The COO of Red FM speaks about the decision to move court after being denied security clearance for participation in Phase III auctions and implications for the FM industry
BestMediaInfo Bureau | Delhi | July 20, 2015
Sun Group, which has FM brands Red FM and Suryan FM, is a significant omission from the list of 21 pre-qualified bidders for e-auction of first batch of private FM radio Phase III channels that was announced by the Ministry of Information & Broadcasting (MIB) last week.
Red FM, one of the oldest and first FM stations in India, has been denied security clearance due to the pending investigations and allegations against Kalanithi and Dayanidhi Maran.
In conversation with BestMediaInfo.com, Nisha Narayanan, COO, Red FM, throws light on the entire issue and the decision to move court for redressal, as well as implications for the Phase III auctions. Excerpts:
What is the official reason given for omission of Red FM from the list of pre-qualified bidders?
As per the communication received from the Ministry of Information and Broadcasting (MIB), they have stated that due to the pending investigations and allegations against Kalanithi and Dayanidhi Maran security clearance is rejected, which makes us ineligible to participate in the auction. We are surprised that a channel that plays mainly Bollywood music and is entertainment-centric has been denied security clearance.
What is the next course of action open for Red FM?
We will move court against this decision. We have full faith in the judicial system of our country and hope we will get relief from the court.
Along with the legal route, what other parallel strategies are you pursuing?
At this point in time, we are actively pursuing the legal recourse available to us and as we said, we have full faith in the judicial system of our country and hope we will get relief from the court.
How do you see this development impacting Red FM in the long run?
It’s unfortunate that one of the strongest radio brands of the country – Red FM – has not been allowed to participate in the auctions. It is essential in public interest that we are roped into the auction process since the absence of a strong player will significantly impact the intensity of rivalry when the bidding process begins.
Do you think denying security clearance to Red FM, one of the major FM players in the country, raises a question mark over the Phase III FM auctions?
If we do not participate in the auction, it will certainly reduce the intensity of the bidding with less competition. Hence, the amount of money that the Government will earn from this auction will be impacted. Also, we believe that this will harm the industry in the long as a major player will be absent. For the industry to grow and the market to expand, you need the existing players to expand into new cities and you need more players to come into the FM business.
How valid is the industry’s concern that any legal action would lead to a delay in the auction process?
This is something that we can’t comment on. All we can say is that we feel the decision to exclude us from the auctions is not fair and hence, we will petition the appropriate court to challenge this decision.
In the case that security clearance is still not given even after all strategies pursued, what recourse remains for Red FM?
I think it will be premature for us to comment on such a hypothesis. As we said earlier, we have full faith in the judicial system of our country and hope we will get relief from the court.
What signal does this give to international investment communities that on basis of allegations a company can be practically forced to shut its business?
In general, such an action does not boost the confidence of foreign investors. The fact that we are being denied the permission to bid is incomprehensible.
What is the market position of Red FM and various other radio channels of the group? How many employees will be affected by this decision?
We are the one of the largest FM networks in terms of footprint. We are the only national player in the North East states and have actively led to the development of the local music industry. As a network, we actively encourage women to apply for jobs and encourage their participation. We have been in the forefront of taking up CSR issues. We pride ourselves on being the “station for expression for the common man”. This decision will impact about 800 loyal employees of the radio business.
What is the support you have received from the industry/ peers?
We are very thankful for the support that we have got from the industry. The Indian Broadcasting Foundation (IBF), Association of Radio Operators of India (AROI), Broadcast Editors Association and News Broadcasters Association (NBA) have all supported us. AROI and IBF have even sent letters to the concerned ministries.
Indian Broadcasting Foundation President Uday Shankar described the move as “arbitrary and unfortunate”. He said, “IBF feels that Sun Group’s exclusion only on the basis of ongoing prosecution in unrelated businesses is a miscarriage of the due process of law and justice.” IBF has also written to the I&B Minister and Home Minister highlighting the industry’s concerns on the cumbersome process of security clearances.
News Broadcasters Association President and India TV Chairman Rajat Sharma has also expressed the view that we have a right to operate our business and that denial of renewal of license on the basis of security clearance is unwarranted and unjustifiable. The audience cannot be denied their daily source of infotainment and entertainment. This step is completely in contrast with the new business friendly policy propounded by the Government. Actions like these reinforce the perception of India not bring a good place to do business and scares away foreign investors.
Anurradha Prasad, BAG Films Chairperson and President, Association for Radio Operators of India, has said that the decision did not augur well for the radio industry. “As an industry, we felt that to exclude such a big network will impact the industry negatively Though the I&B Ministry has been pursuing the case, the decision puts a question mark on the ease of business claims being made by the Government,” she said.