When the National Communications Commission (NCC) in August last year announced that the government made NT$740.5 million (US$24 million at the current exchange rate) from the auctioning of 15 new radio licenses, it raised the question: “When did radio licenses become so valuable?”
The government at the time released five regional and 10 community radio licenses. The former were issued after a qualification review and an auction, while the latter were granted following a qualification review and a draw.
The commission had planned to release 11 community radio licenses, but the license for Lienchiang County failed to attract any bidders, it said at the time.
Media paid special attention to the auctioning of the five regional radio licenses, as the final bidding prices for three of them — covering areas in Keelung (and part of New Taipei City), Taipei and Taoyuan — were 8.4, 6.3 and 10.3 times higher than the floor prices respectively.
The final bidding prices for licenses in Hsinchu and in Kinmen were about four and 4.5 times higher than the floor prices.
The commission has confirmed that the winning bidders made the payments before the deadline.
The auction results were a surprise to many.
Taiwan Radio Chairman Ma Chang-sheng (馬長生) said that the bidding prices “exceeded the expectations of many radio operators.”
VALIDITY QUESTIONED
Chinese Nationalist Party (KMT) Legislator Alex Fei (費鴻泰) questioned the validity of the auction, citing the high bidding prices.
Fei said he was told that the licenses in Taoyuan, Taipei, Keelung and Kinmen were won by a group that allegedly sells medicines not authorized by the Ministry of Health and Welfare.
The number of radio listeners has drastically declined in the digital era, which has in turn shrunk the advertising revenue of radio stations, Fei said.
The commission was aware of the situation that the sector was in, but still set low floor prices for the auction, he said, adding that he found it problematic.
The high bidding prices could have resulted from the government having released the licenses after 18 years of planning, commission spokesman Wong Po-tsung (翁柏宗) said, adding that uncertainty about the release date of the licenses might have also contributed.
Asked the identities of the people behind the bidding teams and whether he had any guesses as to why they might think that running a radio station would be profitable, Wong said that the commission met only the representatives of the bidding teams and does not know their sources of funding.
The commission would meet the management teams of the new radio stations when they apply to simulcast radio programs, Wong said, adding that the winning bidders have three years to establish radio stations.
It took the government nearly two decades to release the new licenses because it originally planned to release them as a measure against underground radio stations, the commission said.
OLD POLICY
The policy in 2011 was to release as many licenses as possible to ensure that people nationwide had access to radio services and that radio frequencies were used more efficiently. Accordingly, the commission had previously planned to release 133 community radio licenses in three phases, with a three-year interval between the phases.
The plan was opposed by radio operators, who said it would affect their businesses. However, the commission went ahead with the plan, but decreased the number of licenses to 33 in 2014.
The reason for the reduction was that underground radio stations had all been taken off the air by 2012.
In 2017, the commission reduced the number of licenses to be released to 16.
Mike Kwan (關尚仁), an associate professor at Shih Hsin University’s Department of Radio, Television and Film, said that the auction’s results were “abnormal.”
“The nation’s radio service market is already saturated in terms of listeners and the number of radio stations. So why did people spend so much money bidding for the licenses? This shows that some people still think it could be a profitable business,” he said.
“However, if the bidders are planning to run a decent radio service, it would be impossible for them to generate a large profit in 10 to 20 years. What I am worried about is how the bidders are planning to recoup the money they have spent on the licenses,” Kwan said.
Some of the operators might use radio programs as advertising channels to sell products for profit, he said.
Kwan said he does not think that the winning bidders would use the radio licenses to experiment with innovative services.
People can sell products via online streaming, which is cheaper and requires no license, he said.
The commission needs to monitor the development of the new radio stations and help existing ones find their niche, Kwan said.
Weber Lai (賴祥蔚), a professor at National Taiwan University of Arts’ Department of Radio and Television, said that instead of releasing more radio licenses, the commission should help radio operators change their business models, for example through mergers or by developing new media services.
DWINDLING SHARE
The nation’s radio operators make a total of about NT$2 billion to NT$3 billion per year from advertising revenue, half of which is divided among the five largest operators, including Broadcasting Corporation of China and UFO Radio, said the former chairman of state-run Radio Taiwan International.
The new entrants would further divide the remaining half of the revenue, Lai said.
Commercial Radio Broadcasting Association chairman Chen Hong-jin (陳宏津) said the auction results showed that there are still people who are optimistic about the prospects of the radio broadcasting business.
Although the market would soon have 15 new radio stations, the heightened competition might still bear some positive results, he said.
The government should ease regulations and raise a development fund for the radio industry so that the operators can compete with other media outlets, Chen said.
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