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Rediff.com  » Business » Centre lobs FM radio issue to EC's court

Centre lobs FM radio issue to EC's court

April 29, 2004 09:45 IST

The contentious issue of allowing the FM radio operators to migrate to a revenue sharing model from the existing licence fee regime has take a new turn with the Centre today referring the issue to the Election Commission.

While some industry operators like the Gautam Radia-controlled Millennium Broadcast -- which runs Win 94.6 -- has decided to go off air from Friday, a leading player has decided to move the high court to prevent the government from revoking its bank guarantee on the non-payment of licence fees on the due date.

Radio Mid-Day, which had filed a conditional business termination notice last year, has decided to pay only two months licence on its payment due date (May 5) and intends to go off air after June 29 if the revenue sharing model is not implemented.

The deadline for payment of licence fees for various players expires over the next few days starting Friday.

The government's decision to refer the matter the Election Commission marks the climax of a two-year old lobbying by the industry players for a revenue sharing arrangement.

First, the Amit Mitra committee had recommended a revenue sharing model. At the second stage, the Telecom Regulatory Authority of India recommended deferment of the collection of licence fee till the final decision was taken.

The industry has been fighting for a migration from the existing licence fee regime to a revenue-sharing model to make operations viable.

The annual licence fees for operating a radio station in Mumbai is Rs 9.75 crore (Rs 97.5 million), in Delhi Rs 7.12 crore (Rs 71.2 million), in Kolkata Rs 1 crore (Rs 10 million) and in Chennai around Rs 3.3 crore (Rs 33 million). The arrangement has an annual escalation clause of 15 per cent every year.

The industry has till date paid around Rs 75 crore (Rs 750 million) to the government as licence fees. It has incurred losses over Rs 120 crore (Rs 1.2 billion) on total revenues of Rs 47 crore (Rs 470 million).

A report submitted by the task force headed by Amit Mitra, secretary general, Federation of Indian Chambers of Commerce and Industry, has suggested permitting licence holders to shift from a licence fee model to revenue-sharing arrangement, allowing 26 per cent foreign direct investment in the radio business besides allowing private players to broadcast news.

Early this month, the TRAI made interim recommendations that all private FM radio licence holders could be given the option to defer payment of their licence fee till a final decision is taken.
BS Corporate Bureau in Mumbai