RadioandMusic
| 20 Nov 2019
Demonetisation causes FM radio revenues to dip over 20 pc

MUMBAI: The after effects of demonetisation have been felt in every industry and radio is no exception to this.

Recently, ENIL MD and CEO Prashant Panday spoke out on television about the impact of the move and its impact on ENIL and the radio sector overall. He said that the impact was an estimated 10 per cent dip in business, but he expects a more turbulent December, speaking to a news agency. He mentioned that there is still hope as the advertisers are not pulling back on the advertising.

Stations across India agree that there has been a dip in revenues since 8 November, because the radio industry completely depends on advertisements for revenue. “It is being observed that advertisers across real estate, retail, FMCG, and education sectors have chosen to cut down their committed advertising drops, given the current scenario. Overall, there has been a 20 to 25 per cent drop in ad spends ever since the demonetisation policy was implemented by the government,” Reliance Broadcast Network Limited COO Ashwin Padmanabhan told Radioandmusic.com.

With the retail sector tightening its belt, the radio sector has witnessed a loss of 20 to 30 per cent in business. Mathrubhoomi director electronic and media Shreyams Kumar states, "The effect has been a 20 to 30 per cent drop in revenue for us. We believe it's a short-term effect. It should work to be positive in the long run." Mathrubhumi owns the radio network Club FM, which operates in Kerala.

Hope seems to be the driving force for both the radio stations and radio advertisers as Friends FM head Jimmy Tangree says, "Retail trade has been affected because of the cash crunch, but I see this as a passing phase. Things will be better in retail around end of December, early January."

Tangree adds that a lot of retailers that were constant at campaigning at Friends FM have stopped due to demonetisation. “They have stopped, but they will start advertising once things are back in place. December is also party season and a lot of brands will start advertising around this time.”

Tangree made a valid point. This is a festive season and this is also when FM Radio earns the most. “For retail this is the time, but the only brands that seem to be active at this point in time are brands like Paytm and then there are government ads. January and February are other two months that radio can bank on for advertising, because in March it will witness a dip with exams coming in. Next it will see an upward climb in April and May as it is the wedding season. June-July will once again be low with rains coming in,” stated Water Communications founder and director Vandana Sethi. Water Communications is a media advertising company that is also into buying and selling radio ad space.

She added that radio has been heavily affected by demonetisation as it is a secondary option for advertisers. “TV and print are advertisers primary medium. The primary medium too is affected. Radio is an important medium for retail, but the sentiments are low so campaigns have been cancelled.”

Misty FM VP Dilip Duggar believes that the biggest issue is payment. “Media planners are waiting for funds. Advertisers have delayed the payment in this quarter. There has been a dip of 25 per cent in comparison to last quarter.”

RJ Tanmay of Radio High that operates in Siliguri, agrees with Sethi, saying the station are still doing well with the government sector ads. However, their overall revenue has dipped 25 per cent.

Plunge in revenue has lead to radio stations postponing their events. Recently Red FM postponed ‘Riders Music Festival’ and Red FM COO Nisha Narayanan stated the reason as: “Looking at the current scenario we felt postponing it will be a wise decision and very fair from both listeners and business standpoint. Due to demonetisation, businesses across sectors have been impacted. The more organised retail sector which holds a big chunk of radio advertising has also been hit by demonetisation with people spending only on necessities."

Odisha headquartered Radio Choklate too has pushed its events keeping the market sentiments in mind. Commenting in the same Eastern Media Limited executive director Tanaya Patnaik said, "Initial reaction has been a bit skeptical. We have seen a few cancellations, around eight per cent. Events that largely depend on local sponsors have been postponed due to market sentiments.”

Concluding the current situation Padmanabhan stated, "This can be identified as a short-term impact of an economic reform of gigantic proportions, and while it takes a while for businesses to get accustomed to such changes, the radio industry could feel the pinch a lot less if adequate support is received from the government."

There seems to be light at the end of tunnel for FM Radio in India.