Delay in paying bank guarantee hits FM project

Delay in paying bank guarantee hits FM project
EXPRESS NEWS SERVICE

NEW DELHI, OCT 13: When Zee Telefilms expressed its inability to pay the minimum bank guarantee amount of Rs 89.10 crore for FM radio operations, just four days before the deadline set by the Information and Broadcasting Ministry, officials were in a quandary. After having projected Rs 425 crore as revenue from radio licences, Zee's reluctance to pay up could influence other players, they were afraid.

And sure enough, on Thursday Nimbus, Observer Network Private Limited and Dabur joined Zee in requesting for extending the October 16 deadline by three weeks. But Information and Broadcasting Minister Sushma Swaraj gave them only a fortnight to pay up. The four companies together owe nearly Rs 180 crore to the Government. Zee officials refused to comment.

Senior officials in the ministry said they were expecting ``some'' companies to back off at the last minute because of their stakes in the stock market. ``We thought the companies would back off after inflating the floor prices just to keep competition out. But if they don't pay up in the next fortnight, we will take away their initial deposit fee,'' they warned.

The companies seeking an extension had even proposed a revenue-sharing formula with the Government instead of paying up their licence fee, a request that was turned down by the Minister.

Then Mid-Day sprung a surprise by showing up on Friday to sign on the letter of approval that would grant them the licence to operate at the stations they have opted for. A Mid-Day official said it would take at least a minimum of six months for private radio operators to get their act together. The group paid its bank guarantee of Rs 20.5 crore on Friday. Another company, Music Broadcast Pvt Limited, has decided to pay its minimum guarantee on Monday to avoid signing on the unlucky 13th.

The Government had taken the decision to open up radio for private participation last year, after which it invited bids for 29 radio stations in the country. With the reserve licence fee varying from Rs 20 lakh to Rs 1.50 crore, radio stations were categorised on the basis of the population of the city and its market potential. The broadcasters will get the licence to operate radio FM stations for the next 10 years.