Media Consultant | 25 Jan 2006
“FM is a local medium and it has to have a local flavor. It’s really not a good thing for the largest networks to go in for similar content across the country. It may sound like a cheaper option in the short run, but if you don’t address local issues in the local idiom, you can’t engage your listeners and you’ll lose their loyalty. You will end up with bland, mass-market cookie cutter programming, which turns people off FM altogether.”
Nisha Narayanan began her career in radio broadcasting much over a decade ago, taking up assignments with the state-run All India Radio before working for a private FM broadcaster. Her broadcast career also coincided with the expansion of cable and satellite television – a medium to which she soon migrated, both as a newscaster as well as executive producer and business development manager. She is currently a media consultant, having recently quit as Head-Programming of Radio City, Bangalore.
Along the way, she has acquired a broad spectrum of radio and TV skills – from programme planning and production to presentation and management – while working for both private and public service channels. On the radio front in particular, she has wide-ranging experience with AIR, Times FM, RBC radio (satellite radio), educational channels like Gyan Vani and commercial FM stations like Radio City, etc. She has also worked with Vaishnavi Corporate Communications as Head of their Audio Visual Programming Division.
With the explosion of interest in FM radio, heralded by the second phase of FM licensing, Narayanan is back in Delhi as an independent media consultant, specializing in radio. “Delhi,” she says, “is where the action is.”
Narayanan is also a Chevening Scholar in broadcast journalism, winner of the Don Rowlands Prize for Excellence, and has also trained on various European Union radio projects. She spoke on the issues facing the industry, which is on a rollout mode. Excerpts from a chat with exchange4media’s Gokul Krishnamurthy
Q. Could you share your views on the growth of FM in India, and the unfolding scenario…
Phase 1 of FM licensing didn’t work. Only 21 channels came up, and the existing players blame high license fees for throttling the nascent industry. Phase 2 looks at lot better. With 338 frequencies offered across 91 cities, for a one-time entry fee and a 4 per cent revenue share arrangement, there has been predictably heavy bidding for the A+ and A category cities. But I doubt if the C and D towns can sustain four channels each.
Though many of the 85 players who have qualified for the financial bids are the usual suspects, not all of them are big media houses. There are some new players who would be interesting to watch. In Phase 2, I think we’ll see more variety, more experimentation, and going forward, the ad pie for radio will grow.
There will be lot more action in the regional markets; I think radio’s share will increase from the present 2 per cent to 7-8 per cent of total advertising revenues, and we will be on a par with international markets then. It could even get bigger if the rural markets are opened up.
Q. You say there will be more variety, more experimentation. Could you explain with reference to content?
When you offer 10 channels in a metro, and four in smaller towns, the only way to survive will be through channel differentiation. Research shows that 70 per cent of listeners can’t differentiate between one FM channel and another based on content. This definitely will have to change. Channel differentiation though is not very likely just yet, and most players will opt for music channels. But there will be more variety in the music on offer. There will be more variety in the languages too.
Q. Is the Government policy aiding the growth of radio?
The new policy, though definitely better, to my mind isn’t good enough. If the intent is to cover as much area and population as the government claims, they could have come with a more enabling policy. It seems that they’re still focused on maximizing profits. There are certain things like the mandatory use of AIR/DD infrastructure where a lot of private players are not happy for logistical reasons.
And, instead of three to four channels in C and D class towns – which would be hard to sustain – they could spread it across a larger number of towns, with fewer channels in each location.
The 20 per cent FDI allowed in FM is another point. Even in cable, you are allowed 49 per cent FDI – there is no consistent FDI policy for the media. Higher FDI would have allowed for more expertise and much needed investment. India is a latecomer on the FM scene. The rest of the world is migrating to digital radio. By the time the FM licences lapse – ten years from now - and digital radio is rolled out in India, commercial FM would be pretty much obsolete.
There is a ban on one entity owning more than one channel in each city. This is going to seriously affect program differentiation. The ban on news and current affairs is another setback for the industry. It’s quite inexplicable, and anyway, it goes against the recommendations of the Amit Mitra Committee and the Broadcast Regulator (TRAI). The one-time entry fee can be as much a barrier as the licence fee was in Phase 1. The bid amounts will decide the reserve price and annual payments: a single, high bidder can queer the pitch for everyone else. We are dealing with a new business here, and as we have seen in Bangalore, the bidding can be seemingly capricious. The policy could have addressed these issues.
