RadioandMusic
27 Nov 2014
editorial
IPL 'industry' v/s the Radio industry - Vineet Singh Hukmani, Radio One MD
RnMTeam | 04/01/2010 03:38:17 PM IST

Someone had an idea. A brain child. He fathered it and nurtured it passionately. And every time the child crossed a milestone, he shouted out from the rooftops. The government thankfully did not interfere or better did not even have an inkling of how to control it with their typical short sighted approach. Suddenly before our very eyes, we see the IPL brand valuation doubling to USD 4 billion dollars, a single team being bid at USD 370 million and a ten year license seems like a lot of time. Everyone who is involved with it and may I add, involved intensely, is benefiting financially. In one IPL session alone, the advertising revenue associated with it is over INR 700cr. Every brand that is worth its salt is interested in paying a premium. Every team's valuation has more than doubled. The players stand to earn more now even up to USD 7 million dollars a player. The broadcaster is bullish like never before and now there is talk of taking it to an international scale. To top it all, each team has an excellent measure of local connect and the fans are filling up the stadiums by paying for tickets at the highest prices because they are all SO INVOLVED. In a short 3 seasons, Jai ho to the father Lalit Modi! Jai ho BCCI, Jai ho team owners! Jai ho consumers! Jai ho advertisers! Jai ho the IPL industry! Jai ho to creativity of free enterprise in India!

Let's compare this to our radio industry. Who is the father here? The government?! or should I dare ask, �Does the industry even have a father?' The government here is like a petty landlord that took the investors money in advance and did not really care about any problems or issues faced by the �tenant' industry. They controlled it with a tough licensed regime and have never cared to understand any serious problem the industry has faced in the last 3 years. They did not provide the required infrastructure in time and tends to be active only to recover its �rent'!

As a result where do we stand in Radio. A meager annual industry turnover of less than 700 Cr net, even when we are the highest reach medium. No REAL passionate involvement from the listener, as there is no REAL differentiation in any station's offering. Even a market leader who is getting a meager return on capital and even thinking twice about whether to bid for more licenses. High geographical reach stations, where the stations in the smaller towns are floundering due to high music costs. An advertiser community who sees radio as a �discounted national volume medium' where budgets are moved from the �savings gathered' from other media. A industry that is volume ridden with no hope of value increase. At no part of the value chain is anyone going to pay a premium and why should they? If we dared to come up with a brand valuation of RADIO of net gain versus net accumulated losses, I think we would be nothing less than shocked. We will discover a steady and irreversible erosion!

So is there a solution to this.

Someone has to assume the role of father. THE RADIO INVESTORS FORUM  which has recently started to meet the minister directly is exactly that. Passionate people who put their money into the medium and have a right to demand return on capital. A right to steer this industry to the growth path. A right to build valuation through a free enterprise. This father must be supported and heard! It is this father, that created this industry and the jobs that were created for all of us to do! The Times group, The Mid-day group, The Manorama group, The Sun network, The Dainik Jagran group, The Daninik Bhaskar group and others which account for more than 75% of India's radio stations are already supporting this cause.

The industry needs a SINGLE MINDED button that is pushed that allows the valuation to come back. That button is extension of the license term from 10-15 years, because the government wasted our time in slow set up infrastructure and unresolved music royalty issue. They must allow this extension of license term to make good their follies of the past. This extension of license period allows the price per frequency to come down. It minimizes risk and therefore revenue phobia. It allows us to create FORMATS passionately both with music and without that will allow ACTIVE INVOLVEMENT with listeners and hence advertisers. Listener involvement will build loyalty to FORMATS. Advertisers will pay a premium for superlative impact and not just feeble reach. It will raise the industry from a hapless volume one to an â€?in control' VALUE one. The bidding for further licenses will receive a boost due to the license extension and new teams will come in more confidently. New teams will attract new talent and the valuation spiral will move in the right direction 

The largest threat is that the government will continue its lazy unconcerned approach and ignore radio's real problems. The bureaucrats will lazily push the 3rd phase license policy through without the extension of license period. They will dangle mirages of �news, industry growth blah and entice your investor to put in more money and take your attention away from the core issue of non viability. They are under pressure to �depict progress' of the I&B ministry given that other ministries are showing progress. These bureaucrats are at best stand in caretakers and will soon be in other ministries while the radio child will continue to flounder. They therefore want to hurry announcements without thinking things through and sharing the same transparently with the radio investors.. No one will bid for these lack luster licenses without extension and the industry valuation will come to a standstill. It will then perhaps grow with a small incremental growth in top lines but no rescue for the bottom line. It is unlikely that players from outside will come and support the licensing. Look at 3G, it's only the existing players who have bid.

The even larger threat to this is a player thinking they can win while the industry is losing by still bidding for licenses. There is also a player who may want to sell their businesses and think that just the announcement of phase 3 is going to help them do that. Both these groups need to think again. The simple learning is �IPL succeeds, only then, do the team companies succeed'… radio needs to win for the players to win! The all important question to ask is �where is the value, how can it be generated and how much time do we need?' Every team in IPL supported Lalit modi on the �valuation chase' and the result is clear for everyone to see. � You don't need just a phase 3…we need a phase 3 that builds valuation and viability!' Let's get it right this time!

I love radio intensely and I know you do too! I know you respect the investments made by your investors. I know you have slogged it out to make things work. It is because of this love and respect, the time has come fellow CEOs / MDs and people who work in radio to push for our rights to a free enterprise. It is time to set aside our EGOs and take control of our industry's destiny. We have to let the government and its bureaucrats know that, we will not bid without thinking, we will not allow our industry to die because of their laziness. We have to support the paternal RADIO INVESTORS FORUM who has given us all the means to be what we are today. Let's support this unanimously, passionately and whole heartedly and let the bureaucrats know that they are NOT our PARENTS. Let's send the message out to these bureaucrats that they need to be transparent, fair and clean in their evaluation of the industry's viability. Lets' come together and put the industry back on an upward valuation spiral and ensure that the license extension from 10-15 years is given to us. IT IS OUR RIGHT !

I urge you to pledge your support to the â€?radio investors group'. In a way it's a pledge to your own self to do what's right… And if you do read this and decide to go on with your lives,  the IPL match every evening should remind you of radio's sorry state!