Phase III of radio to add approximately 700 licenses

As the phase III of privatisation is expected to roll out soon, the Indian radio industry is expected to witness a major boost.

As the phase III of privatisation is expected to roll out soon, the Indian radio industry is optimistic of huge growth. The industry, which is currently about Rs 1,000 crore in revenue, will see 800 new radio stations, across 300 towns, during this phase.

While addressing the audience at the FICCI Frames 2011 Convention, held at the Renaissance Powai, in Mumbai Prashant Pandey, chairman, FICCI Radio Forum and CEO Radio Mirchi, said, "The year 2010 was a year of waiting for us. But, the phase III auction of radio is expected to add approximately 700 licenses across tier III and few tier II towns."

Pandey was moderating the panel session, Coming Soon 800 New Radio Stations in 300 Towns: Opportunities and Hurdles. The panel comprised Tarun Katial, CEO, Reliance Broadcast Network, Harrish Bhatia, CEO, My FM, Rahul Gupta, Director, Radio Mantra, L V Krishnan, CEO, Tam, and Salil Pitale, executive director, investment banking, Enam Securities.

Gupta said that since the government will now allow licenses for radio stations to run for 15 years rather than 10 years, there are many investors who have now begun to show interest in this sector.

Said Pitale, "During phase II, the industry noticed a clear shift towards profitability. But, it was in the top bracket. And now, it is expected to go right down to smaller stations, and this is increasing the interest of investors."

Krishnan noted that the penetration of radio in this country has seen a tremendous rise. Today, 80-90 per cent of mobile users exercise radio accessibility. And, this mobility of the radio has increased the usage of the medium. He also added that with time, the consumption of radio amongst women has also increased considerably.

"There are 250-300 million radio users today. This is more than that of newspaper penetration. Also, the consumption time of radio has moved ahead of television. It is 145-150 minutes per day as compared to the television, which is approximately Rs 140 minutes per day," said Krishnan.

But, when it comes to monetisation of the medium, radio is yet to meet its dues. "The cost per thousand and cost per reach of radio is significantly better than television. The platform is very effective as a delivery system. But, advertisers are yet to completely recognise this potential," said Katial.

However, there was an air of optimism across the panel. When recession hit the global economy and slowdown invaded India, it was only radio whose economics remained stable, while other media platforms such as television and print de-grew significantly.

"It was during the slowdown phase that everyone discovered the potential of radio. It was revealed as a very effective system, and today, it plays a very important role in the media plan of various advertising categories across the metros," said Bhatia.

He added that now, to push that potential upward, there is a clear need for multiple frequencies in metros which will help increase the category's advertising inventories.

Pitale noted that the roll out of the third phase for radio will bring localisation of advertising on this medium in a big way. Radio can become more expensive when compared to television, if one wants to buy it nationally, he noted.

Elaborating further, Bhatia said that the scope for the small town retail market is enormous. "And now, it is the retail and the educational sector that will drive the advertising revenue growth of this industry. We will see the jump of advertising categories from print to radio, at a much cheaper cost," he said.