RadioandMusic
| 22 May 2018
Private FM radio ad revenue overcoming DeMo, GST blues?

BENGALURU: The media and entertainment industry seems to be slowly overcoming the blues of demonetisation and the new GST regime. Different verticals and players within those verticals in the industry will definitely not have the same rate of progress. One of the verticals, private FM radio, is slowly coming to terms and has staged a bit of a recovery, going by the numbers released by the Telecom Regulatory Authority of India (TRAI) for the quarter ended 31 December 2018 or Q3 2018 as the quarter is known in fiscal terms (quarter under review, third quarter).

According to TRAI data, 16 new radio stations became operational in fiscal 2018 until the end of the third quarter. Of these, four became operational in the October-December 2017 quarter taking the total number of private commercial FM operating radio stations to 326. TRAI data for the quarter under review reveals that 325 private FM radio stations reported total advertisement revenue of Rs 570.08 crore (Rs 5,700.8 million) or about Rs 1.75 crore (Rs 17.5 million) per station. Comparative numbers for the first and second quarter of fiscal 2018 were Rs 477.51 crore (Rs 4,775.1 million) from 310 stations or Rs 1.54 crore (Rs 15.4 millon) per station and Rs 539.04 crore (Rs 5,390.4 million) from 322 stations or Rs Rs 1.67 crore (Rs 16.7 million) per station respectively.

Of course the industry is quite a way off from the peak ad revenue of Rs 2.22 crore (Rs 22.2 million) per station two years ago (Q3-2016, the October-December 2015 quarter) or Rs 533.70 crore (Rs 5,337 million) from 240 stations; or even the Rs 2.01 crore (Rs 20.1 million) per station of the year ago quarter when demonetisation hit the completely unaware Indian citizen (Q3-2017, October-December 2016 quarter). In Q3-2017, TRAI reported ad revenue of Rs 547.76 crore (Rs 5,477.6 million) from 272 stations. Please refer to the figure below for average ad revenue per station trend since Q1 2012 (Q1-12, quarter ended 30 June 2011, April-June 2011 quarter) until Q3 2018 (Q3-18).

It must be noted that the average revenue per station number is just an indicative figure. Big players such as Entertainment Network India Limited (ENIL), Music Broadcast India Limited etc., that operate a fraction of the total number of private FM stations in the country have a lion’s share of revenues.

More than 25 percent of the ad revenue reported by TRAI can be attributed to ENIL or Radio Mirchi. Mirchi’s consolidated operating revenue for Q3 2018 declined 1.5 percent y-o-y to Rs 148.42 crore (Rs 1484.2 million) from Rs 150.65 crore (Rs 1506.5 million).  Consolidated profit after tax (PAT) declined 19.9 percent y-o-y to Rs 13.16 crore (Rs 131.6 millon) from Rs 16.42 crore (Rs 164.2 million). ENIL’s numbers for the quarter under review were affected by an early Diwali and an errant client according to its press release.

Commenting on the results, ENIL MD and CEO Prashant Panday said: “While our revenues dropped a notch, it was because of some issues with one single client. Had that not happened, we would have reported a 4.6 percent growth. Fortunately, the issue has been resolved recently. There was also the impact of early Diwali which advanced as much as Rs 12 crore (Rs 120 million) from this quarter into the previous one. With all this behind us, we remain confident about rapid revenue and profit growth in FY 2019 and beyond. We are delighted that our new Phase-3 stations have started making a profit within just a year and a half of launch!”

MBL or Radio City revenue from operations increased 4.7 percent y-o-y to Rs 76.18 crore from Rs 72.79 crore (Rs 727.9 million). PAT increased 16.4 percent y-o-y to Rs 11.88 crore or Rs118.8 millon (15.6 percent margin) from Rs 10.21 crore or Rs 102.1 million (14 percent margin).

MBL director Apurva Purohit said, “We have delivered a strong topline growth of 9 percent against mixed trends of the market. The growth is achieved mainly on the back of rapidly growing new markets along with an uptick in volumes. Despite a nonconductive environment, we have grown at 5 percent in volume terms in comparison to the industry growth rate of 2 percent. There has been a 20 percent revenue growth in both November and December, we believe that the impact of demonetization and GST has reduced to a great extent and business will only continue to grow from here. There are signs of an economic revival which will further bolster our growth prospects.”

Among the major players are the two mentioned above, Red FM that is associated with the Sun TV Network group, Reliance Broadcast Network Limited (RBNL)/ Zee Media Limited owned Big FM. There are even single station players. Among the listed successful ones whose numbers are available in the public domain are ENIL, MBL, DB Corp’s My FM and HT Media’s Fever FM.