The Hindu Business Line : Panel moots 26 pc FDI in radio sector

AS part of the second phase of FM privatisation, the Expert Committee set up to look into changes in norms for radio broadcasting has suggested permitting 26 per cent foreign direct investment (FDI) in the sector.

It has also proposed switching from a licence fee regime to revenue sharing arrangement, permitting operators to own multiple licences and allowing broadcast of news and current affairs.

The report, which was presented on Monday to the Information and Broadcasting Minister, Mr Ravi Shankar Prasad, is a "pro-reform initiative" aimed at increasing the spread of FM radio in the country.

Currently, besides All India Radio (AIR) there are about 23 private FM radio channels across the country.

The Committee headed by Dr Amit Mitra, Secretary-General of the Federation of Indian Chambers of Commerce and Industry (FICCI), has suggested that while the bidding process should continue with the Government retaining a floor price, companies would have to get the financial and technical eligibility criteria certified through a bank or a financial institution.

But instead of the existing license fee structure, the committee has recommended a revenue share of four per cent of gross revenue.

For switching over to the revenue sharing regime, the group has taken the cue from the telecom model and has said that existing players should pay up the licence fee till the cut-off date of July 24, 2003 and subsequently switch to the new arrangement.

"There should not be any blacklisting of bidders for new licences on the basis of their default in Phase-I, as this was characterised by acute market and regulatory imperfections."

On the issue of FDI, the committee placed a 26 per cent cap that includes holding by FIIs. Currently, FIIs can invest up to 20 per cent in the radio business but they are not allowed to invest in the print media or in news and current affairs television channels.

In the case of radio, no distinction has been made between players offering news and current affairs and entertainment.

But it is mandatory to have a dominant Indian shareholder with 51 per cent equity; 75 per cent of directors of the licensee, the CEO and all key executives and editorial staff must be resident Indians.

However, for entertainment channels, exception has been made for People of Indian Origin (PIO) cardholders and NRIs.

The committee has suggested allowing multiple licences in the same city, permitting networking by the same broadcaster on several stations and removal of the co-location condition for making this sector viable.

It has also suggested setting up a fund for starting non-commercial radio channels, offering fiscal incentives like lower reserve fee and revenue share for niche channels.

Also, till a broadcast regulator is in place, a non-statutory committee must be set up with terms of reference similar to the regulator, the panel said.

Speaking to newspersons, the Information and Broadcasting Secretary, Mr Pawan Chopra, said that the Government would study the recommendations and seek views from the Finance, Law and Home Ministries before taking any action on the report. "Any changes in policy would also require Cabinet assent."

The Secretary also said that issues regarding loss of revenue due to change to a new model would have to be studied.

Article E-Mail :: Comment :: Syndication

Stories in this Section
Jessop sell-off case hearing deferred by three weeks — SC agrees to review ruling on HPCL

Michelin picks up 14.9% stake in Apollo Tyres — Ties up to set up joint venture

Panel moots 26 pc FDI in radio sector

Guard against rate risk, RBI tells banks

BSE imposes special margin on 96 stocks

What is the word-of-mouth in the ad world, now?