The Hindu Business Line : Strict eligibility norms may force media houses to play low key in bidding for FM

EVEN as the number of cities tabled for FM radio have increased manifold in the imminent second round of bidding for the service, strict eligibility norms could see some players beating a retreat.

A total of 338 channels in 91 cities go to the bidding floor on January 6, in the second phase of the industry's regulated growth. But there are indications that a clutch of leading media and entertainment houses may either opt out of the race completely or participate only at low key. Alongside were comments from certain quarters of industry of a preference to wait and watch, hold back a bid now and cash in on licences floating up for sale later.

The Zee Group, which was aggressive in the first phase, was taking a "cautious" stance in the second round, a senior official said. "We would bid for some licenses but we are taking a conservative approach."

Prominent newspaper group, Dainik Bhaskar, was also expected to maintain a modest presence in the fray. "We would like a pan India presence in FM radio but we are looking at a few viable cities," a group official said.

The Sri Adhikari Brothers Group, which had evinced interest in the second phase of FM radio, was yet to take a decision on bidding.

"We are in discussions to decide if we should enter the segment at all," an official said. A couple of newspaper groups are also likely to move out of the race, industry players said.

Industry sources said that a key disciplining factor this time was the need to pay upfront 50 per cent of the bid amount with a bank guarantee for the remaining portion.

Failure to comply would result in the blacklisting of the applicant and disqualification from bidding anywhere for the next five years.

Though the FM radio sector has been on a growth trajectory in terms of advertisement revenue, it may not be economically viable for all entrants, some industry officials felt. "This time around only serious players would enter the fray as the bidding rules are more stringent," Mr A.P. Parigi, Managing Director & CEO, Entertainment Network (India) Ltd, which runs the Radio Mirchi stations, said.

The company, due to tap the capital market with an initial public offering, was expected to be one of the big bidders in the second round.

Radio City and Radio Mid Day West (India) Pvt Ltd were the other bidders who should be extending their presence through the second round. Making a comeback was Mr Gautam Radia who had run Win 94.6 in Mumbai during FM radio's first round. While that station had to shut down, Mr Radia has entered the second round with Clear Media India Pvt Ltd and bids in four cities linked to the IT / BPO space.

Spoken of was the name of Mr Rajeev Chandrasekhar, former Chairman & CEO of BPL Mobile, who had netted a fortune selling his telecom stake to Hutchison Essar. Asianet and Malayala Manorama, also expected to join the race, may, however, stay limited to the Kerala market.

"In the second round, those who are bidding would do so on the strength of their own business calculations of the market. You have to make a sensible assessment of the market and go for it in such a manner that you neither end up with a large bid price nor lose out in the game," one senior official said.

"The business plan of a bidder is of utmost criticality. It is a ten year-licence and the bidder is paying upfront," Mr Parigi said.

The bidding process would be spread over six consecutive Fridays commencing January 6.

According to him, one or two players typically cornered the radio market.

It was also among reasons prompting participants to back out of the bidding process or hold back for opportunities later.

In the first round of bidding few years ago, 108 channels in 40 cities were offered to private players.

Only 22 private stations are at present on air.