Radio hoping for festive cheer after disappointing H1'2017
Most private FM players have seen drop in revenue in the opening quarters of 2017 due to various government policies including GST, RERA and more. Yet, the sector is hoping for a change in fortunes during the festive season
The latter part of 2016 and now 2017 has witnessed several changes in government policies. Demonetisation, GST and RERA have had a direct impact on several sectors, including advertising on radio. But on a hopeful note, radio players are looking forward to the second half of 2017, which they believe will bring better fortunes due to the festive season and the diluting effects of GST implementation.
Among radio operators who have declared results so far, ENIL, which runs Radio Mirchi, has reported de-growth of 5.8% in total revenues at Rs. 104.4 crore as compared to Rs.110.8 crores in Q1FY17. Prashant Panday, MD and CEO, ENIL, attributed this to slowdown in all top advertising categories on radio in Q1 due to lingering effects of demonetisation, the rollout of RERA (Real Estate Regulation Act) and run-up to GST in June.
“Most companies, not just FMCG, have reported weak results in Q1. This had a debilitating effect on Q1 revenues of most radio players. I expect advertisers to come back towards the second half of Q2 as and when their own business picks up. Everyone knows that this is a temporary slowdown. The markets will soon bounce back. I think the effects will be fully erased in H2. Remember that last year’s H2 was very bad. So, this year’s H2 will report high growth rates,” he told us.
Dainik Bhaskar, which runs 94.3 MY FM, saw a 5.4% drop in radio advertising revenue in Q1 FY18 (Rs. 31.2 crore) as compared to Q4 FY2017 (Rs. 33 crore.)
“Across categories and industry, Q1 has been a disappointment owing to change in government policies such as GST, RERA andthe effects of demonetisation. Q2 is also witnessing impact of the policies.We are hopeful that September onwards, business will be better and the festive season will make the market sentiments better,” said Harrish Bhatia, CEO of 94.3 MY FM.
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Speaking about the upcoming festive season, Bhatia said that H2’17 will be definitely better as the teething problems of the policies would be over. “Secondly, advertisers who have held back spends owing to the policy impact will spend more to recuperate,” he added.
This sentiment was also expressed by Satyanarayana Murthy, CEO of Radio Indigo 91.9 FM, who told us that ad spends have started to pick up from July-end and categories like real estate, which had become shy of spending due to RERA, have also started spending once again.
“Q1 ad volume for radio industry must have dipped by around 15% in markets like Bangalore and Mumbai and the impact has largely been felt in the existing frequencies and not the new ones. Existing frequencies have seen miniscule or negative growth and it has been a mediocre quarter,” he told us, while saying that spending will improve in the second half of the year.
Radio City 91.1 FM reported revenue of Rs. 66.55 crore in the first quarter of 2017, down from Rs. 72.79 crore in the preceding quarter. However, in the second quarter of 2017 (April-June,) revenues increased to Rs. 70.31 crore.
“Some categories like Real Estate have gone slow because of RERA. The big players are continuing to advertise while the smaller ones have slowed spending. For May-June, the sector has been down. Categories like Education, which are seasonal and typically spend in Q1, were down. Government, which is among the top 3 categories, was down for about a month but has started spending again now,” opined Abraham Thomas, CEO of Radio City 91.1 FM.
Tanaya Patnaik, Executive Director at Radio Choklate 104FM, said that radio business has been somewhat stagnant as it is largely dependent on retail market. “Last year, it was demonetisation and this year it is GST, the retail market needs a reason to be sceptical. We are experiencing the impact of market sentiments but post May’17, national business share is increasing,” she said.
Talking about her expectations from the festive season, Patnaik said, “The festive season is expected to be good because those who are in business also want to grow and hence they are expected to engage with their consumers through radio. It is going to be more events though, rather than traditional advertising.”
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