RadioandMusic
| 24 Apr 2018
Indian FM Radio industry: lots of promise, yet problems of plenty

MUMBAI: Old time Indian regional FM radio players are today seeking succor. The reason: following the completion of phase III, national biggies have been invading their smaller turfs, undercutting them on ad spot rates and making tall claims about becoming No 1 in the markets. What’s also worrying the entire FM radio ecosystem are the “inequitable” music royalties that they have to fork out for smaller towns with relatively less ad and revenue potential.

Consider Radio Choklate, Orissa which has been operating in for the past eight to nine year and is the only radio station playing content in Odia. But national biggies and recent entrants such as Red FM and Big FM have been belting out 100 per cent Hindi programming, explains Radio Choklate executive director Tanaya Patnaik.

“Even though we believe content matters, we are facing challenges,” says Patnaik. “The biggies are selling their spots at Rs 20 to 30 per 10 seconds where we have been selling at Rs 130 to Rs 150. Hence clients are being diverted and competition is being raised.”

Putting a cap on the advertisements too has been a burning topic in the radio business. The industry leaders are now also taking some serious steps to resolve the issue.

Also read: Industry leaders to put a 'cap' on radio advertisements – that is the amount of radio spots run per hour.  

One way of doing so is by hiking ad rates, albeit tentatively. For instance, MY FM took the step of taking its spot rates up north.

Also read: MY FM increases advertising rates by 25 per cent

Then there is the alarming trend that has emerged of almost every radio status claiming numero uno status which creates a lot of confusion amongst the advertisers.

Explains Red FM CEO Nisha Narayanan:  “Lack of a tool of measurement too is a major hindrance. Everybody claims to be number one and there is no justification of that number one spot. Data can always be analysed as per convenience but that may not be the true picture.”

A way out is to implement a national or regional listener monitoring system in place highlights MY FM CEO Harrish Bhatia.

Says he: “We should have an individual measurement system like BARC is for television so that the industry can apply rates for the buyers accordingly. This can make things easy and the buyers can participate accordingly, knowing who stands where and have better prices.”

But not much has moved on this front since the Telecom Regulatory Authority of India (TRAI) issued a consultation paper on radio audience measurement in May 2016. In fact, All India Radio had opposed any move to set up a rating body vehemently saying that its listenership would not be reflected effectively in any such measurement body. So clearly industry needs to reach some consensus on this.

Also Read: Red FM increases ad price by 15 to 20 per cent

However, one area there appears to be agreement is the high reserve and bid prices that were set aside for the auctions, as well as the royalties that the industry has to dish out.

Also read: Radio Mirchi to cap inventory of existing radio stations to 15 minutes

Irrespective of the state/city the radio stations sold in auctions are priced equally instead of being benchmarked on the basis of their ability to deliver revenues, explains Bhatia. He says that this is unfair to the radio industry. “When Chandigarh can be sold for Rs 16 crore, Saharanpur neither being a state capital nor a metro city cannot be sold at the same price. Every buyer will purchase a station keeping profit in mind. Whereas, Saharanpur cannot give the expected profits, how will it be sold for such a high price?”

Seconding Bhatia is Narayanan, “The royalty that I pay in big or small towns is almost the same. In places like Pune and Ahmedabad royalty paying revenues are limited. This is one reason why regional players are not in the foray. Nobody enters C-Towns like Dehradun and Chandigarh as they are priced at 16 crores. Small players cannot afford so much money. Red FM bid for it this time.”

This is probably one of the main reasons why small town stations went unsold during the auctions. This also is one of the reasons why the regional players are yielding to the biggies in smaller towns.

Bhatia also further states that one-time fee; tariff rates paid by the radio stations are irrational and unfair for the smaller radio stations. “If we want radio to be viable in smaller towns too, one time fees can be rationalised by dividing it area wise -  north, south, east, west. In the next radio phase, there will be smaller towns also, hence it is necessary to rationalise the tariffs and royalties.”

The industry is growing rapidly and changing for the better, thus it also expects the government to bring in certain necessary changes in its policies. On this Friends FM station head Jimmy Tangree commented, “The requirements are never ending. We always want some or the other changes and I feel things in the industry are fine and the government is really looking up at us. The only worrisome part is the ever escalating prices of radio stations and that should be controlled.”

Narayanan avers, “One of the things we should have are news and current affairs. There is a Supreme Court order that is pending but this is one of the important things. If we want another category to be added in radio, sports commentary needs to be allowed.”

She further explains, "This government supports radio. BJP has utilised radio during general elections in the best way. They customised and personalised the advertisements as per the regions. There is also ‘Mann Ki Baat’ which means the government understands the potential of radio. They have also brought in the DAVP (Directorate of Advertising and Visual Publicity) ads, but radio is too powerful a medium and they have to be cautious."