With only 20 radio stations participating in the third batch of FM Phase-III radio auctions, the bidding is set to witness a lukewarm and conservative response from players – who are likely to fork out only 10% of what they spent in the last batch, Storyboard18 has learnt.
With major players choosing to stay away from participating in the third batch, including the likes of Radio Mirchi and City, insiders shared that “with so few participants, the auction is more about survival than growth for the industry.”
The absence of major players also comes after radio channels reportedly requested a nearly 70% reduction in the reserve price in the auction – mainly because the third batch is set for the cities with less business opportunity and a high cost of operations.
“Big players (like Radio Mirchi or Red FM) likely played it smart, focusing on renewing licenses for key cities rather than splurging on expansion. Smaller players will probably bid conservatively, sticking to markets they can sustain,” notes Siddharth Chandrashekhar, Advocate and Panel Counsel, Bombay High Court.
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“Batch one witnessed the most lucrative bids. The government should have opened the new batch around 2016 only because players were still bullish at that time – ‘reach’ used to be a big word for radio players but today station owners would not take these 734 cities very seriously – it’s not something that’s going to change the fortunes of anyone,” shares founder and former MD 94.3 Radio One, Vineet Singh Hukmani.
According to an insider’s estimates, major players would probably want to spend 10% of what they spent in 2015 and acquire at least 100 stations only.
“Regional players might still show some interest in the bidding, major players have already seen the saturation in the markets they are present in,” adds another insider.
Another reason for the lukewarm response from the players is also the long gap – of almost a decade – between the last batch (two).
The Long Wait
The first batch auction of Phase III, which raised around Rs 1,156 crore for the government and saw participation from 28 applicants, took place in 2015. The highest spenders in the first batch were Radio Mirchi (ENIL) and HT Media (Fever FM), who together spent around Rs 340 crore and picked up frequencies in metros and mini-metros.
HT Media bid for a total of 10 frequencies (the most expensive frequency being at Rs 169.16 crore for the one in Delhi and Rs 122.81 crore for one in Mumbai,) and ENIL for 18 frequencies. For its part, Reliance Broadcast Network (Big FM) acquired 14 stations and spent around Rs 117 crore followed by Jagaran Prakashan (Radio City) shelling out around Rs 62.5 crore for 14 frequencies.
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The second batch saw much less interest with only 14 eligible applicants and major players like Fever FM, Big FM, DB Corp (My FM), and Radio City choosing to not participate. In the same batch, only 66 frequencies were acquired out of 266 available, generating around Rs 202 crore.
The third batch (to be held in January 2025) for 730 channels across 234 new cities is set at approximately Rs 784.87 crore and has seen only 20 participants with the likes of Radio City and Mirchi choosing to sit out.
Hukmani notes, “The gap in the roll out of these stations is too large and is 9 years too late, so late that expanding FM radio reach is no longer lucrative and therefore relevant.
Smart mobile phone penetration in small towns is huge but smartphones today rarely have an FM radio playout chip/software… so people in these small towns already get local content from social media and other online sources.”
“This is more like a ‘top up’ that’s come too late,” he remarks.
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The annual license fee of FM channels in specific cities will be charged as 4% of gross revenue excluding GST. The reserve price for the auction of channels in these cities is as per the TRAI recommended prices of 2022.
For the purpose of applying for the e-auction in Phase III, the bidder will have to deposit earnest money deposit which will be calculated based on eligibility points and the reserve price for a specific number of cities or a combination thereof for which the bidder wants to participate. Accordingly, depending on the number of cities for which the bid is to be submitted, the amount of deposit shall range between Rs 25,000 to Rs 20,00,00,000.
Furthermore, the auction rules do not provide for consequences of missing any auction at the end moment, however, all bidders participating in the e-auction are required to submit a bid for at least one city in the first clock round.
“Any bidder who fails to do so in the first clock round shall have to forfeit their earnest money deposit in its entirety affecting their ability to bid in further rounds,” highlights Alpana Srivastava, Partner, Desai and Diwanji.
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The 20 applicants for the third batch include Guwahati-based AM Television, Palakkad, Kerala based Ahalia Healthcare Ltd (Ahalia Radio), Clear Media India (Hit 95 FM), DB Corp Ltd (MY FM), Orissa-based Eastern Media, HT Media Ltd, JCL Infra, Sun TV Network’s Kal Radio Ltd, Haryana-based Lohchab Motors, Madhuresh Publications, Malar Publications (Hello FM), Pindari Media Entertainment radio, Rajasthan Patrika (FM Tadka), RLFE Pvt Ltd., Santamonica Tours & Travels, Sapphire Media (Big FM), Setwell Coatings, Sun TV Network’s South Asia FM Ltd, the Malayala Manorama (Radio Mango), and the Mathrubhumi Printing & Publishing Co. Ltd. (Club FM).
In November 2024, the Ministry extended the deadline for applications for the allotment of 730 FM radio channels under the third batch of phase-III auctions and set it for December 9, 2024.
The original deadline for submitting applications was November 15, 2024. Several radio operators had urged the government to push the deadline to January 15, 2025, citing the need for additional time to assess market conditions and review the auction process in each of the 234 cities covered by this batch.