FM radio players seek revival package after sharp dip in revenues

The private FM radio industry has sought a bailout package, including permission to broadcast news and current affairs as part of their revival plan.

“There is a need to lift the restriction on the broadcast of news and current affairs on private radio stations. As per the existing rules, FM radio broadcasters can only air AIR bulletins in exactly the same format. This is an unfair situation in an age where private television channels and digital mediums, though unregulated, are allowed to freely broadcast news and current affairs programs. Sports-related broadcasts, including live coverage of national and international sports events, should also be allowed on FM Radio,” the Association of Radio Operators in India said in a letter to the telecom regulator.

Radio revenue in FY24 is expected to be only 67 per cent of pre-pandemic numbers, according to FICCI Report, 2022. The industry has suffered severe financial repercussions due to many factors, including the economic slowdown owing to the Covid pandemic, high licence fees and music acquisition costs, reduced FM radio listenership, high recurring infrastructure costs, and declining ad-revenues.

FM Radio operators have also sought relaxation in the licence fee regime by delinking the payout from a non-refundable one-time entry fee (NOTEF). The formula for calculating the annual fee as it currently stands is higher than 4 per cent of Gross Revenue for the financial year, or 2.5 per cent of the NOTEF.

NOTEF is the successful/ highest bid amount arrived in a particular city through an ascending e-auction process of Phase III licenses. “The calculation of annual fee based on NOTEF results in serious discrimination and adverse economic consequences as places where frequencies have been auctioned in the Phase III regime, the bid amount has exceedingly increased which ultimately affects all license/permission holders even those who had no part in the bidding,” said a letter from Red FM Radio to the TRAI.

In cities such as New Delhi, where one frequency was put up for auction under Phase III, while the reserve price for Phase II stood at ₹37 crore, the bidding for the frequency in Delhi rose up to ₹169 crore which became the NOTEF for Delhi. The fact that only a single frequency was put up for auction, resulted in a scarcity premium which resulted in high NOTEF. Iin cities where frequencies were not put up for auction under Phase III such as Kolkata, the annual fee was calculated based on a percentage of gross revenue. As a result, the annual fee calculated as a percentage of the gross revenue in such cities was much more reasonable. “In the current economic scenario, which is already crippled by the pandemic, such a formula which is completely oblivious to the financial realities of the FM broadcasters, will only lead to greater difficulties for the sector, making survival extremely difficult,” Red FM said.

“ Please again note that there has been a 50 percent plus drop in revenue during the pandemic and even as of 2023, it is expected to reach only about 70 percent of Pre-Covid Levels. The pandemic proved how unfair the formula was since it has resulted in (some operators) paying more than 100 per cent of their revenues as license fee,” it added.

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