RadioandMusic
| 13 Dec 2019
Tarun Katial: 'We see radio reaching where no other medium can'

* Radioandmusic.com features and salutes glorious years of Private FM Radio

From Ameen Sayani's golden voice on Binaca Geet Mala to raising political and social issues, All India Radio dominated the radio broadcast for decades, becoming an integral and primary source of information for every household in India. It was in 1993, when private FM radio broadcasters began their voyage when they were permitted to provide programming blocks to AIR-owned FM stations, and 6 July  - 1999 marked a historic day for private FM players as government gave a green light for private radio stations to operate in India. 21 licenses were  issued by Government of India to private FM radio broadcasters in 2001.

With high licenses and music royalties, content and reach limitations in Phase-II, the nascent industry faced all the government regulations and challenges of a new medium, and after ten years of struggle has successfully established itself as a 1200 Crore industry with 36 FM operators, 40 mn listeners in four metros and 350 mn listerners in 91 cities and town.

Being at an infant stage the medium has bloomed, flourished and created its own space with other media giants in the last decade. Radio has become the fastest growing industry after digital with 20% growth than the other mediums. The upcoming roll out of Phase-III has widened and expanded the scope of the medium, opening a diverse array of opportunities for Private FM Radio players with 839 frequencies across 294 cities, FDI upto 26% and the broadcast of news bulletins of All India Radio.

Radioandmusic.com will bring in expert views of the Private FM Radio players on the current radio scenario and the industry's voyage in the bygone decade. We begin with featuring Reliance Broadcast Network Ltd CEO Tarun Katial, who sheds light on the medium's rocky phase to its potential, impediments and escalation with the arrival of Phase-III.

On Radio completing 10 years and entering Phase-III…

The advent of FM radio gave a fresh lease of life to the stagnant radio industry in India. That was in 1999, when the Government of India had decided to allow private players to enter the FM broadcasting sector with a 10-year licensing period. However, it was only after the successful launch of FM Phase-II that the industry began to see rapid and robust growth, and even advertisers began to notice the impact of radio on listeners and the cost effectiveness of the medium. Cellular phone services, retailers, television channels, educational institutions, and even election campaigns have been the key advertising categories on radio.

Phase-III is a key development for the radio industry in India and will unleash the true potential of the medium. The interplay of mobile and radio penetration will see a host of new applications, content and engagement with audiences across the demographics. With expansion of FM radio to 300+ cities, FM radio will now touch 90 per cent of the Indian population, making it truly a common man's medium. With Phase-III reforms, the doors to this growth have now been opened and we will see an era of 30 per cent year-on-year growth for the radio industry.

Radio contributes only 4-5% to the total advertising revenue…

The last few years have been very good for radio. Revenues are expected to post 20 % CAGR, faster than most other mediums, aided by increasing acceptability of radio among advertisers.

Our radio numbers for instance have been excellent and very encouraging with year-on-year growth. The business has broken even over the last few quarters, is doing exceedingly well and the trend will continue, both in terms of volume and in terms of value. Our radio operations have turned EBITDA (earnings before interest, taxes, depreciation and amortisation) positive in the quarter ending December 2010. In that period, we also saw excellent inventory utilisation growth, 42% over the previous year. This clearly highlights the medium's effectiveness. We also saw a 23% growth in our radio sales from the tier-II markets over the previous year, which shows that growth is not merely restricted to the metros.

Mobility of the medium has increased listenership and revenues…

Yes, listenership has most certainly grown. Radio as a category has been undervalued by the market and given the stupendous reach. A recent RAM baseline study shows a 50% jump in listenership across the four metros. This means that advertisers are increasingly seeing the value and radio should get the price it deserves – given high reach and high engagement.

On Big FM's progress and growth …

Big FM, though a late entrant has toppled competition in several cities e.g. in Bangalore we are an undisputed No. 1, and also in Kolkata. Similarly, we are doing extremely well in most cities and have the No.2 market share already. From innovations for advertisers to clutter-breaking content, our network has served and continues to serve listeners across the country from Jammu and Kashmir to Pondicherry. We are now ready for Phase-III which will give the radio industry phenomenal growth.

Key challenges for the decade…

·Phase-III of radio reforms that have recently been announced, will play a crucial role in fuelling growth for the industry, and there is need for clarity on the royalty issue.

·The Government also needs to relook at the steep commercial fees that Prasar Bharti charges FM operators which are not in line with market rates.

·The empanelling of FM stations in several tier II and III cities need to be closed. Again, the DAVP rates were very low and needed revision.

·The license period

needed upward revision of periodicity from the current 10 years to at least 15 years, which will rationalize the costs being incurred by radio stations in the initial set up phase.

·Given that the industry is still in its infancy there is need for suspension of license fees for the next few years

·Finally, news, current affairs and sports needed to be opened on radio given the relevance and timeliness of the medium being consumed. This will go a long way in attracting a larger and diverse listener base  World over, radio is a key medium of news transmission and it is imperative that it be opened in India too.

Phase-III has opened the gates for growth of the medium…

Private FM radio has the potential to truly transform India at a grassroots level. So far Radio has been used primarily as an information and entertainment medium. Phase-III is poised to unleash the true potential of this very strong local medium. This, combined with mobile penetration reaching the one billion mark will unravel multi dimensional possibilities for policy makers, corporates, innovators and advertisers to interact with  broad canvass in a customised manner.

Hurdles as well as opportunities with Phase-III …

As the announcement of a much delayed FM Phase-III policy brought some cheer for the radio industry, which is gearing up for the next phase of expansion, there is wariness on some issues that seem unclear or have been left unresolved. The timeline to when exactly when the policy will be implemented has not been announced. There is also not enough clarity around the license extension to 15 years (from the current 10 years; there is no mention of this in the new policy), transparency in the e-auction model, and the royalty issue.

Big FM among the best FM Radio stations…

Today, 92.7 Big FM is India's largest FM Network with 45 stations and is reaching over 3.57 crores Indians each week. The radio business recorded revenue of Rs 175 crore, a growth of 15 per cent over previous fiscal. Radio remained EBITDA positive at Rs 28 crore, a growth of 732 per cent. The radio business currently contributes to around 70% of RBNL's revenues. The radio business is at a mature stage and has delivered good results, continuing to demonstrate the confidence of advertisers in the brand.

The five year old Company has showcased speed to market like no other Indian media company, created a mark for itself. As it enters its new growth phase, we are optimistic about being able to maintain a 30%+ growth rate, through a strategic and well planned business plan, taking the Company to newer heights over the next five years.

FM Radio in the next five years…

The interplay of mobile and radio penetration will see a host of new applications, content and engagement with audiences across the demographics. We see radio reaching further into the masses and deeper into the country. We see radio reaching where no other medium can, because of literacy and cost issues. With expansion of FM radio deeper into the country, radio, five years hence, will become truly - a common man's medium.