MUMBAI: B.A.G Infotainment, a wholly owned subsidiary of B.A.G. Films Ltd, plans to invest over Rs 500 million for its FM radio business spread over 10 towns.
The investment includes expenses towards infrastructure, equipments and studio facilities. The company will also have to contribute to the common transmission infrastructure. "We have bid successfully at very low costs. This has given us an edge and our outgo towards license fee is just 10 per cent of our project cost," says B.A.G Intotainment CEO Rajiv Mishra.
B.A.G is also trying to work out an equity arrangement among a consortium of small and regional radio operators who are in the process of being formed for collectively tapping advertising. "Our feeling is that there should be a common bonding for the consortium that will make it last. This will be best served by an equity arrangement among the partners. We are in talks towards this," says Mishra.
The consortium of radio operators for ad sales is in the process of being finalised. B.A.G will lead this combination which will have a national footprint to present before advertisers. Besides pressuring on higher ad rates, the partnership arrangement can help drive down operating costs for these FM broadcasting companies.
B.A.G expects to rope in 40 radio companies as members of this consortium. The idea is to counter the bigger players like Radio Mirchi, Radio City, Sun TV group and Anil Ambani-controlled Adlabs. "We hope to form the consortium by 15 July. We have already signed up with six companies including Renecka Fincon and Gwalior Farms. We are also in advanced talks with many others," says Mishra.
B.A.G has bagged licenses to operate stations in Shimla, Patiala, Karnal, Hissar, Ahmednagar, Jabalpur, Dhule, Jalgaon, Muzzaffarpur and Ranchi. "We expect the second phase of FM stations to be active by December. The marketing efforts should start somewhere in September-October. As for selecting radio companies who would form the consortium, we are careful that in each locality no competing operator is selected. We are selecting geographical blocks," says Mishra.
