ITV

Tag: FM broadcasting

  • Adlabs expanding into FM, home video; to pump in Rs 5 billion

    Adlabs expanding into FM, home video; to pump in Rs 5 billion

    MUMBAI: Adlabs Films Ltd is planning to invest Rs 5 billion over the next three years for expansion of its operations, entering into new areas, and making acquisitions.

    The company aims to raise up to $100 million through issue of Foreign Currency Convertible Bonds (FCCBs). The board will meet on 8 December for this purpose. “We are targeting $100 million. But it could be in the region of $50-100 million, depending on the response and terms that we manage to get for the FCCB issue,” says Adlabs Films chairman and managing director Manmohan Shetty.

    Adlabs plans to foray into private FM broadcasting and has expressed interest in bidding for radio stations. It is also getting into the home video segment. “The investment towards radio would be approximately Rs 1.25 billion, if we manage to get the maximum stations that are allowed to an individual operator,” says Shetty.

    In the multiplex business, Adlabs aims at adding up 100 screens by the end of FY 08. It already has 35 screens. “We will be making an investment of Rs 2 billion towards multiplexes,” says Shetty.

    For film production, the plan is to produce at least seven-eight movies and pump in Rs 500-600 million a year. The company has tied up with noted film makers for a longer term. Ram Gopal Varma, for instance, will be making 12 films for Adlabs. Vipul Shah has been tied up for three movies and Prakash Jha for two. “We are negotiating with Ramesh Sippy. We plan to produce at least seven-eight movies a year from FY 07 onwards,” says Shetty.

    Adlabs is also looking at expanding through acquisitions. “We are in negotiations with a few companies,” says Shetty.

    Early this year, Anil Ambani’s Reliance Land Pvt Ltd acquired 51 per cent stake in Adlabs for a total consideration of Rs 3.6 billion.

  • Licensing Process

    Licensing Process

    The Committee is of the view that the open auction bid process was not suitable for auctioning of the frequencies and it did not yield the desired results. Various legal challenges were raised in connection with the open auction bid process followed in case of Phase I of the liberalisation of FM broadcasting. The Committee recommends that adoption of tender process for radio licenses is more suitable for the following reasons:

     

    1. It is a standard and simple process followed by the Government in numerous sectors whereby sufficient experience has been garnered. The process is also judicially well recognised.

    2. It is an internationally well-accepted process. 
    3. It is the preferred process, specifically for broadcast licenses. It is one of the prescribed processes in case of auction of spectrum licenses in Australia and is also followed in the United Kingdom. The European Community recommendation on Independent Broadcast Regulator also envisages a tender process for broadcast licenses.

    The License process shall consist of the following rounds:

     

    a. The first round should be the pre-qualification round and only bidders complying with the financial and technical eligibility criteria specified in the tender documents and as certified through a viability/ sensitivity study by an Eligible Financial Institution/Bank should qualify for the next round. The security for participating in this stage should be the earnest money deposit as specified in the tender document. The security amount should be in line with phase I tender document.

     

    b. After the pre-qualification stage, the financial bids of the qualified applicants should be opened at a notified time and place to determine the Entry Fees.

     

    The bid license amount must be based on the business plan and the security for the same should be in the form of an irrevocable, unconditional and confirmed bank guarantee for the full amount of the quoted license fees. The bank guarantee shall be the security for the period from the date of application till the date of payment in full of the entry fees (i.e. the date of allocation of frequency).

     

    In the tender process the entry fees could naturally be different for each bidder. The number of highest bidders that equal the number of frequencies available would automatically win the frequencies at each center (e.g. if there are seven frequencies available at a center, the seven highest bidders would be allotted the frequencies).

     

    Immediately upon award of the bid, 25 per cent of the entry fees should be payable and the frequency should be allocated only upon payment of the balance amount of the entry fees.

  • Foreign Investment

    Foreign Investment

    The Committee is in favour of a simplified foreign investment regime for radio.

     

    We recommend that the following safeguards be introduced in the license agreement: 

    a. FDI up to 26 per cent should be permitted in FM broadcasting (news as well as entertainment).

    b. While calculating the 26 per cent limit on FDI, the foreign holding component, if any, in the equity of the Indian shareholder companies of the licensee should be duly factored in on a pro rata basis to determine the total foreign holding in the licensee. The equity held by the largest Indian shareholder group should be at least 51 per cent of the equity excluding equity held by public sector banks and public financial institutions. 

    c. 75 per cent of the directors of the licensee, the Chief Executive Officer of the licensee and/or head of the channel and all key executives and editorial staff of the channel must be resident Indians appointed by the licensee without any reference on or from any other company for all news channels. For all entertainment channels exception to the above could be made for ‘People of Indian Origin’ cardholders / NRIs for the position of key executives and editorial staff. This facility will not be available to channels providing any kind of news. It should be obligatory on the part of the licensee to inform the Ministry in writing before effecting any alteration in the foreign share holding pattern or in the shareholding of the largest Indian shareholder and / or in the CEO / Board of Directors. Further, the licensee should be liable to intimate the Ministry the details of any foreigners/ NRIs employed/engaged by it for a period exceeding 60 (sixty) days. Further, there should be a bar on direct/ indirect outsourcing of content to foreign parties.

    d. The licensee should be required to make disclosures of any shareholders agreements, loan agreements and such other agreements that are finalized or proposed to be entered into. Subsequent changes to the said agreements should be permitted only with the prior approval of the Ministry. Further, the licensee should not be permitted to raise loans from foreign entities for all news channels beyond the proportion of foreign equity allowed. (In other words, for Licensees putting out news, upto 26 per cent of their total equity can be taken as loans from foreign sources and no more).

    e. In the light of the aforementioned changes to the FDI policy, in respect of FM broadcasting, the existing licensees should be required to effect the necessary amendments to their Memorandum of Association and Articles of Association and relevant agreements no later than two months from the date of migration of their licenses from Phase I to Phase II.