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News |  20 Mar 2014 19:55 |  By RnMTeam

India does not need DRM or any other form of digital transmission of radio signals: Prashant Panday

MUMBAI: While All India Radio is talking about DRM and digital receivers, private radio players are talking about inventory, growth, audience measurement and most importantly Phase III, all of which were highlighted areas of concern in the 2014 KPMG-FICCI report. The report gave a positive side of the radio industry by predicating that the FM radio industry is expected to outspace the growth of overall advertising industry and it would grow at CAGR of 16 per cent till 2018, which will double the industry revenues. But at the same time the concern of diminishing inventory and need for alternative way to grow drive the industry, dominates the space.

ENIL CEO and executive director Prashant Panday who understands the space with years of experience, spoke to radioandmusic.com’s Jescilia Karayamparambil on what the radio industry need and what it does not.

Excerpts:

DRM Consortium is making its presence felt in different forums; do you think the DRM team has been able to create an impact amongst private players?

Firstly, I do not think India needs DRM or any other form of digital transmission of radio signals. India will leapfrog from FM broadcasting to online/mobile broadcasting. DRM needs special receivers and Indians will not be willing to spend money on buying special DRM receivers. On the other hand, most mobile handsets come with FM tuners as well as with internet connectivity. Hence FM and online will be preferred ways of receiving radio.

Is the concept of digitisation of any concern among the players? Will you even consider it in the near future?

Not a concern. No, we will not consider it.

Do you think the digital technology and data measurement process is linked in any way?

Not in radio. In TV, it is distribution that is measured. In DRM, it is not possible to measure actual distribution or listenership of radio.

Talking about phase III, have you received any update from the Information and Broadcasting ministry on the same?

The update we have is that the two IEMs (Independent Expert Monitors) are reviewing the RFP (for auctioneer) and NIA (for broadcasters/bidders) and as soon as they are done, the documents will be put before the Minister for approval. Whether the Election Commission gives permission or not to go forward remains to be seen. Since it is an old policy (announced in July 2011), we feel the EC should permit the roll-outs. If it does not, we hope the new government will in any case roll it out quickly.

Are foreign players ready to invest in the radio industry after the delay?

It is highly doubtful. Phase II has been a torrid experience for most broadcasters. Returns on investment have been less than a few percent for all of them. The question remains on why foreign broadcasters should come in. They would not be too enthused by Phase II results. That aside, the bidding in Phase III is going to be fairly expensive which means that even Phase III will be a big hurdle. There might be some strategic investment in some top players but I do not expect much action beyond that.

The KPMG report stated that radio will continue growing but there will be need for inventories. Comment

It is very true. The last radio stations were launched around 2006-2007. We desperately need to launch more stations. In Mumbai, why do we have only seven private stations? In most metros, we have seven-eight stations. Even Colombo and Manila have 25 stations. The TRAI has already given the formula for increasing the number of stations. We can reduce the channel separation from 800 KHz to half, and make room for many more stations to launch. However, a few myopic broadcasters have resisted this so as to protect their existing businesses. This is similar to the reaction of what was called ‘Bombay club’ in 1991, which resisted economic reforms. Ultimately, most of them benefitted from the reforms. I hope these broadcasters also realise that they will benefit if radio expands and that is only possible with more stations coming up.

How long do you think it will take before the inventory is exhausted?

Inventories are all completely exhausted. In fact, it is becoming a joke now. During Diwali, some stations run 35 minutes of ads. What will they do next year? Take it up to 40 mins? At Radio Mirchi, we follow very strict rules about inventory so we provide our advertisers with a better environment to feature their ads. Considering there is no more inventory available, the ad rates will have to rise. Ad rates are still 25 per cent lower than in December 2008 (around the time of the Lehman debacle) there is no way this can sustain.

Talking about the live properties, do you plan to add any more to the existing bunch?

We will grow this business. This is a high risk business, with a real possibility of heavy losses in the initial years. For example, we still incur losses in Mirchi Music Awards but our objective is not to make money, it is to pay tribute to the music fraternity, our friends. In the long run, these properties will make money but one has to have the appetite to bear the losses in the initial years.

How much will Radio Mirchi invest in live space this FY?

It is difficult to say, but we launched Mirchi Top 20 this year. We will focus on growing it. We also might add another property during the year if we can hit a great idea.

How much do you expect to make this fiscal?

I would not like to share this data.

Like other radio players, is Radio Mirchi planning to hike their ad rates? And why?

We have no option but to seek higher rates. There will be no announcement. Because volumes are running so high, we will have no option but to drop the lowest paying clients. It is thus my fervent request to advertisers/agencies to be realistic about this and facilitate a gradual increase in rates.

Radio Mirchi has expanded in live and online space - what is the next move?

We keep innovating and that is the only thing that keeps us going. We are transforming ourselves from a radio company to a solutions company. Being part of a large group like TOI, we have experience in all media verticals. Our promise to our clients is no longer just radio, but a wholesome solution. That is what we will be focusing on in the future. This aside, there will be more products we will launch.

Games