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Is Radio Mirchi’s acquisition of Oye FM a threat to Big FM?

23-July-2015
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Is Radio Mirchi’s acquisition of Oye FM a threat to Big FM?

The MIB gave its nod to Radio Mirchi’s proposed buyout of Oye FM from the TV Today Group. However, it has only allowed the sale of 4 out of the 7 stations operated by Oye FM. Interestingly, Big FM is among the strongest national player in these four cities

Radio Mirchi gets MIB nod to acquire Oye FM's four stations

Yesterday’s development might be a bittersweet pill for Radio Mirchi. On one hand, it has made an entry into 4 new markets but, perhaps because more importantly, the MIB did not allow it to buy Oye’s assets in Kolkata, Delhi and Mumbai.

Almost all the big, national channels want to get a second station in the metros of Delhi, Bangalore and Mumbai, which are considered to be the most lucrative market, especially the capital. Since having multiple stations in the same city is allowed in Phase III, it is expected that these cities will fetch a high price in the upcoming auctions. If the proposed sale of all of Oye FM’s assets had gone through then Radio Mirchi would have engineered a massive coup against its competitors.

The four stations that Mirchi has managed to acquire are interesting ones. Though not at the same level as, say, a metro like Delhi, they have till now been the dominion of Big FM (all four) and My FM (Amritsar and Jodhpur). The entry of another major player will create a tipping point in these cities.

If we go by RAM data, in the 4 big metros of Delhi, Mumbai, Bangalore and Kolkata; Big FM has had a consistent lead over Radio Mirchi in terms of listenership percentage, while Radio Mirchi is clearly the strongest in Kolkata with Delhi usually seeing a close competition between the two.

However, Radio Mirchi is known for charging premium rates across the cities it operates in with planners and radio professionals maintaining that it still manages to have a lack of inventory. Is it possible that Mirchi might be able to offset some of the additional demand to these cities? If the operating cost is lower than the metros, it makes for good business.

Also, it will be interesting to see the kind of format that Mirchi brings to play in these cities. Generally, Radio Mirchi focuses on Bollywood and regional content, while BIG FM’s main focus is retro Indian music in most of the cities it operates in, something that a lot of operators have shown interest in. In fact, it is considered to be a Rs 400 crore market by some. Will Mirchi, with a different programming, disrupt the market?

It might also be possible that Radio Mirchi creates a separate retro programming for all Tier II-III cities it operates in. Thus creating a separate ‘network’ from its existing brand image. What is certain is that the private FM industry is in for some exciting times.

 

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