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The crisis in the radio industry is likely to have an adverse impact on the music industry as well that employs more than a lakh people. (Photo: iStock)
The crisis in the radio industry is likely to have an adverse impact on the music industry as well that employs more than a lakh people. (Photo: iStock)

Devastated by covid-19 lockdown, radio industry sends out SOS

  • Industry revenues fell over 80% in April and are estimated to decline another 90% in May
  • Government dues to the radio industry have been pending for a year now

NEW DELHI: Under tremendous pressure due to a fall in advertising spends across sectors because of subdued business activity amid the covid-19 pandemic, the FM radio industry is staring at a major financial crisis.

Industry revenues fell over 80% in April and are estimated to decline another 90% in May. With no revenues from commercial segments and government advertising, the radio industry, in the first two months of FY21, has witnessed an estimated loss of over 200 crore - a figure estimated to top 600 crore by September.

The unprecedented crisis also stems from the huge unpaid dues of the MSMEs (micro, small and medium enterprises), real estate and retail sectors that also have been hit hard by the pandemic-induced lockdown.

In addition to this, government dues to the industry have been pending for a year now.

The Association of Radio Operators for India (AROI), an industry body of private FM channels, had reached out to the government seeking a bailout package in March. In a letter to Union minister of information and broadcasting Prakash Javadekar, AROI had sought a one-year moratorium on licence fees and charges by the government and Prasar Bharti, and restoration of government advertising on radio, besides clearing of long-pending payments from the Directorate of Advertising and Visual Publicity.

While the ministry has responded to the request with a three-month extension of license fee payments without interest which will reduce pressure to some extent, the support isn’t enough.

"These are extremely turbulent times for radio industry. Covid-19 has further aggravated the problems that radio industry has been facing since last year or so. What we seek from the government is not a cash bailout package but a lease of life for the industry in terms of waiver of annual fee for a year and relaxation in few of the terms of our operating agreement with the government. This gesture will help us revive the industry and we will be able to keep India informed and entertained like we always have," said Harshad Jain, chief executive - Radio & Entertainment business at HT Media Ltd., the owner of private FM brands Fever FM, Radio One and Radio Nasha.

HT Media is the publisher of Hindustan Times and Mint.

"What the government has offered is a very small measure really. It’s not a waiver at all, it's just a postponement of the payment obligation by 3 months," said Prashant Panday, chief executive officer of Entertainment Network India Ltd that operates Radio Mirchi. “Even the payments which the government owes are being cleared very very slowly. Not even 10% has been cleared."

As a result, the industry has been forced to undertake drastic cost reduction measures as companies are unable to generate enough cash flows to meet salary cost and fixed operations cost requirements. Many players have unwillingly reduced salaries and rationalised manpower resulting in job losses. Multimedia houses that own these radio channels find themselves staring at huge losses in the print and TV space as well and have been unable to infuse required capital into the vertical.

The crisis in the radio industry is likely to have an adverse impact on the music industry as well that employs more than a lakh people. Radio is also a major reach and marketing platform for the music industry.

Given the important role it plays in imparting information, entertainment and social messaging, the radio industry expects a positive response to the relief package it has sought from the government.

"The government needs to utilise traditional media better. Radio has always been the last mile, helping take the right message to all of Bharat,

Nisha Narayanan, chief operating officer and director, RED FM and Magic FM had said in an earlier interview to Mint.

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