RnM Team    27 Dec 08 15:34 IST

Project Head 93.5 SFM Nisha Narayanan

A brief note appeared on the website of Information & Broadcasting (I&B) Ministry recently on the status of the Electronic Media Monitoring Centre (EMMC). It said that Rs.19.65 crore was approved for the EMMC -- well equipped with state-of-the-art facilities -- to check the violations of the program and advertising code and license conditions for private FM.

As always, the government's passion to monitor and control, on which they spend huge amounts of money, outweighs any impulse to promote this nascent industry.

Long before the current phase of FM licensing, I had written with concern about the growth of radio in a regulatory vacuum, guided by expediency, impelled by profits and scrutinized only for the twin bogeys of revenue loss and national security. Almost nothing has changed since then, although FM radio has grown manifold in the intervening years. There is still no regulatory body, no clear guidelines, and no resolution of the dozens of issues facing FM broadcasters, ranging from FDI (too low) to music royalties (too high).

In spite of these hurdles, private radio still racks up an impressive 40 percent revenue growth, but this is mostly due to the rapid expansion of FM radio across new markets. We may see another spurt in growth with Phase III of FM licensing next year, but it will almost certainly plateau and decline once all the stations are rolled out and the market settles down.

In fact, many in the industry are not convinced that Phase III – with anything between 400 to 700 new radio channels, mostly in C and D towns – will bring any joy to the industry at all. I recommend you to take a look at the 237 cities proposed in TRAI's wish-list for FM Phase III and ask yourself what kind of ad revenues can be expected from the 187 category �D' towns, from Adoni to Yavatmal, especially during the current financial slump.

One could easily predict a substantial growth in FM listenership over the next two years, without any proportional growth in revenues. This is not an unusual paradox in the media business: the US radio market increased by three million listeners in 2008, without any increase in ad revenue.

If there is one thing that really eats into an FM channel's profits, it is the very high music royalties paid by private broadcasters. This is anything between 20 to 40

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