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Amid teething troubles, radio revenues up 30% in 2007-08

Amid teething troubles, radio revenues up 30% in 2007-08
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First Published: Sat, May 31 2008. 12 59 AM IST

Updated: Sat, May 31 2008. 12 59 AM IST
New Delhi: Companies in India’s fledgling private FM radio space recorded an average revenue growth of 30% in 2007-08 over the previous year, and they expect to maintain the same rate over the next two years, says a survey by consultant Ernst and Young (E&Y).
The companies that participated in the survey expect the medium’s share of India’s Rs19,600 crore advertising pie to increase from 3-5% in 2007-08 to 5-7% in 2009-10.
The absence of a universally accepted listenership measurement metric, no content differentiation, regulatory concerns, and music royalty-related issues emerged as the top concerns of the industry.
“The industry is clearly poised for healthy growth and even as several key issues relating to measurement, regulatory clarity and music royalties are being sorted out within the constraints, I think the existing players are doing a great job,” said Ashish Pherwani, senior manager with E&Y’s media and entertainment division.
“Globally, radio commands 7-8% of the total ad spends. Many players will become profitable as India’s overall ad spends expand and radio’s share within that grows closer to the global average,” said Pherwani, who authored the report.
A majority of respondents said the radio industry could support around seven profitable players within a few years. The survey also identified a pattern of scale most companies are adopting: national players with 30 or more stations; players with six to 20 stations who’ll focus on key advertising markets, and regional players with five or less stations.
A key demand of the industry on the regulatory front is that companies be allowed to own multiple frequencies in the same city. “Allowing companies to own multiple frequencies will lead to content differentiation and there will be far more diversity on airwaves. New York, for instance, has more than 50 radio stations catering to all kinds of niches,” said Tarun Katial, chief operation officer, Big FM, a division of Adlabs Films Ltd.
“For instance, in Mumbai, if multiple frequencies are allowed, we could launch news stations as well as music in regional languages. It will give a big fillip to regional music.”
In its recent consultation paper on FM radio to the ministry of information and broadcasting, the Telecom Regulatory Authority of India had recommended that the ownership of multiple frequencies be allowed if there are already three players in a licensing circle.
The respondents felt that the absence of a universally accepted way of measuring listenership was hampering ad revenue growth.
However, Radio Audience Measurement, a division of the Mumbai-based TAM Media Research Pvt. Ltd, already operates in New Delhi, Mumbai and Bangalore. “We will be present in Kolkata by end of June and Chennai and Hyderabad within this year. Expansion is not easy. It’s expensive and time consuming,” said L.V. Krishnan, chief operating officer at TAM.
The industry also wants a more flexible music royalties regime. “There is a clear consensus that the royalty regime needs to be more flexible. Hopefully, the music industry and radio industry will together move to a revenue sharing model soon,” Pherwani said.
On the advertising front, the report predicts, while corporate advertising will retain significance, key revenue sources will shift as the Internet, emerging digital technologies, retail advertising and cross media sales gain ground.
As growth in radio stations is likely to outpace the rate of hiring in radio stations, the report predicted a shortage in trained manpower. High attrition is already a big concern for radio stations.
The survey was based on the responses of 25 senior executives across different functions in 10 radio firms as well as regional players. HT Music a
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First Published: Sat, May 31 2008. 12 59 AM IST