Q. How regional does one need to be, with respect to content?
FM is a local medium and it has to have a local flavour. It’s really not a good thing for the larger networks to go in for the same -- or similar -- content across the country. It may sound like a cheaper option in the short run, but if you don’t talk about local issues in the local idiom, you can’t engage your listeners and you’ll lose their loyalty. You will end up with bland, mass-market cookie cutter programming, which turns people off FM altogether.
Q. Are national and international content sharing agreements the way forward?
During special events like cricket or the Oscars, we could see this happening. Yes, networking is permitted in Phase 2, but only in C and D cities within a region. The new policy is more liberal about outsourcing programming content, though. Theoretically, 50 per cent of a station’s content can be outsourced. With international broadcasters like Virgin Radio, BBC and Deutsche Welle showing an interest in Indian FM, we’re probably going to see more international content on our channels.
Q. Are Industry bodies to represent the Radio community necessary?
We absolutely need an industry body, with so many new operational and policy issues. Of course, there are bodies like the IBF, but they focus more on television. The FM players are aware of the need for a representative body, and the sooner they come up with one, the better.
Q. What is the scenario beyond the metros?
It is sad to see that FM expansion is mirroring the telecom wave. We don’t see anyone keen to open up the rural markets – not the government, not the players -- as these are not seen as profitable. This is a pity. We are denying 70% of our people access to a cheap and empowering medium. Besides, even AIR’s experience shows that rural markets -- though harder to tap -- can be surprisingly profitable if tapped innovatively.
On the other hand, there is a very active Community Radio movement which is trying to open up rural areas to FM, though not for profit. Unfortunately, at present it seems to be on the backburner. If community radio is opened up and things work to plan, an estimated 4,000 such stations could be on offer -- though I’d be happy even if a few hundred CR stations actually came up. With commercial and community radio on an equal footing with the government broadcaster, we could be looking at a long awaited and much overdue radio revolution in India.
Q. By when do you think radio will account for 7 to 8 per cent of the total ad revenues? How much of this will be from the rural markets?
Within two to three years of going on air, radio should account for that percentage of the total ad pie. The greater share of this will be from A and B cities, but small-town and rural markets will still throw up decent numbers.
Q. With Phase 2 rolling out, how will the requirement for manpower be met?
Training is an integral part of the radio scene. It is unrealistic to assume that you can take someone from another media stream -- or advertising -- and put her in radio, and things will work.
There are lots of reputed mass comm. institutions opening up professional radio training programmes. Radio is not just TV without the pictures. The nuances are different from other media and the programming is different.
Going forward, I see a lot of attrition happening. Poaching is on the rise; it is a cause for concern for existing players. We are talking about 300+ channels by the end of the year – even if you calculate it at 20 to 30 radio professionals in each station, it adds up to a huge number, and nobody knows where they will come from; it can be quite scary!
Q. Have there been too many surprises in the rollout of Phase 2 till date?
Not really. Much has been made of HT Media’s awesome bid of Rs 35 crore for a single frequency in Mumbai, which has been bandied about as a ‘four-fold increase’ over the highest bid in Phase 1. That just doesn’t add up. The highest bid in Mumbai five years ago was only Rs 9.75 crore, but it would have added up to Rs 198 crore over a 10-year licence period.
HT’s Rs 35 crore in the current bidding is a one-time expense, and each Mumbai channel could theoretically pay as little as Rs 88 lakh a year as annual fee. As Aroon Purie has been quoted as saying, Radio Today saved Rs 27 crore by exiting and re-entering the FM market as a new player.
The bids for B, C and D cities in North India have just come in, and they are almost all in the sub-Rs 2-crore range, with the exception of Chandigarh. I don’t expect much excitement in the Eastern region either. If anything, the bids are going to be even lower there, and many frequencies may not find any takers at all. The region to watch is the South, where we expect some fairly competitive bidding.
Q. Any guesses as to why the bidding could be lukewarm, especially in the smaller cities?
As I said, this is a new business, and the last round of FM licensing didn’t exactly generate a lot of confidence in the industry. Phase 2 wasn’t given much mileage by the government. And the press underplayed it to a great extent – not very surprising, really, given their cross-media interests. This might have kept the bidding from getting out of hand, but ultimately, the radio industry will be the loser if potential broadcasters stay away and frequencies are wasted. In the long run, fewer players would mean diminished public interest and lower investment in radio, and a smaller slice of the ad pie. The upside is that with many frequencies left over from Phase 2, and other frequencies being freed for FM broadcasting, Phase 3 of FM licensing may be closer than we think.