Private FM players may skip new auctions amid unresolved industry issues

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Also read | Govt revises advertisement rates for private FM radio The core issues revolve around the licence fee structure and rising operational costs. FM players have long argued that the system needs an overhaul and that the licence fee should be capped at 4% of gross revenue across the board. The Association of Radio Operators for India (AROI) suggested last year that the annual licence fees be delinked from NOTEF, urging the government to amend Clause 6.1 of the Phase III Policy Guidelines accordingly.

A senior executive from a leading radio station, speaking on the condition of anonymity, said, “In many smaller cities, it’s already difficult to generate revenue. The operational costs are high, and finding advertisers is a challenge. We’re cutting staff and expenses just to survive." In August, the Union Cabinet approved the third batch of e-auctions under the Private FM Radio Phase III Policy, offering 730 new channels with an estimated reserve price of ₹784.87 crore.

While the government has agreed to cap the licence fee for new channels at 4% of gross revenue, broadcasters believe this concession is insufficient without scrapping the base price, which they argue is too high in smaller markets. The situation is compounded by rising operational costs, including higher royalties demanded by the music industry, particularly through "per needle hour" fees. Additionally, radio operators must pay Prasar Bharati in advance to use its land and tower infrastructure (LTI), as well as Broadcast Engineering Consultants India Ltd.

(BECIL) for Common Transmission Infrastructure (CTI) setup. Failure to make timely payments results in high interest rates—up to 24%—on delayed payments to Prasar Bharati. Also read | Trai issues