Sector Report: Radio

Over the years, Government officials and broadcasters have used the Frames platform to share their views and developments on this nascent industry. It can be recalled that one of the very crucial announcements affecting the FM radio industry – that of giving operators the option of migrating to a revenue-sharing model -- was made at Frames 2005.

The nascent FM radio industry is on a high-growth path, thanks to the revenue-sharing regime put in place last year. However there are many nagging issues related to content and infrastructure which, once resolved, can help put this industry on a higher growth trajectory.

“It isn’t good news for All India Radio!” observed then Information and Broadcasting Minister Jaipal Reddy at FICCI Frames 2005. Reddy was speaking at a time when the government was working on further liberalising the FM radio space by issuing more licences for private stations.

Over the years, Government officials and broadcasters have used the Frames platform to share their views and developments on this nascent industry. It can be recalled that one of the very crucial announcements affecting the FM radio industry – that of giving operators the option of migrating to a revenue-sharing model -- was made at Frames 2005. “The Government will adopt a liberal policy. We will move towards a revenue-sharing arrangement. We will go into a fresh round of bidding. The emphasis will be on the growth of the medium and not revenue generation. We expect 400 new stations to come up!” Minister Reddy had then said.

The FICCI–PricewaterhouseCoopers Annual Report on the Indian Entertainment and Media Industry 2007 predicts an over three-fold jump in the growth of this industry by the turn of 2011. The report says the industry would grow at a compound annual growth rate of 28 percent to Rs 1,700 crore by 2011, from the current Rs 500 crore.

Over the past two years the radio industry has moved beyond AIR with private FM stations lapping up the airwaves. The three policy initiatives from the Government -- migration to a revenue-sharing regime, allowing foreign direct investment upto 20 per cent and opening up the sector to 91 more cities by issuing 338 licences to private players -- have aided this growth tremendously. This initiative, under the Phase II of FM radio expansion, saw the government netting Rs 1,145 crore in the form of one-time entry fee and migration fees.

FM Phase II saw as many as 245 more stations bagging licences, which are expected to be functional by the end of this year. As the licence agreement only permits a maximum of 15 per cent of the total number of stations that a single player can operate, the D- category cities, especially in the Eastern and Western zones, were the losers as those who had won licences surrendered the financially less attractive licences.

Appreciating this initiative, AP Parigi, head of Entertainment Network India (ENIL), which runs the popular station Radio Mirchi, observed, “The Government has been very helpful on this issue. Phase II gave a fresh lease of life to the industry and has really taken radio to the next level. Things only look better from here, given the way this has helped new stations to come in, the existing and serious players to organise more and convert radio into a revenue making option.”

In addition to the policy initiatives, Community Radio has also finally taken root. Satellite radio continued to grow while the new concept of ‘visual radio’ was also launched on mobile phones.

All isn’t rosy yet

However, the delay on the part of Broadcast Engineering Consultants India (BECIL), which comes under the I&B ministry, in institutionalising the common transmission infrastructure (CTI), has hampered the growth of this medium in some parts of the country. Another drawback is the government’s unwillingness to allow private stations to transmit news and current affairs. What is more ironical is that so far the discussions between the various stakeholders have yielded no tangible results too.

In addition, the debate on fresh content on radio still rages on with media players airing their disappointment at not getting enough differentiated content to choose from. This is despite that fact the all the operators have been unanimously defending this and calling for multiple licences in a city for the differentiation to happen.

On the single-licence-per-city policy, Red FM COO Abraham Thomas observes, “I believe that this is a primary reason players are not able to innovate and differentiate.” Agreeing with him is Radio City CEO Apurva Purohit who says, “My point of multiple frequencies is very simple. If all of us are allowed only one frequency in a city, all of us will go for the lower-end and the idea of being niche will never happen.”

A major issue the industry is divided on is the need for a robust measurement system. With each passing year, more and more players are expressing their discontent with the Indian Listenership Track (ILT) results from MRUC. The major point of dissatisfaction is the methodology of Day After Recall (DAR) followed by the research body.

Explaining her opinion on the methodology, Purohit observes, “The listenership track measures DAR which is equal to saliency, but it is not equal to listenership! So, typically in DAR, what gets picked up is salience, which really is the top-of-mind brand that you might have recently seen in an outdoor campaign.”

Thomas, looking at this from another point, says, “In an increasingly sophisticated and demanding marketplace, we need to move beyond the mere top-of-mind recall. Whether that means we move to the dairy methodology or we add audio mastheads to DAR, something needs to be done soon.”

With the readership surveys (that track other mediums like radio as well) available only once or twice a year and ILT being the only syndicated survey available today, every radio station is depending on its internal measurement systems for programming and other needs. This accentuates the need for a robust syndicated research system.

On the satellite radio front, WorldSpace is still the only player in the country. Nothing has been done in this sector over the years. The assurance given by I&B Secretary S. K. Arora at the FICCI Radio Forum in November last that a level playing field would be provided to both FM and satellite radio players and that more players could enter the satellite radio sector when a new satellite radio policy was announced, could provide the much-needed relief to everybody.

The good news came with 2006 finally seeing the approval of a new community radio policy allowing non-profit organisations to set up community radio stations (CRS). Explaining the initiatives on community radio to the FICCI Radio Forum, Arora had said, “The I&B Ministry will soon announce further liberalisation of community radio policy. We have so far given licenses for 60 community radio stations. After the new policy announcement, we expect this number to go into several hundreds, if not several thousands.”

However, last year also saw the shutdown of a truly novel community radio venture of a local technician Raghav Mahato, called Raghav FM Mansoorpur1, on the ground that only genuine public interest was not enough to run a radio station.

The not-so-talked-about area in the radio space seems to be the Internet radio. With various Internet radio stations already on-air in the country, albeit playing from outside, it has found acceptance with the online community tuning to it on a regular basis. With the tracking problems facing the medium, this model will surely provide an answer, but not before the medium itself becomes popular.

Multiple licensing, satellite radio, community radio and Internet radio are just some of the talking points in the sector, while conventional FM is still trying to find its feet on issues like content and marketing. There surely is a lot to discuss when it comes to radio.