MUMBAI: India’s private FM radio segment is expected to grow and generate revenue of around Rs 14 billion in 2012–13, with 245 private FM stations operating in 86 cities growing at a Compound Annual Growth Rate (CAGR) of 14 per cent annually, according to ‘Poised for Growth: FM radio in India’ latest study by Confederation of Indian Industry and Ernst & Young.

Furthermore, the sector is expected to grow to ?Rs 23 bn at a CAGR of 18 per cent, within three years of the FM Phase III being rolled out. The sector accounts for around 4 per cent of the country’s total advertisement industry. Globally, radio’s average share of the total advertisement industry is between 5– 10 per cent.

According to IRS 2012 Q2 data, radio has an estimated audience of 158 million people (out of which FM radio accounts for 106mn), as compared to 563 mn in the TV segment and 352 mn in the print sector. Advertising revenues comprise more than 85–90 per cent of the total revenue generated by FM radio companies; non-FCT sales can contribute up to 20 per cent of a radio company’s total revenue today.

Ernst & Young partner Ashish Pherwani said, “The report is a compilation of the views of 23 industry stakeholders including radio companies, regulators, music labels and more. It highlights the need for a speedy implementation of Phase III, which can grow the radio industry from Rs14bn to Rs 23bn in three years, subject to enabling networking and cost management, development of a measurement metric which supports the industry and ensuring license fee prices during Phase III auctions are not irrational.  The report also highlights operational, tax and technology implications of the industry.”

According to the report, the current state of the industry is that radio is not considered a primary advertising medium due to its limited number of stations. While larger cities are mostly covered by it, advertisers interested in regional ad campaigns prefer using regional print or TV, which has grown significantly since 2005. However, with the implementation of Phase III, with 839 frequencies being made available for auction, radio is expected to provide advertisers with a much deeper reach.

More than 50 per cent of FM radio consumption is in houses, followed by people listening in transit (on mobile phones and in-car listening) and out-of-home listening at restaurants, offices, shops and more. Around 25

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