millennium Mumbai, Music Broadcasting Pvt Ltd and Radio Midday West.

As the AIR tower in Mumbai is too old, it is not in a position to
co-located transmitters of private operators. However, Prasar Bharati has
chalked out an alternative plan for Mumbai FM licensees now. Prasar
Bharati officials will meet private FM operators and offer them a complete
solution package for Mumbai.

The terms and conditionsof the Mumbai offer are expected to be decided
shortly. The capital investment for the Mumbai solution package, which
includes building a new tower, is estimated at Rs 15 crore.

Making it a fool-proof offer, Prasar Bharati has kept a second option
ready in case the private licensees don't accept the total solution
package. While the total solution would mean that the private players get
to co-locate their transmitters on a newly-made tower and use the AIR land
and building, the second option will entail only the use of AIR land and
building. The charges for these facilities will have to be worked out.

Even if private FM players agree to accept the AIR total solution package
for Mumbai, they will need to get their interim operations ready within
the next four months. For the permanent tower, however, Mumbai FM
licensees have time till December 2003.

Prasar Bharati is planning to offer the total solution package for the
permanent set up in Mumbai. The government granted additional time to FM
licensees in Mumbai, as the AIR tower in the city was not in a position to
take the extra load of FM transmitters of the private players.

It may be recalled that the government had asked FM players to co-locate
their transmitters on a single tower in the metro cities because spectrum
is a scarce resource. Private FM players were given one year from the time
of allocation offer to set up their operations.

However, because some of the FM licensees went to court against the
government over terms and conditions of the licence, the remaining players
could not set up their operations in time due to the uncertainity over
co-location. Then, to facilitate the co-0location process, Prasar Bharati
stepped in with its offer to allow co-location on AIR towers in
metros. 

FM PLAYERS TO TURN UP RADIO AD VOLUMES: Private sector FM players
are seen as grabbing as much as half of a growing radio ad spend pie 
by March 2003, according to a research report of the ANZ Investment
Bank. The new players are projected to account for a whopping 75 per 
cent of the total radio ad revenues by March 2006. The lower would
be the current government-owned monopoly player, All India Radio AIR

Radio's total share in adspend is also headed north. Industry
estimates say radio accounts for around two per cent of total
adspend across media in the country (currently estimated at Rs
10,000 crore). This is expected to sharply increase to five per cent 
by 2007. (ENDS)