FM licence sale set to open up India's airwaves

Indian radio presenter Lavanya Padmanabhan has seen many changes during her 13 years in the business, from reel-to-reel tapes and manual faders to the introduction of computerised, digital technology.

But a planned government FM licence sale, loosening the state's grip on the airwaves with the potential to create hundreds of new radio stations reaching millions of Indians, may well be the biggest shift yet.

"It's a superb opportunity," she told AFP at the studios of Big FM 92.7 in India's entertainment and financial capital, Mumbai.

"Radio is a medium that can only grow bigger and bigger from here... It can reach where no other medium can."

Lavanya isn't the only one excited. Her bosses, their competitors and media analysts also see the auction of more than 800 FM licences as a turning point.

"It will be a watershed event for radio in India," said Asheesh Chatterjee, chief financial officer at Reliance Broadcast Network Ltd, which runs 45 Big FM stations across India.

"For the first time, private FM players... will be shoulder-to-shoulder with the (state-run) national broadcaster All India Radio (AIR).

"The radio industry will now be able to actually carve out a niche for itself and start competing with regional television, regional print and national television with all its might."

India's radio broadcasters have had to look on, particularly over the last decade, as hundreds of new television channels went live, creating near 300 billion rupee (ê6 billion) industry and the world's third largest market.

Radio was by far the most popular source of entertainment and information in India before the television explosion.

The so-called "phase three" licence auction, which the government estimates could raise up to ê400 million, may redress the balance, with increased listeners and advertising.

Under the plans, about 227 new cities are in line to get FM radio services in addition to the existing 86.

Licences have been extended from 10 years to 15; news bulletins are allowed for the first time; and foreign investment limits have been increased.

Companies will also be allowed to run more than one station in the same market.

Global consultancy KPMG estimates the sale -- expected in mid 2012 -- could boost revenues from 10 billion rupees last year to 24.9 billion rupees by 2015.

"The phase-three policy is extremely important to all radio broadcasters," said Prashant Panday, chief executive of Entertainment Network (India) Ltd, which operates 32 Radio Mirchi stations.

"Radio is the only sector in the Indian media industry that hasn't been able to add any capacity in the last five years and more," he said in an email interview.

"Phase three will mean that radio will be able to catch up with the other segments of media."

ENIL, part of the Times Group that owns the Times of India newspaper, and Reliance Broadcast said they were looking to add second frequencies in major markets and were keenly eyeing the potential of smaller cities.

"Radio will be an extremely important medium" in smaller markets, said Panday. "As economic activity spreads into these smaller towns, they will emerge important in the years to come."

Broadcasters, though, want a further relaxation of the regulations, not least the requirement for commercial channels to source news bulletins only from AIR.

"Why would we pay money to AIR to broadcast news that they produce?" asked Panday. "We are India's largest media organisation -- surely we can do a better job getting news ourselves?"

Also contentious is that only three new frequencies and eight left over from the last auction in 2001 will be available in India's eight largest cities.

Jehil Thakkar, head of media and entertainment at KPMG, said phase three lays the foundations for a move away from programming based around popular Bollywood film music towards talk radio and more niche content.

"M and A (mergers and acquisitions) will happen and some consolidation. Also it (radio) will become a national medium, so we will see the emergence of some national players that will drive revenue," he added.

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