Anurradha Prasad President AROI; CMD – B.A.G. Network is clearly on a mission. With the Music royalty issue taken care of, she says the Radio industry should now look forward to excellent tidings on automatic migration and extended license period for current operators, and those eyeing Phase III should safely expect a policy that takes on board all concerns of the Radio industry in India. Meanwhile, AROI's mission on other specific areas like an equitable empanelment of Radio operators for DAVP ads and permission to produce and air news, continues.

In conversation with Pavan R Chawla, Director Content  & CSO Indiantelevision Group and Editor - RadioAndMusic.com

It's been much less than a year since you've taken over as President of the AROI  What have you tried to achieve so far, and what has given you the greatest satisfaction?

I continued the works and efforts initiated in the past. Some recent efforts are:
a) Presentation to Parliament Committee  (HR) on Music Royalty.
b) Presentation to Parliament Committee (IT) on Phase III Policy.
c) Closer understanding with Government, without compromising  on independence of approach.

Some of these efforts have started bearing fruit  The most satisfying has been the Copyright Board ruling on Music royalty at 2% of revenue as against the previous exorbitant rates which amounted to roughly 18% of revenue.

The Copyright Board order has been the silver lining for the Radio industry and the resolution will pave way for short-term survival and long-term growth  It will also pave way for a successful Phase III auction.

What are the other major problem areas in Radio you are worried about, and what is your action plan to help resolve them?

The problem areas that remain to be satisfactory resolved are:
a) Extension of license period  to at least 15 years as the current 10 year period is not enough to even recoup costs, let alone profits.
b) Low rate and volume of DAVP ads.
c) Announcement of Phase III policy.
d) High Prasar Bharti Rentals.

What is the status on the most pressing demand to extend the license period to 15 years?

All I can say right now is that I, along with members of the fraternity, have taken up the matter at the highest levels, and we are hoping for a satisfactory resolution of the matter.

What about the Radio industry's other pressing demand to be allowed to generate and air news like other media like television and print?

We have been pursuing to convince the government to allow news on private FM radio, the same way as it allowed on television. However certain concerns of the Home Ministry on the difficulty of monitoring 1000 geographically disbursed stations need to be addressed. Pending this, the government should allow verbatim feeds on radio from news television, AIR and news agencies.

If that happens, what kind of revenue generation are you expecting from the industry?

Since the news television genre is about 10-15% of total TV ads, we can expect a similar increase of 10-15% on radio once news is allowed 

There was word earlier that the I&B ministry might use the clock and obviously, the industry is not too happy with the idea. What is the latest on this?

I don't  think that the clock auction method has been finalized. In fact  the industry has been very comfortable with the Phase II methodology of closed tenders as it worked well and enabled smaller operators also to win bids  The clock auction method was also rejected by government earlier in Phase II  The main reservation is that richer bidders have an advantage in this method  

When is Phase III expected to actually start rolling out, beginning with the bidding process? It was expected to happen this year. What is causing the delay?

The Phase III policy is the window to a much more liberalized and fair regime. Therefore it was important that views of all interest groups be considered  AROI had requested for an automatic migration with extended license period for current operators. Since the extension is the core to the very survival of the industry, this matter was taken up and is under active consideration at the highest level. We expect the declaration of Policy very soon.

What are the concerns of radio industry as it steps into Phase III?

The interests of existing radio operators should be protected through an extension of license period. This is the main concern.

The radio industry also expects government to support radio through an equitable allotment of DAVP advertisements. As of now, even after many years of operations, DAVP is yet to empanel many of the radio stations.

What is your view on the current systems of measurement of radio listenership available to the medium today? How do you view the performance of RAM and IRS respectively?

There is a lot of scope for improvement. Further, most small stations do not get measured. We have been discussing this with both RAM and IRS, and are sure that an action plan to improve measurement performance will soon be worked out and implemented.

Radio chiefs are divided in their opinion on whether or not the royalty issue is actually solved. One believes it is solved, while another disagrees, saying the order does not specify which of the several interested parties the royalty should be paid to. What are the grey areas in the order?

The Copyright Board order is out  We believe that the order is fair and as per international norms. It clearly defines the royalty payable for playing music on radio and the mode of distribution to all music companies.

Since the interested parties in the hearings were a few radio operators and PPL, the first licenses were issued to the radio operators who were party to it. However, the order applies to all radio operators and music companies. The process of application for and issue of statutory licenses to other operators  is on.

I think that in the long run Music industry will realize that growth of radio industry is complimentary to its growth. Music should use radio as marketing medium to increase legal sales. We will support all anti-piracy initiatives 

There were criminal and civil cases against the AROI on the issue of royalties. What is the status on those?

No, not against the AROI. Some cases were filed against individual operators as also against the last President of AROI in her capacity as head of Radio City. This was part of the strategy of Music Companies to harass radio operators through frivolous cases. These have been dealt with at individual operator's level 

As head of AROI, what would your advice be to radio operators and aspirants targeting Phase III opportunities?

Liberalization of television in 1990s led to an industry that soon overtook the Print media in terms of its size;  this, even while Print grew at CAGR of over 12 percent  We can expect a similar boom in the Radio business, which is fast becoming the favorite for retail advertising.

What is the average return on capital that the radio businesses are giving in the 66 cities it is currently in, and what return on capital is it likely to give in the Phase III cities  and towns?

Under Phase II policy and older copyright rates, it was not possible for almost all operators to cumulatively break even in 10 years  Therefore we have requested for a minimum 15-year regime. The revised license period and other Phase III initiatives, combined with a more rational copyright regime, will make the radio industry financially viable. The impact of these measures can be analyzed only when the policy is announced           

With 700 more stations to be auctioned , we can all look forward to one of the greatest leaps forward for the radio industry in India in the next 3 to 5 years.

What government help will you seek on behalf of the radio industry, to make sure that Radio survives and prospers in the smaller cities? Do you have a wish list, and whom are you approaching with it?

A fairer allocation and disbursal of DAVP advertisements to small cities and operators is what we believe should come in existence, and we have approached the Government with this request.

Is there anything you believe the entire radio industry should do collectively, which it is not doing right now,  to strengthen itself as a viable business proposition and thereby contribute to the economy?

We should promote radio across the country, including in smaller cities  This is the only medium which one can access while driving, eating, working or playing  and has tremendous potential, which needs to be promoted.

Radio today contributes 4-4.2% to the advertising pie. Where do you see this contribution at the end of Phase III?

10-15%. In next 5 years. Provided it receives a level playing field as a medium that has been and will be contributing strongly to bottom-of-the-pyramid infrastructure growth in India.