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FM Stations In 28 Cities Have No Takers In FM-III Clock Auctions
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Over 60 channels are sitting on their reserve prices fixed before auctions, says Ashish Sinha
Despite having conducted 40 rounds of clock auctions that took two full working weeks, over 60 stations (out of 135 stations) across 28 cities (out of 69 cities) have seen zero interest from the 21 pre-qualified bidders even after the 10th day of bidding. The clock auctions are currently underway for the 135 stations across 69 cities where the collective bids have crossed Rs 1,000 crore, almost 2.5 times the reserve prices fixed.
Experts pointed to the high reserve prices as one of the main reasons for a lack of interest from the bidders in so many cities where at least one or two stations are available for auctions. Analysts tracking the radio industry also blame the FM-III policy itself which had put a cap on any single FM operator owning more than 15 per cent of the total channels available. “There are several deterrents for the bidders. FM-III may be far away from the success envisaged by the policy makers who got swayed by the telecom spectrum auctions of 2010. FM penetration may just remain confined in only select cities even after three phases and 15 years of private radio operations,” said a senior analyst.
Another experts pointed to the high reserve prices in certain towns which have added to the woes of the participating bidders. “Take for example the reserve price of channel in Kozhikode at Rs 7.02 crore. Money can’t be made by anyone even if this is the winning bid. Similar is the plight in Tirupati where the reserve price in Rs 4.5 crore. If only about half the channels are won by operators at the end of this first round of auctions, then the government should review its FM-III policy. No one is here to do charity,” said a technical expert on FM radio stations who advices leading players.
According to a media analysts who tracks the radio industry, current bidders have put their money on established markets like Delhi, Mumbai, Bangalore, Chennai, Pune etc. “Compared to a reserve price of Rs 31.42 crore set for the lone channel available in Delhi, today it is worth Rs 144 crore and counting. Mumbai’s reserve price before auctions was Rs 35 crore. Today it is Rs 93 crore and counting. These numbers are very high but bidding is on. Clearly, the focus is on established markets,” the analyst said.
Cities like Dhule, Gorakhpur, Gulbarga, Lucknow, Aligarh, and Jhansi are said to be among the 28 towns where the reserve price fixed before the auctions continues to be the price even after 40 rounds of clock auctions where the cumulative bids have crossed Rs 1,000 crore as against the cumulative reserve price of Rs 407 crore. Additionally, the government will get around Rs 1,600 crore as the renewal fees from the existing 245 FM Stations who will also be a part of the third-phase.
“Operating FM stations in some cities for the winners may become unviable at the current rates. Creating scarcity and then calling for bidding is clearly a flawed idea which could have been rectified. Had there been 5 channels available in Delhi or Mumbai, things would have been different,” says a senior executive in a leading FM brand.