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Cabinet Approves FM Radio Phase III; FDI Limit Increased; Pvt. Stations Can Carry AIR News

The Union Cabinet has approved the Ministry of Information & Broadcasting’s proposal for granting new FM radio licenses to private players, under the Phase III of FM radio expansion. It has also cleared the Ministry’s proposal to an e-auction on the lines of the 3G and BWA spectrum auction, as recommended by the GoM on Licensing Methodology for FM Phase-III. The policy for expansion also features a number of new proposals including increasing the FDI+FII limit in private FM broadcasting companies to 26% (from 20%), permitting the carriage of AIR news bulletins, allowing broadcasters to own more than one channel in the city on a conditional basis and giving incentives for rolling out services in special regions of Jammu & Kashmir, North Eastern States and island territories.

According to a statement from the Government of India, FM Phase-III will extend FM radio services to about 227 new cities, in addition to the present 86 cities, with a total of 839 new FM radio Channels in 294 cities, and will result in coverage of all cities with a population of one lakh and above with private FM radio channels.

Proposals under Phase-III:

– Broadcasters have been permitted the carriage of AIR news bulletins on their stations. Also content featuring certain categories like information related to sporting events, traffic and weather, coverage of cultural events, festivals, coverage of topics pertaining to examinations, results, admissions, career counseling, availability of employment opportunities, public announcements pertaining to civic amenities like electricity, water supply, natural calamities, health alerts, among others as provided by the local administration, will be treated as non-news and current affairs broadcast and will be permissible on private FM radio stations. The government still does not want private news players to threaten AIR, and maintains its monopoly on news.

– FDI (Foreign direct investment)+FII( Foreign Institutional Investment) limit in a private FM radio broadcasting company has been increased from 20% to 26%.

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– The limit on the ownership of Channels, at the national level, allocated to an entity has been retained at 15%

– Private broadcasters can own more than one channel in the city provided it’s not more than 40% of the total channels in a city subject to a minimum of three different operators. So are the broadcasters open to start niche, targeted stations?

– The new policy allows networking of channels in all cities, allowing broadcasters to relay broadcasts from one studio to multiple cities, without the need to invest in new studios for each city. Previously this was permitted only  in C and D category cities.

– Private broadcasters will be able to choose any agency other than the government owned Broadcast Engineering Consultants (BECIL), for construction of common transmission infrastructure (CTI) within a period of 3 months of issuance of the letter of intent, failing which BECIL will automatically become the system integrator and set up co-location facilities and CTI.

– The government has proposed special incentives for North East, Jammu & Kasmir and island territories.Channels allotted in these regions will be allowed over and above the 15% national limit to incentivise the bidding for channels in such areas. Broadcasters will be required to pay half the rate of annual license fee for an initial period of three years from the date from which the annual license fee becomes payable and the permission period of fifteen (15) years begins, in these areas. Apart from the fee relaxation, the guidelines ensure that Prasar Bharati infrastructure would be made available at half the lease rentals for similar category cities in such areas. The provisions of the Policy will also be available to FM Phase-II operators.

– To improve the viability, as against a maximum of 4 channels in D category cities permitted in FM Phase-II, FM Phase-Ill proposes 3 FM channels in D category cities. The government believes that viability will improve since there would be lesser operators to share the advertisement pie.

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– It has also proposed the reduction in the lockin period of shareholding of promoters/majority shareholders from the present 5 years to 3 years to give them greater freedom to change the Share Holding Pattern.

According to the government statement, e-auction for the channels will be conducted in batches and number of batches will be decided by the Ministry of I&B, depending upon the response from the bidders after auction of first batch. The Ministry of intends to appoint an independent agency, through a transparent selection process, following established procedure, to conduct e-auction.

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