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Radio industry suffers high licence fee

Radio industry suffers high licence fee

Author | Shakir Sheikh | Friday, Apr 30,2004 8:35 AM

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Radio industry suffers high licence fee

It was only last year when Gautam Radia-promoted Millennium Broadcast’s Win 94.6 FM was axed by the licence fee. And, this year it dies yet again. And what’s worse, for the same reasons. Win was unable to cough up the third year’s licence fee of Rs 12.89 crore, for which the Information and Broadcasting Ministry revoked its licence.

The third year’s fee was a 15 per cent increase over the second year’s fee of Rs 11.21 crore. Gautam Radia, CEO of Win 94.6 FM, however, could not be contacted.

A gloom has descended upon the industry players and they are unequivocally empathising with the casualty. Says Nischint Chawla, CEO, Red FM: “This is a bad sign for everyone related to the radio business. The licence fee issue should be worked out immediately as it is generating negative vibes which is not very good for the future of the industry.”

The entire radio industry is sticking together on this issue and demonstrating solidarity, vocally or otherwise. A classic example would be the programme aired simultaneously on 94.6 and 92.5 FM at around 10 am, where Tarana (DJ for Radio Midday 92.5 FM) spoke to Malishka (DJ for Win 94.6 FM), live on air and songs were being dedicated to Win 94.6 FM.

Senior officials of Mumbai’s FM stations have been pushing for a revenue sharing system, instead of the license fee for a long time now. There were some indications that it might happen when bidding for the second round started, but nothing has transpired yet and the industry is in the dark about its status.

Licence fees are the highest in Mumbai, with the industry watchers attributing it to the cutthroat competition. Radio stations made extremely high bids for the licences based on advertising revenue potential, which is playing hide-and-seek with the stations and taking a toll on them, feel most industry observers.

“High license fees constitute the highest percentage of operating costs, constituting in some cases up to 60 per cent of the total costs with royalty costs constituting the other major expense,” says Ernst & Young’s latest report on the Indian Entertainment sector.

Says Prashant Panday, CEO, Radio Mirchi: “The radio industry has yet to deliver on the revenue front. It has not performed as expected with a nominal growth of 15 per cent to 20 per cent in the last year. With events such as the Mirchi Kaan awards and Radio Works, we are aiming at accelerating the growth in advertising and creativity in the industry.

“The ad-spend on radio in 2003 was approximately Rs 180 crore ($40 million), which is two per cent of the total ad-spend of Rs 9,600 crore ($2,133 million), of which television and Press garnered a sizeable share,” says the E&Y study.

With the industry players being uncertain about the course of action by the Government, the road ahead for the radio industry looks rugged.

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