FM Phase III bid: Sun plans to move court today

As is extensively reported, auctions for the third phase of FM Radio would commence by the end of this month. As e-auctions are happening for the first time, the bidding radio stations would go through a mock auction drill on 21st July 2015. It is also known that Sun TV owned Suryan and Red FM (Sun has majority stake at 48.9%) have been disqualified from participating in the bid for Phase three.

If one does a quick analysis of information available in the public domain, RED FM, with a punchline of Bajaate Raho (keep playing) might not only be restricted from entering newer markets but might also have to stop playing altogether.

While Sun plans to move the court against the decision, the Association of Radio Operators for India (AROI) has too has sent a letter the Prime Minister.

In a communique to Adgully.com, Nisha Narayanan, COO, RED FM on the current scenario: “We were looking forward to Phase 3 of Private FM Radio, with us poised as one of the key bidders. We are surprised that a channel that mainly plays Hindi music and is an entertainment centric station has been denied security clearance.” She added, “We believe that if we do not participate in the auction, it will reduce the intensity of bidding as there will be fewer competitors in the fray. Also we believe that this will harm the industry in the long run as a major player will be absent. For the industry to grow and the market to expand you will need the existing players to expand into more centres as well as more players to come into the FM business.” She also spoke of moving the court, 

“We will move court against this decision. We have full faith in the judicial system of our country and we are confident that we will get relief from the court.”

Meanwhile in a conversation with PTI, Sun group Chief Financial Officer S L Narayanan has stated, “"We will move the court on Monday challenging the decision. I am hopeful that we will get justice. We will knock the door of every court," he added, "We will get acquitted. Because nowhere in the world anybody is punished before adjudication process is over. Due process of law has to be exhausted. Till then I am presumed innocent."

The letter written by AROI has expressed concern that it would lead to closure of 20% FM radio stations in the country if security clearance is not provided to Red FM. It has also stated that it would lead to major job losses.

Sun TV group runs 45 FM channels, under the brand name Suryan FM in Tamilnadu, and Red FM in other cities.

FM stations were very excited at the announcement of Phase III auctions after a rather long wait. Would the current scheme of things put a spanner in their plans is yet to be seen. As to comment on the reasons for security clearance not being provided, Adgully has no expertise in the matter, and hence we would refrain from commenting on the same.