Day Two at the FICCI Frames 2006 was witness to another whirlwind round of sessions. The first session of the day saw panelists deliberate on one of the hottest entertainment mediums today - the radio. Though radio corners a mere 2.5 per cent share of the media revenue currently, players and analysts alike expect the medium to grow at a rate of 15-20 per cent in the next few years. Given the recent developments in the medium and following the Phase II of FM radio expansion, it can definitely be called 'the' booming sector today.
The government, too, has facilitated growth in the sector with its radio-friendly policies - viz. the shift from the license fee regime to 4 per cent revenue sharing model in mid-2005, which came as a respite to all FM broadcasters. Another move by the government that has come as a great respite to the sector is allowing 20 per cent FDI in radio. Though the figure is less in comparison to the percentage of FDI allowed in other sectors like print and television, it is a good start indeed.
The second phase of FM radio expansion, bidding for which concluded last month, has opened a wide platform for 330 stations in different SEC cities. And now what? Who all will be the advertisers on the medium? What makes the big players in the medium tick? What was it like in the old days of radio when there was not enough money to run a radio station? And lastly, will the medium be actually able to grow at the expected growth rate? These were some of the key issues that received considerable attention from a panel comprising A P Parigi, MD, ENIL (Radio Mirchi); Sunil Kumar, MD, Big River Radio; Raj Gupta, President, Insight (a Lintas media group); and Gautam Radia, CEO, Win Radio (the station that had closed after the initial phase of FM privatisation because it had incurred huge losses) in the first session of the day on ‘Radio: Tuning in Again’. Anish Trivedi, Chairman & MD, Banyan Tree Communications, was the moderator.
The discussions were along expected lines and did not bring forst any out-of-box thinking. ENIL's Parigi, the first speaker of the session, spoke about Radio Mirchi's journey to success and how it had been able to reach where it was today. He also underscored some fundamentals that needed the attention of the government and the FICCI committee, in particular, and which would be helpful in bringing path breaking developments in the entertainment and media industry. According to Parigi, “FM radio will redefine the way media is consumed and handled today... Multimedia convergence is happening and is being monetised also.”
A few challenges that Parigi acknowledged, included the need to flow news and current affairs in radio, need for multiple frequency ownership to spur the launch and growth of ‘niche’ channels to reach underserved audiences, fair and reasonable price for co-location infrastructure and music royalties and also the need to bring satellite radio at par with terrestrial radio. “What Maruti has done for the auto sector, radio will do for the media industry, it will bring revolution,” asserted Parigi, adding that he looked to forward to opening 32 stations in less than two years.
While, Parigi talked about the macro aspect of the industry, Radia of Win Radio addressed the micro aspect with specific reference to small players, who had to take care of several things before the station became operational. Radia informed, “We have two stations in Delhi and Mumbai, and now have won in Delhi in the second phase of expansion. We look forward to open a station in Mumbai by April 2006, if we get lucky.” Win Radio's Mumbai station closed down in 2004 following the Rs 30 crore loss it had incurred, and could not afford to start the station again.
Taking through the projections for radio in the future in terms of advertising revenue, total investment, and so on, Radia cautioned that “a significant number of the players will not be able to gain from the growth of radio when there will be some stations making lot of money, while some are losing a lot of money.” So, it seems like the fight of extremities.
Big River Radio's Kumar lay emphasis on the opportunities, strengths and weakness of the medium as he touched upon the branding aspect of radio stations. “Stations are brands, but the question is will an individual player be a national brand or will a local station emerge as a brand?” he wondered.
Bringing in the advertising and media agency perspective was Insight's Raj Gupta. This apart, he also focused on the inclination and contribution of youth segment in radio in his presentation. “They have a higher affinity for radio and a lot of youth categories will migrate to this medium,” Gupta averred.
Several more interesting issues came to the fore once the session was thrown open to questions from the audience, who asked questions ranging from FM radio stations' programming strategy after news content was allowed to the threat from online radio as well as checking out the possibility of radio going niche with a station exclusively for kids. ENIL's Parigi, who took the last query, replied, “Yes, a radio station for kids could very much happen as it is already present in the West.”
One thing that emerged from the session was that every player is bullish about the future of radio in India and has great expectations from the medium.