CEO | 30 Apr 2003
“There is no other country in the world where radio license costs anything what it costs here. Be it on an absolute basis or on a per person basis or on a percentage of revenue.”
John N Catlett, the CEO of Radio City, is an old hand in radio broadcasting. Armed with more than four decades of experience in radio stations across the US and Europe, he has in-depth Indian market knowledge too, and can make the Indian FM radio industry at par with the best in the world. In a chat with Akshay Bhatnagar of exchange4media, Catlett shares his views on the current state of affairs of the private FM radio industry in India and its futures prospects, coupled with information on how the industry here is different from the US and European markets.
Q. You have spent a major part of your career abroad. How you have used your International learning of radio in the Indian market?
My experience tells me that if I try to apply my learning from another country in India, it will work. I use various research techniques applied in other parts of the world to find out what the public likes and want to hear. And believe me, it’s very difficult to find out what the public wants, because if you ask them, they will tell you what they think you want to hear! In our trials, we found out that we should have ghazals in the early morning slot or perhaps some devotional music. There has to be special techniques involved to get that answer to be able to predict how they will interact with your radio programming. So we used a different technique of testing by giving them samples of programming, and asked them to tell us second by second what they like and dislike. It doesn’t match up with what they tell us if we just ask the questions directly.
Q. In your opinion, how is the private FM radio industry shaping up in India?
It is still evolving because at the beginning, all of us in the industry used the research techniques, which I mentioned earlier. Many of us relied on our gut feel and employees’ personal tastes. And as a result, a number of stations drastically changed their programming in just a few months into operation. In terms of ad sales, we are learning more and more about what the retailers want and need, and we try to supply them with the kind of advertising programs they are looking for.
Q. What difference do you find in our programming and in the International trends?
Well, we don’t have news. We are not allowed to do that. I hope some day the government realizes that increasingly there are many sources of news which are beyond the control of the government. It is healthier, and in a democracy, there should be as many voices as you can have. But if allowed, we have to do it carefully and package it well. Because a lot of news and current affairs programmes tend to sound dull and appeal to a very small segment of the audience. In most countries where radio has a substantial source of advertising revenues, a significant share of listenership comes from news and current affairs programmes.
Q. Where do you see private FM radio market moving in the next few years in India?
Well, I think a lot relies on the government policy. It depends on when the government begins to allow additional licenses to operate private FM radio stations at a reasonable license fee. And of course, when it makes it possible for the existing operators to operate with an equally reasonable fee as well. I think there is every reason to expect that there could be 200-300 private FM radio stations in India in the near future. With that kind of an expansion, radio advertising is bound to move up quite a bit.
Q. Has the evolution of private FM radio in India followed the worldwide pattern?
No, it’s different. Here, the government didn’t allow radio earlier, unlike TV. See, there is a difference from country to country. A market like UK is similar to India as commercial TV arrived there before commercial radio. Commercial radio was a poor relative for a long time. It took 28-30 years for commercial radio to come into its own in UK. Part of the reason is that they didn’t have enough stations. UK being a small country, a large amount of advertising is National advertising. And until 10 years ago, they didn’t have a way to efficiently expand reach into the whole country. The US is a completely different story. There are 12,000 radio stations and about 10,000 of them are commercial. Some of them are tiny and have just five employees only, but 7000-8000 of them are profitable. Radio does struggle against TV but it is as modern and cutting edge a medium. It has survived over and over again when people predicted that it was going to die. They said the same when even movies or talkies happened. But see, radio is still here, alive and kicking!
Q. Talking of comparisons, do you find dissimilarities in terms of radio industry regulations between India and abroad?
Yes, it is really different. In the US, the govt. started licensing radio stations in the 1920s itself. The licensing of radio stations in most countries is not a significant revenue factor for the govt. But here, it was thought that it could be. Of course, it was not the govt. that set the prices. It was the auction participants who set the prices. All of us were bidding at a time when the business euphoria was on a high and Internet was exploding. At that time, radio seemed like a wonderful opportunity. No wonder, many companies wanted to ensure that they get a foothold in radio. So all these people bid prices way beyond what they logically should have bid for them. Then, the market crashed, the dotcom bubble burst, and the IPOs stopped succeeding. That’s why we are so out of our way. On the licensing fee front, there is no other country in the world where radio license costs anything close to what it costs here. Be it on an absolute basis or on a per person basis or on a percentage of revenue. I’m talking of percentage on revenue basis when our license fee is way above our revenues.
Q. Okay. Coming to your recent launch in Delhi, how is the Delhi market going to be different from the other cities?
We are primarily aiming at younger people mostly because advertisers want those younger people. As an older person myself I’m resentful about that. And I think that eventually the ad agencies and the retailers will realize that people 50 years and above do spend money. But in an ad-supported medium, we need to supply our advertisers with the people that they want to reach out to. We like to appeal to all the people and have quite carefully assembled samples of people who broadly represent the target group. We have tested different kinds of programming on those samples and accordingly have come up with the right mix of programming on air.
Q. What about ad sales? How are brands reacting to Radio City in Delhi?
What we talk about today would only be about the advertisers who are buying, as they say, ‘on the come’. But I think we will see an evolution on air of the kind of advertisers we can expect to come to radio. A retail advertiser would usually be making his decisions based on personal gut feel, which is slowly being replaced by the more accurate measure of ‘cash register ring’. I say the first advertisers from the retail front are those retailers who like our station personally. And because of the unfamiliarity with the radio that exists in India, the additional advertising will be far more heavily tilted towards National and International advertisers now then it will be in six months or a year’s time. Take the case of USA where 70% of all radio revenues come from local retailers. And only 30% comes from either National or International advertisers or from the network of advertisers.