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Delhi, Mumbai could fetch upwards of Rs 70 crore in Phase III auction

05-May-2015
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Delhi, Mumbai could fetch upwards of Rs 70 crore in Phase III auction

With the first round of Phase III expected any time now, operators are expecting aggressive bidding for the major metros of Mumbai, Delhi and Bangalore.

Radio operators we spoke to point out to the fact that there are very few frequencies available in these markets. In all, Delhi and Chennai have 1 frequency each while Mumbai and Bangalore have 2 frequencies that will go under the hammer. Also, these three cities have proven themselves to be the most financially lucrative so it would make sense for radio operators to spend in acquiring additional frequencies here.

The head of a radio channel (who did not wish to be named) suggested that bidding in Delhi could go as high as Rs 75-80 crore as major radio stations like Big FM, Red FM, Radio Mirchi, Radio One, Fever FM, etc. are expected to bid for an additional frequency. The Delhi market leans towards Bollywood and Hindi genre as was evidenced recently when Hit 95 FM changed its programming from English to more mainstream Bollywood. With an additional frequency, stations might be able to experiment with more esoteric genres like Punjabi, etc. which are expected to do well in the north market.

On the other hand, Mumbai could go as high as Rs 65-70 crore, while Bangalore could fetch as much as Rs 40 crore said the radio executive.

“The metros and mini metros will generate the most interest. As such there are no new cities other than Phase II leftovers; so with solid business history in hand, most of the players would like to look at major markets. We do foresee players using aggressive but a cautious approach in bidding in these cities as going overboard won’t serve anyone’s purpose. As such with Phase III preceding digitisation and FM band reduction, too much of aggression might also lead to tough situation for players in time to come. While big networks would have limitation due to overall cap, regional players will add to competition in selective markets due to interest from both,” opined Nisha Narayanan, COO of Red FM.

With some radio stations these days focusing on retro programming, something that has worked well for them, it will not be too farfetched to think that another additional frequency in the big metros could be used to start a dedicated channel on retro programmes.

The important thing to note here is that in all three cities there is an opportunity to experiment with regional content and programming. 

Harrish Bhatia, CEO of MY FM also agreed that the cities with the most potential were Delhi, Mumbai and Bangalore. When asked whether he expected any major bidding wars this time around, Bhatia said, “This will purely depend from one player to other. I’m sure every station have worked out their mathematics based on the base price, market potential, economies of having a second station in the same city, etc. Radio stations may go for few major cities. Being the biggest markets in terms of potential, these cities will definitely invite lot of bids.”

Another city that would be interesting to follow is Chennai which has one frequency up for grabs. Regional player Hello FM has a very strong presence in Tamil Nadu and has already stated its ambition of reaching more cities in the state. The south market could see competition between the likes of Red FM (Suryan), Hello, Club FM, Fever FM, etc. “The south biggies will try to consolidate their play and Tamil talk stations mostly catering to a family audience are being considered,” said a radio executive.

“Chennai is one of the biggest markets south and one of the biggest in India and thus will generate interest. However, I would like to add here that South is comparatively more competitive and mature radio market and the challenges are different. With TV being a strong medium due to its reach and internet penetration also very good, radio has been managing only organic growth in South – which may impact return on investment,” added Narayanan.
 

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Prior to joining Madison PR in 2012 Chaudhary was Group President Corporate Communications at Reliance Industries Limited.