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IndustrySpeak: Why FM radio needs news and multiple frequencies

22-September-2009
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IndustrySpeak: Why FM radio needs news and multiple frequencies

With the FM Phase III rollout expected soon, industry expectations are high, particularly regarding permission to air news and multiple frequencies, which are seen to help the FM radio industry to further consolidate and grow. exchange4media finds out from industry honchos how news from multiple sources and multiple frequencies can help the industry.

According to the PriceWaterhouseCoopers (PwC) Indian Entertainment and Media Outlook 2009 report, in the year 2008, the Indian radio industry had grown at a CAGR of 36.4 per cent over the last four years from 2004 to 2008. The Indian radio advertising industry is projected to grow by 18 per cent over the next five years, reaching Rs 19 billion in 2013 from Rs 8.3 billion in 2008, which is more than double its current size.

While the FM Phase III will see around 700 additional frequencies for private FM players and introduction of FM stations in 90 new cities, the Indian radio industry is also eagerly waiting for allowing of news from multiple sources and permission for multiple frequencies. While the I&B Ministry has already given its nod to air news and current affairs on FM radio as per TRAI recommendations, which is through select agencies or sources, the irony is that news is likely to be restricted to Prasar Bharati (All India Radio).

What industry leaders have to say:

Harrish M Bhatia, COO, My FM (Synergy Media Entertainment Ltd):

“Permission to broadcast news and current affairs and allowing multiple frequencies are extremely important measures for the growth of the radio industry. Private FM is still in its nascent phase and is yet to realise the potential of a mature medium. News and current affairs broadcast will allow FM stations to tap into those target audiences that seek mature content in a medium, while multiple frequencies will give radio a wide spectrum of content to choose from. These measures will allow newer formats of radio to flourish and will be vital to growth in the third phase. Multiple frequencies will help us diversify into niche formats while retaining the core appeal of a mass channel. We are also very keen on allowing of broadcast news and current affairs from internal media house sources, along with permission to broadcast sports, as these measures will boost the medium and will diversify our audience base as well.”

Sunil Kumar, MD, Big River Radio:

“News on radio is an audience builder. Through news, the audiences remain connected to their world – be it their city, their state, the country, weather, share markets, sports – while getting entertained. So, when more people listen to radio, the medium gets more advertising and that works well for everyone, be it operators, listeners, advertisers or even the Government.”

Neeraj Chaturvedi, National Marketing Head, Fever FM:

“If news on FM radio is only restricted to AIR, then there will not be any differentiation in terms of news. If news from multiple sources is allowed, it will also open up wider audiences consuming news. Multiple frequencies, on the other hand, will provide enough value for the niche segments, which have been sidelined. Allowing news and multiple frequencies will see newer audiences, thus leading to expansion in listenership and thereby also an increase in revenue generation.”

Ismail Dabhoya, Senior Vice President – Finance and Commercial, Big FM:

“Today, the need for differentiation in content is most important. News on radio forms an integral part of content and the source of the same hence plays a critical role. If all radio stations get the same news from the same source, the power of the medium will not be used to the optimal. The size of the advertising pie in the radio industry currently is approximately 4 per cent and growing at 10-12 per cent. We have made a recommendation for multiple frequencies, which will allow for profit margins to grow and hence improve returns. Multiple frequencies will allow for stations to experiment and will see greater differentiation come in with niche stations and newer formats of radio.”

Ashish Pherwani, Senior Manager - Media and Entertainment, Ernst & Young:

“What I don’t understand is why FM radio should be restricted to air news from multiple sources, whereas print, Internet and television face no such restrictions. If news is permitted on radio, it will bring in more listeners to radio and hence, it will lead to growth of the segment. Because multiple frequencies are currently not permitted, most FM stations have taken the mass entertainment route - as a result there isn’t much content differentiation. If they are permitted, you will see FM players experimenting with interesting new formats and music genres. Such stations will address the radio needs of niche listeners, who are currently left out, and thus, multiple frequencies will bring in more listeners to FM radio.”

The benefits:

Harrish Bhatia pointed out, “News and current affairs and multiple frequencies in FM radio, it will increase the revenue generations and advertising spends from sectors that are still wary of the potential of radio. With news and current affairs bringing in the more serious listener, sectors which are targeting these audiences will be able to utilise the medium much better. Multiple frequencies with diversified content will also attract larger target audiences, which, in turn, will attract a larger base of advertisers. Multiple frequencies, news and current affairs, varied content and resolution of music royalties are all important issues that need to be sorted along with the Phase III bidding.”

Ismail Dabhoya observed, “It will most certainly augment revenues. Advertising spends, too, will increase as advertisers will have clearly identified radio stations with a clear TG for their products. Although the music playout time reduces and royalty expenses are reduced, there could be news gathering costs, which might nullify the savings.”

According to Sunil Kumar, “The larger audience size for radio means larger spends by advertisers. Plus, the listeners will have an even bigger emotional connect with the medium – ‘a friend who knows it all and shares what I must know, what interests me, what affects my day-to-day-life… and make it simple enough for me to understand, unlike newspapers and news channels, which are far too political and intellectual’.”

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