In a week that has seen three terrorist bombs shatter lives on the monsoon drenched streets of Mumbai, the Indian radio industry has had some good news. Up to 800 further FM licences have just been released, the restriction on FM commercial stations broadcasting news will be eased, and limits on foreign investment in radio stations will be relaxed. The bomb blasts further emphasised the inequity of a media landscape that allows live news reports on commercial tv yet prohibits them on commercial radio, but that is about to change reports Steve Ahern from Mumbai for radioinfo.
The Indian government has passed the long awaited guidelines for the FM commercial radio industry’s third phase of expansion. Nothing is small in India, everything is done in big numbers. In the past five years hundreds of new commercial FM stations went to air in 86 cities after the first two phases of FM licence auctions. This next phase of licence releases will open up 227 more cities to commercial radio expansion, fetching the government hundreds of millions of dollars in auction revenue.
The Cabvarchar(15) meeting which approved the sale also lifted the foreign investment limits on private FM radio broadcasting companies from the current 20% limit to 26%, and approved the broadcasting of news on commercial FM channels.
There is a sting in the tail on the news decision though, stations will likely have to take their regular news bulletins from the national broadcaster All India Radio, which currently has a government sanctioned monopoly on radio news broadcasts. The broadcasting minister did, however, leave the door open for stations to read their own wire service agency news copy instead of AIR news, if various other government agencies give their approval.
Some of rationale for this news bulletin regulation is that commercial stations may trivialise the news or that, in a country like India, where there is poverty, corruption, political unrest and terrorism, the government broadcaster is the best one to be trusted to broadcast news in the public interest. Preserving the public broadcaster’s revenue streams and preventing too much competition against AIR are also factors in the mix. Commercial stations will likely have to pay AIR for the news bulletins if they broadcast them. The other factor is that very few commercial station employees have any training in reporting, editing or reading news, making more training an essential requirement in this area, as it is in so many areas of the expanding Indian radio market.
Stations will also now be freer to do things that Australian stations take for granted, such as broadcasting service information, sports, traffic, weather, exam results, admissions, career counselling and job opportunities. More networking will also be allowed, but this is a moot point in a country that has dozens of regional languages making it difficult to network a show from one area in one language to listeners in other states who speak completely different languages.
Last night, during the bomb blasts, some stations were already taking advantage of the more relaxed rules on news by broadcasting reports from the bomb scenes. It wasn’t really news, but it was close to it. The most responsive station as I listened to around the dial was Red FM 93.5, which talked to eye witnesses and broadcast reports of the terrorist attacks. As many Mumbaikers stayed at home today, radio stations kept them informed of what streets were open, how the death toll was rising and what was being done to catch the terrorists.
The newly released licences will be e-auctioned, according to the Information and Broadcasting Minister:
“Through the auction of licence of the FM Phase-III expansion, the government is expecting Rupees 1,733 crore of income [over $300 million]. The government is counting on a big bonanza from auction of FM radio licences and telecom spectrum to bail out its finances.”
Publicly listed Radio Broadcasting companies such as ENIL and Reliance Broadcast Network saw their stock prices rise between 5% and 10% on the news. Industry bosses I met here in Mumbai welcomed the announcement.
Investment analyst Ashesh Jani, a partner in Deloitte Haskins & Sells, told the DNA newspaper the policy will give a boost to the sector. “More so because this opens an investment opportunity to many in an era of an uncertain stock market and limited vistas of investments.” According to Jani, for both radio station owners and advertisers, spreading to newer cities will bring the opportunity of “tapping an untouched market.”
Another industry analyst from Earnst and Young predicted that revenue for commercial radio would double in the next five years.
The changes to commercial radio broadcasting regulation are a step in the right direction according to most people I have spoken to here, but there are still some sticking points which the industry feels need further reform. The requirement to pay for news bulletins from AIR will remain a significant issue, as will the crazy royalty payment rules which require stations to regularly renew licences for each song they play. There is no overall general agreement yet with a collecting society to streamline this process, as there is in Australia.
Broadcasters are also seeking guarantees of 15 year lifespans for their licences and discussing whether ownership limits should be relaxed. Under the existing rules, private operators can have more than one channel, but they cannot own more than 40% of the total channels in any one market.
A full listing of all the new government rules is available here.
A comprehensive report from the busines focused DNA newspaper is available at the link below.
(Disclosure: Steve Ahern is co-owner of radioinfo and owner of a broadcast training company that operates extensively in India for a range of radio companies.)