The long-awaited rollout of Phase III of FM expansion has brought much cheer to the radio industry in the country. On July 7, 2011, Union Information and Broadcasting Minister Ambika Soni stated that the Cabinet had approved Phase III of FM expansion in the country, which pave the way for the addition of 839 new radio channels across 227 towns.
In conversation with exchange4media, Harrish M Bhatia, CEO, My FM, said, “The Phase III rollout will make sure that radio spreads all over the country and finally becomes a pan-India medium. And this in turn will highlight radio truly as a common man’s medium. Currently, radio is accused of having a relatively small listenership by many media planners and advertisers. But this scenario will now change as from a 90-city medium radio will take a huge jump and be a 300-city medium. This expansion will aid radio in going way past other mediums and will definitely help in the growth of radio revenues vastly.”
On whether the industry is satisfied:
The auction process and the appointment of an independent agency will separately issue a detailed information memorandum, in due course, enabling the prospective bidders to participate, and also indicating the cities, reserve prices city-wise, number of channels to be taken up in each batch and other procedures for e-auction. The key regulatory changes in Phase 3 are expected to facilitate industry growth. The industry is looking forward to receiving the benefits of cost economics, format innovation, increasing reach and revised industry structures.
On the growth prospects:
Additionally, driven by Radio’s strong value proposition and Phase 3, there is likely to be a significant growth in local advertising. Permission for multiple frequencies and permission to relay news, sports and current affairs could create opportunities for content innovation. FM Radio Listenership could potentially increase from around 115 million currently to more than 200 million by 2015. The government will get more license fees; the broadcasters will be able to launch more channels. And the most important thing – the listeners will be served much better. Multiple frequencies will be made available through the new revisions, which will be a revenue multiplier without huge incremental CAPEX/OPEX.
Also, the lock-in period for promoters that has been cut down from five years to three years, which will also help us in letting go of unsuccessful dealings.
On the constraints:
The restriction on sourcing news from AIR, even though we are all large and responsible media houses is random and antiquated. We are not too happy with this decision as each and every media house follows a particular style and format and we think that we should have been allowed to abide by that.
Furthermore, for the radio industry, there has been only a marginal revision in FDI limit from 20 per cent to 26 per cent, which for a nascent industry is not encouraging and will not unleash the true growth potential of the category. It is important that media platforms be treated neutrally, with radio being given a fair chance, with the FDI limit increased to at least 50 per cent. The medium needs to first become viable to attract FDI. This will only happen once the concerns like music royalty, extension of license period are addressed by the government. Unless and the royalty issue is addressed many radio stations will shy away from participating in the bidding process, especially in smaller towns.
Additionally, while we are positive about the policy announcement, our expansion plans largely depend on more clarity around the license extension to 15 years (from the current 10 years); there is no mention of this in the new policy announcement made recently. Apart from these we are still facing challenges like the absence of an effective tool to measure radio along with the cost of the Prasar Bharti rentals. Once, these challenges are adhered to, we will truly be happy to have moved forward finally.
FM Phase III: Radio players upbeat; see 30 pc y-o-y growth
Cabinet okays FM Phase III; 839 new channels to be added