FM auctions net Rs 1,064 crore

The first round auctions for phase-3 of FM radio licences closed with the government raising Rs.1,064 crore for 91 frequencies in 54 cities. In addition, seven frequencies have reportedly been auctioned but details were not available because of a Madras high court stay on them. As many as 38 frequencies, mostly in smaller towns like Tirupati and Vijayawada, remained unsold.
The big bidders in this round of auctions were Entertainment Network India Ltd (which owns the Mirchi brand) with Rs.339.2 crore for 17 channels; HT Media Ltd, which bid Rs.339.8 crore for 10 channels; Digital Radio Broadcasting Ltd (Sun TV Group) with Rs.134.9 crore for three channels; and Reliance Broadcast Network Ltd, with Rs.116.9 crore for 14 channels. In terms of number of winning bids, DB Corp and Rajasthan Patrika equalled Reliance's 14, but their total outlay was much smaller because they stuck to smaller towns like Karnal, Dhule, Jalgaon and Jhansi.
If the successful bids by the Sun TV group entities covered by the HC stay were to be taken into account, its total outlay would be in the region of Rs.245 crore--that's if its bids are allowed to go through.
The city that fetched the highest bid was Delhi at Rs.169.2 crore, about five-and-a-half times the reserve price of Rs.31.4 crore, a clear indicator of a `scarcity premium' driving bids up, since there was just one frequency up for grabs in the Capital. Similarly, the bid for Bangalore touched Rs.109.3 crore, over five times the reserve price, and for Mumbai Rs.122.8 crore, three-and-a-half times the base price (which was relatively lower because two frequencies were on offer). The auction rules, which allowed the system to be `gamed', particularly by non-serious bidders, also played a role in sending prices through the roof.
Some smaller cities like Guwahati, Sholapur, Bhubaneswar, Jodhpur and Varanasi saw the winning bidders shelling out even higher multiples to the reserve prices, with the bid in Guwahati being nearly 11 times the base price.
The results of the auctions, along with some acquisitions, means that the Mirchi brand will expand from the current 32 cities to 43. In some cities, it will now have more than one channel--for instance, in Bangalore, two, and Hyderabad, three.

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