Financial Daily from THE HINDU group of publications
Tuesday, Sep 16, 2003
Industry & Economy - Radio/TV
Radio City moves court for licence protection
New Delhi , Sept. 15
AFTER Star News, it is now the turn of Radio City to seek court protection against the Government's move to cancel the licence for violating the FM radio norms.
The Ispat group-owned Music Broadcast Private Ltd (MBPL), which holds the Radio City licence, has approached the Bombay High Court seeking a stay to prevent the Government from cancelling the licence.
Star India Pvt Ltd, through its subsidiary Digiwave, is the sole content provider for Radio City.
The decision to move court comes even as the Information and Broadcasting (I&B) Ministry felt that the answers provided by MBPL on issues relating to the loan and content sharing agreements with Digiwave have not been adequately answered.
The company has responded to the show cause notice issued by the I&B Ministry seeking an explanation as to why their licence should not be cancelled due to violation of certain clauses in the FM radio licence agreement.
The Government had sought details on its loan and content agreements with Digiwave, besides the shareholding pattern of the Star company.
The high debt equity ratio of MBPL was also a cause of concern.
MBPL, in its response, has said that there is nothing unusual in high debt-equity ratio, especially in a greenfield project.
According to sources, since the Government has not stipulated the eligible debt-equity ratio in the licence agreement, "this decision is entirely a management decision".
The Government is of the view that MBPL has also not been able to furnish details of the shareholding pattern of Digiwave - a company from which it sources content apart from seeking loans.
On the relationship between MBPL and Digiwave, the Ispat company has said that since Digiwave had agreed to play an advisory role, senior officials of the Star company including Mr Sumantra Dutta and Ms Praveen Malhotra have been interacting with the Government.
Also, while the Star brand name has been dropped from the advertising, MBPL said that Star India continued to be its ad sales and marketing agent.
The company also claimed that the adverse reports surrounding Radio City have started impacting revenues. "They have sought a meeting with the Government to explain their position," said I&B Ministry sources.
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