Broadcasters argue that the government has yet to address key demands, including capping the annual licence fee (Grant of Permission Agreement or GOPA) at 4% of gross revenue for existing frequencies and eliminating the base price for new channels. Without these reforms, industry players say expanding to new cities will only worsen their financial strain.
Currently, FM radio operators must pay an annual licence fee based on 4% of their gross revenue or 2.5% of the non-refundable one-time entry fee (NOTEF) for the concerned city—whichever is higher. In most cities, particularly metros, the NOTEF is substantially higher, pushing broadcasters into deeper financial distress. Many are struggling to break even, especially in large markets where high fees and declining advertising revenues are common.
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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.
No relief in sight
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.
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“The radio industry is bleeding, and there’s no relief in sight. We’ve already had to cut staff by 20%, and it’s becoming harder to survive,” another executive added. “The new batch is to generate employment, while we are finding it difficult to keep existing employees.”
Advertising slump
Adding to the pressure is a steep decline in advertising revenue. As digital platforms dominate the advertising landscape, traditional FM radio stations are struggling to compete, especially in smaller cities with limited local advertisers. Many broadcasters fear that expanding into new cities will only worsen these revenue challenges.
India has 388 FM radio stations across 113 cities in 26 states and five UTs, but the future of FM radio expansion looks bleak unless the government steps in with better reforms.
Previous auctions under Phase III saw mixed results. The first batch in 2015 raised ₹1,156.9 crore from 97 channels in 56 cities, but 26 channels, mostly in South India, remained unsold. The second auction in 2016 saw significantly less interest, with only 66 frequencies acquired out of 266 available, generating just ₹202 crore—far less than the first auction.
Compared to the first batch, which saw participation from 28 parties, the second auction had fewer players, including major broadcasters like HT Media, DB Corp, Reliance Broadcast Network and Jagran Prakashan-owned Music Broadcast Ltd, choosing to sit out. Industry insiders believe the same trend may continue in the upcoming auctions unless substantial reforms are made. It is learned that AROI has sought a meeting with the minister for information and broadcasting, with a final decision expected after that meeting.
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India currently has 388 FM radio stations across 113 cities in 26 states and five Union Territories, but the future of FM radio expansion looks bleak unless the government steps in with meaningful reforms. Broadcasters are particularly concerned about the steep base price for new channels, which they believe should be set by market forces, not the government.
“There’s simply no money left in the system,” said the executive. “We’re expected to bid for new frequencies and expand into cities where there’s little to no advertising revenue. If these unresolved issues aren’t addressed, it’s hard to see how the industry can grow or even sustain itself.”
DISCLAIMER: Mint is published by HT Media, which also owns Fever FM, Radio Nasha and Radio One.
