Anchor | One Big Idea by Apurva Purohit: Rationalization of OTEF a must

18 Jan,2013

By Apurva Purohit, CEO, Radio City

 

For any business to survive it has to have a favourable regulatory environment and a cost structure which has the potential to translate ultimately into profit and a reasonable return on capital for the investors. For the past 11 years that the private FM has been operational in this country, it has had to consistently grapple with two major deterrents -License fees and Music Royalty.

 

While the Copyright Board judgment in 2011 was clearly a game changer for the industry in the matter of royalty, the next biggest game changer that can fillip investment in the industry is rationalization of the OTEF (one time entry fee) that is paid for the licenses.

 

One way of doing this is to have a differential OTEF for different genres which would encourage existing/new FM players to set up niche channels which would help the Industry offer listeners a varied choice in content.

 

Today, even if an FM operator wants to offer classical or folk music which many listeners ask for, he is expected to pay the same OTEF as others. This investment does not justify the revenues that could be generated out of the station as a niche offering.

 

Almost all towns in India with a population of over 10 million people already have enough FM stations offering popular music. The scope for expansion for FM players lies in offering new genres and to set up new genres, the current reserve price is a huge deterrent and therefore the above suggestion would circumvent the challenge.

 

Finally, of course, the ultimate game changer for FM is for the Government to move into allowing players to set up FM stations on a plug and play mode. Like TV and digital and print can do, any potential FM operator should be allowed the liberty to set up FM stations without any content restrictions at any point of time instead of waiting for an auction that happens once in five years.

 

 

 

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