FICCI Frames 2008: Radio players visualise growth amid various challenges

From the days of medium wave and Vividh Bharati to today’s interactive FM radio programmes and talk radio, the airwaves in India have witnessed a whole world of changes. According to a recent FICCI-PWC report, the radio sector in India is poised to become a Rs 1,200-crore industry by the end of the decade. The sector is expected to grow by 40 per cent to touch Rs 672 crore in 2008 as per industry estimates. exchange4media talks to some major radio heads on the challenges and opportunities that radio as a medium faces, what would be the area of focus for radio growth – infrastructure or programming.

S Keerthivasan, Business Head, Fever FM, said, “The key challenges for radio currently are differentiation of content on offer and segmentation in the market. Radio has huge potential to evolve and with increasing choices for the consumer, the market will eventfully segment itself and come up with ideas like specialised radio stations and catering to varied listener palates.”

“From an advertiser’s perspective, radio is emerging as a vibrant, lively platform and advertisers are willing to exploit this vibrancy. Also, with a credible and robust radio audience measurement coming in place, there will be more advertising commitment to radio in the near future. One of the greatest advantages of radio is the live factor. Almost everything on radio is served fresh,” he added.

Keerthivasan further said, “Radio currently calls for programming innovations. People will listen to a radio station only if it is entertaining, informative and relevant to them. A radio station needs to focus on programming strategy and introduce innovations at a localised level, given the nature of the medium.”

Apurva Purohit, CEO, Radio City, and President, AROI, said, “Among the current key challenges private FM faces today are prohibitive music royalty costs, which specifically impact the profitability of broadcasters in smaller cities. It is imperative that broadcasters and the music industry sit face-to-face to arrive at a mutually beneficial solution. Considering that radio is one of the best promotional vehicles for the film and music business, there is ample scope for both industries to work together on a synergistic basis.”

“Another key need area is evangelising the medium itself. While individual broadcasters work towards enhancing their competitive advantages in the market, it is important that they work together as an industry to showcase the strengths of the medium. For example, how many people actually realise that radio is as much a traditional media vehicle as it is a new age 360-degree media vehicle? Thus, these key need gaps are as much challenges as they are potential opportunities in taking the medium even further,” she explained.

According to Purohit, “This year is all about consolidation, wherein each broadcaster builds on the power of his network to collectively reinforce the reach and impact of the medium. This consolidation, needless to say, would involve all aspects of business, be it a focus on differentiated programming or brand building initiatives. One expects the opening up of content with Phase III. The opening up of genres in radio would infuse a creative revival in the medium impacting its reach exponentially. With the manifold growth of the medium, the infrastructural demands and requirements are bound to increase too. With the help and support of the members of AROI, the radio industry is all set to leave its trademark on the concerned stakeholders.”

Vineet Singh Hukmani, CEO, Radio One, pointed out, “The challenge that a radio medium faces is that it is the youngest and most fragmented medium. Radio’s biggest challenge is to be able to overcome stringent Government policy on multiple frequencies, news, genres and be able to represent itself again to listeners as a highly entertaining and creative medium. Its second biggest challenge is to be able to keep the interest of those who work in it alive.”

Hukmani further said, “Whenever I see various people from the industry, I realise one thing – no one is having fun. Radio’s growth will come from how it challenges every norm of creativity and moves itself into a space of love and unconditional loyalty from its targeted listeners. We hardly hear anyone say I love radio or love this station. We just have ‘ambient listeners’ as programming is essentially non-differentiated. The focus, therefore, has to be on programming and being true to your targeted set of listeners.”

Tarun Katial, Chief Operating Officer, Big FM, said, “Broadcasting of news and current affairs needs to open up. Live sports events like cricket broadcast needs to open up as well. The share of radio in the total ad pie is still very low at about 3 per cent. Also, as a per cent of the GDP, radio ad spends are very low and breakeven time is huge.”

“Another challenge is to be able to speak as an industry collectively to the Government, the advertisers and the listeners to give the message that radio is exciting and very entertaining, but at the same time, fiercely competitive in one’s own sector of the market. Multiple frequencies in a single city would lead to clearer differentiation. The situation would get better once companies are allowed to own multiple frequencies in a city, this would lead to greater appetite for experimentation with content,” he added.

Katial further said, “The recent RAM results that were out recently proved how well the industry is doing. The year 2007 was a good year for radio, it was a year of expansion. The radio category needs to grow to where it deserves and with the radio audience measurement coming in, it is a move in the right direction. What is measured is what is bought and RAM has worked extremely well for the radio industry. FM Phase II saw as many as 245 more stations bagging licenses, most of which went up this year.”

According to him, “The FM radio broadcasting space commanding higher advertising rates is key to profitability. The top 2-3 players in the market with large advertising potential should fare well over the medium. Radio is becoming an important part of the advertising mix. The future will see more advertisers coming on board.”

He added, “The radio industry is poised for growth, which will come from both infrastructure and programming. Better infrastructure will enable better turnaround time for the set-up of stations and hence, quicker revenue generation, which is extremely critical for the category growth. Programming is also critical to the growth of the industry.”

Prashant Panday CEO, Radio Mirchi, said, “Radio is poised at an exciting point in time at this moment. As we speak, TRAI has made progressive recommendations for radio as part of Phase III. We believe that the entire process of kick-starting Phase III has been initiated by the I&B Ministry and hence, we believe that they will accept most of the TRAI recommendations. Should that happen, we believe that radio will spread across the length and breath of the country and that’s very good news for all.”

“There are obvious challenges that the radio business today faces, and one of them is ensuring viability. As things stand, with the exception of 1-2 companies, all the others are making losses. Most losses are on account of the relatively slow growth of radio revenues, while at the same time the entire cost structure in the business is so huge. With relations with the music industry in no better state than what was many years back, it is unlikely much of the potential gains of Phase III would actually happen. If the music royalty regime is not drastically overhauled, it is unlikely that Phase III would even take off,” remarked Panday.