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2015: A year of great expectations for the private FM sector

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2015: A year of great expectations for the private FM sector

A successful year nearly always creates more pressure on the industry to match and even outperform in the year that follows. 2014 was a good year for the private FM sector in India from both a business, revenue and policy perspective, but, like a Test batsman, the pressure is now to see whether all these good starts will lead to something bigger.

The most pressing issue that everyone in the radio sector wants to get resolved as soon as possible is the Phase III auction. An announcement on the previously announced partial auctions is expected in the next few days, which, everyone hopes, will finally set the ball rolling for the eventual auctions.

And once that happens, there are a number of other policy matters that the radio sector will want the government to look into.

“Once Phase III is implemented, the industry will grow by leaps and bounds. Restriction in news broadcasting for private radio channels is another issue which will prevent content differentiation. Thirdly, the copyright board is also not in place which has left the music royalty issue unresolved and it will have negative impact going forward on Phase III. Fourthly, on DAVP rates, the government has been unable to create a price model which is linked to listenership and pays radio stations according to it in a particular city, currently old radio station (before 2007) get disproportionately higher price and new radio stations get unexpectedly lower price,” lists Harish Bhatia, CEO of MY FM.

The music royalty issue that Bhatia alluded to earlier is one that was supposed to have been resolved through a 2010 amendment to the Copyright Act, which, like many other things in the radio sector, is still pending. The problem, at least for terrestrial radio operators, has been partially resolved by the agreement of a license fee with most of the labels. However, the problem still affects internet radio and until the promised Copyright Board is not established there doesn’t seem to be a resolution to the issue.

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But the focus of most operators, for now, is on Phase III and rightly so. 

Ashwin Padmanabhan, National Head of 92.7 BIG FM, feels the importance of Phase III cannot be overstated. According to him, it will bring a penetration of FM that will match the reach of TV. “We have seen that there has not been too much happening on the TV front. Even the new channels that have launched have done well in terms of TRPs. Post Phase III, with FM reaching towns and cities with 1 lakh population, it will start becoming very relevant to sectors like FMCG. I see radio becoming a firm favourite in 2015,” he explained.

The Union Budget is another area where a lot of expectations are. Last year’s budget did not specifically address any of the concerns of the radio sector but being a subset of the economy in general, radio operators are hoping that the spirit of optimism continues with the budget providing a stimulus to economy.

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“We are very optimistic as an industry but the ground realities tend to be different. There are lot of expectations from the budget. People are looking for a big bang budget and we are hopeful that there is an impetus on manufacturing and the economy grows,” said Hitesh Sharma, Executive President of Radio Mirchi.

Radio players also expect the innovation and experimentation seen last year with content and programming to continue. For example, Padmanabhan feels that there will be emphasis and investment in new formats, which are more talk show-based, new shows and content around sports, rather than just music as it becomes a more integral way of communication for brands.

In 2014, we saw Radio City, the oldest private FM station in the country acquired by the Dainik Jagran group. Consolidation is another trend that players expect to see continue into 2015. This is likely, since, in India, the cost of setting up and running a station, getting the necessary license is too high for smaller players. With the bigger players looking to expand into new geographies, we could see smaller players drop out.

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