MUMBAI: FM Phase III is set to be a game changer and the radio industry is highly awaiting the move. With FM Phase III having received a boost after the EGoM clearance, radio broadcasters are busy charting out their expansion plans to enhance reach and profitability. While the expansion policy will open up newer opportunities in local and regional markets, there are not much plans for metros said Prashant Panday at the Ficci Frames 2013 conference in Mumbai.

Even though the biggest hurdle remains regulatory framework, most players have overcome the challenges and grew by around 10.5 per cent in 2012. ENIL CEO and executive director Prashant Panday disagreed with the Ficci-KPMG report by stating that the figures were understated and radio reported a growth of around 14-15 per cent in the past year.

Addressing the session ‘Radio: Poised for Growth’, the panel moderated by Panday featured My FM  CEO Harrish Bhatia, Radio Mantra director Rahul Gupta, Reliance Broadcast Network Ltd CFO Asheesh Chatterjee and HT Music and Entertainment Ltd business head Harshad Jain.

Dismissing all claims that radio was not amongst the fastest growing mediums as compared to others, the panelists highlighted that radio grew more than one and a half its size and was at par with TV in the growth segment.Radio has been the fastest growing medium in the last five years. With FM Phase III, the growth is expected to be much more than that predicted in the Ficci-KPMG report.

Radio is expected to grow at a Compound Annual Growth Rate (CAGR) of 16.6 per cent over the period 2012-2017 post the rollout of FM Phase III licensing, according to the Federation of Indian Chambers of Commerce and Industry (Ficci)-KPMG Media & Entertainment 2013 report.

Most radio companies have now turned profitable with players like Radio Indigo and My FM reaching break-even and giving back the share to its investors. The panel also said that the share of radio in the advertising pie grew to about 4.5 per cent even in a stagnant number of stations operating. Moreover, with FM Phase III opening up newer opportunities, the share in the pie will further increase somewhere between 7-10 per cent.

Commenting on the revenue growth in 2012,  Bhatia said, “We witnessed a revenue growth of over 25 per cent. The factors attributing the growth included focusing on growing India that is non-metros. While most brands have been moving from big towns to small, we have in turn done the opposite. I feel by 2026, the FMCG segment will grow hugely in non-metros. So I feel we are at the right place at the right time.”

Aiming to grow the ad pie further, client integrations and the boom in the retail market will largely help the radio stations with brands having a local to local connect.

“We grew by 20-23 per cent in the last couple of quarters which was mainly driven by monetizing the FCT’s inspite of having finite inventory levels. Even our client integrations and programming has done well. We now aim to be a GEC on radio,” elaborated Jain.

Laying focus mainly on advertising and its growth, the power of radio lies on the fact that it is the most valuable platform for FMCG’s and can be integrated with most TV and print campaigns effectively.

With more than 55-60 per cent of traction being attained from advertising, retail consumers have understood the power of engagement on radio. But while larger players managed to project a good growth rate in the ad segment amongst others, smaller players tried to overcome their losses through centralization and saving cost.

Gupta highlighted, “We did lots of centralization in the music scheduling and saved cost there. We were also amongst the players that fought for music royalties which helped us a big deal.”

Bhatia said, “There is no need to play radio for 24 hours so we decided not to play for some hours and centralized the man power.”

Moving forward, focusing on profitability seemed to be the need of the hour. Using technology in the right way can help save costs and there also needs to be a focus on collections. Chatterjee also stated that there needs to be a body like the IPF to check on the collections, helping the radio stations further.

He also added that the adex will grow in local and regional markets, and while the local products will emerge, the national products will in turn reduce their price point. “We need to grab that and in combination with TV it works great. For a player like us which also has various regional TV channels, we also borrow shows from our radio station which run well with the audio visual medium,” he mentioned.

Apart from that, customization of content is expected to help the players in the future. Jocks are considered as celebrities by the audiences and their measure of popularity is high in markets. But in the regional markets where RJ popularity is not as high, the awareness of radio as a local medium to solve issues related to society plays a key role.

A senior AIR ex-employee raised a point stating that most players are biased towards young voices and do not employ senior RJs. Aiming to differ from the same, Fever FM programming head Gaurav Sharma said, “Radio is more about attitude and voices connect with listeners. If you see, most of the RJs are between the ages of 35-40. We have matured RJs for the morning band so there are jocks who are aged above 30, while the evening time band is more relaxed and has young jocks.”

On the other hand, for a player like Fever FM who developed a live entertainment business, selling events has not worked largely in their favour and has taken a big hit on their revenue. But what worked in their favour was the in-house production of radio dramas like Ramayana and more, which garnered a high level of listenership.

“ Within the next six months, we aim to develop plays which are episodic and run for 30 mintues to an hour,” Jain stated.

Also when Big FM turned retro in Delhi, it increased their audience base as listeners were looking for something new in the music market. Highlighting the growth Chatterjee said, “The shelf life of new music is limited and we got in newer audiences when we shifted our format, and the best part was that they were not age driven.”

Radio is today also very strong on reality with various campaigns surrounding social issues across cities. But while it can pick up lots of niche content to expand its offering, the high spectrum fees and e-auctions can act as a major deterrent and needs to be worked upon.

While content is one of the major drivers for radio players in the future, expansion into other markets is also a key point as there are not enough stations. The formats also need to emerge so that the listenership does not remain stagnant. Jain also stated that the industry will grow to be a Rs 800 million market after Phase III. The radio industry is highly awaiting FM Phase III and is expecting it to be a game changer.

Gupta said, “Listenership is the key as we saw 30-40 per cent growth in the station due to the factor. Phase III will help growth in that sector.”

While big players have worked around the music royalty issues and are now only around two per cent of revenues, smaller players still have to work towards that. They claim that centralization and networking will be the key to make small stations successful.

So inspite of phase III beckoning a new future for radio, there are internal aspects like content creation and advertising that needs focus from most players. Most of the panelists stated that the young generation is emerging as the new breed of listeners and lot of work is needed to develop creative content for the audience.