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Star's Radio City now under Govt scanner — Probe to examine conformity to FM radio norms

Our Bureau

As per the licensing agreement, the licensee himself would have to carry out broadcast and cannot subsidier, assign or transfer the license to a third party.

New Delhi , Aug. 12

AFTER Star News, it is now Radio City which is to come under the Government scanner. The Information & Broadcasting (I&B) Ministry is initiating a probe into Star Group's FM radio business interests and is inquiring into its conformity to the FM radio norms in both `letter and spirit'.

Star India Pvt Ltd, through its subsidiary Digiwave, is the sole content provider to Ispat Group-owned Music Broadcast Pvt Ltd (MBPL) that holds licenses for operating FM radio channel in Delhi, Mumbai, Bangalore and Lucknow under the Radio City brand name.

According to sources in the I&B Ministry, it appeared that almost all funds for running MBPL's Radio City was provided for by Digiwave, which also provides exclusive content to the radio station.

While the Government is planning to ask MBPL the details of its relationship with Digiwave, it is also seeking opinions from the Law Ministry and Department of Company Affairs (DCA). It will also find out whether the arrangement between MBPL and Star in anyway violates the foreign equity restrictions in the sector.

The I&B Ministry will be examining whether there was any violation of the licensing agreements, besides looking at the financial arrangements between Digiwave and MBPL, said sources.

As per the licensing agreement, the licensee himself would have to carry out broadcast and cannot subsidier, assign or transfer the license to a third party. Also, the licensee must generate local and variegated content and make available quality programmes with localised flavour in terms of content and relevance.

Another area of concern is the issue of funding. Digiwave has provided a loan of Rs 58 crore to MBPL. Since, MBPL has a low equity base of Rs 1 lakh, the debt equity ratio works out to 5800:1. The Government is concerned about this as most lenders have guidelines for the debt equity ratio and the normal limit is 2:1.

This probe comes just after the Ministry has constituted an Expert Group chaired by FICCI Secretary General, Mr Amit Mitra, to re-examine the existing radio guidelines.

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