Balancing FCT and non-FCT revenue is key to surpassing radio’s 2019 levels: Red FM’s Nisha Narayanan

The COO and director says the private FM channel is now a content creation hub across 69 stations in multiple languages.

Khatija Rehman and Band, Sithara Project Malabaricus, T.M Krishna, Agam The Band, Nithya Mammen, Job Kurian, Arivu + The Ambasa Band, and Thaikkudam Bridge. These are just some of the artists performing at Red FM’s South Side Story. Scheduled on August 31 and September 1 in Delhi, apart from music, the two-day extravaganza will also celebrate the diverse heritage of South India with dance forms, food, attire, and even books.

In its sixth edition now, South Side Story began as an initiative to support independent music from South India. Originally, it started small with just two bands, Agam and Thaikuddam, but the overwhelming success of those shows made it into a full-fledged festival and not just a concert. While the expectation was to attract about 1,000 people, the first event in Mumbai is said to have drawn over 4,000 attendees. 

Nisha Narayanan, COO and director, Red FM and Magic FM, says Red FM has always been more than just provocative entertainers on the radio and on the ground—it is also a cultural evangelist. A part of the Chennai-based Sun Network, one of its goals with South Side Story is to change perceptions about South India. 

“With 69 stations across the country, we are deeply local, and celebrating local culture is a natural fit for us. There's a misconception that there's nothing "cool" about the South, which I believe is unfounded. Often, the North holds certain stereotypes about the South, but through this festival, we aim to show that the South is just as cool and progressive as any other part of the country,” she says.

As much as Punjabi music has dominated the scene, Narayanan feels there's a need for diversity. So it has also launched other cultural initiatives like Sounds of Punjab with Gurdas Maan, and Dugga Dugga during Durga Puja, which highlights Rabindra Sangeet and other art forms from Bengal. It also conducts Himalayan Indie Fest, where it brings together music from the Himalayas, showcasing artists from different genres in Delhi. 

“The idea that only big, expensive artists can drive ticket sales and profitability is not something we align with. We're a radio station that values inclusivity and diversity. These festivals fill a gap in the Metro cities and respond to the audience's desire for something different,” she adds.

These events also offer local and national brands a unique opportunity to connect with a niche, targeted community, making it an effective platform for their specific schemes or promotions.

These events are a part of the private FM channel’s bid to boost its non-Free Commercial Time (FCT) revenue. In the last three years, it has significantly grown from 5% to about 30%. 

“This increase has largely come from events and digital, both of which have been expanding rapidly. We need to continue strengthening our digital presence. Even capturing a small share of the larger digital pie can result in substantial gains for Red FM and the radio industry as a whole,” Narayanan says.

According to the FICCI EY Media and Entertainment report, in 2023 radio revenues grew 10%, but it is still just 73% of 2019 revenues. Narayanan says this gap can be bridged on two levels: policy and operations. 

On the policy side, implementing TRAI recommendations, such as a 4% revenue share or a concessional GST rate of 5% like print media, would help the industry become more profitable. Currently, the GST is 18%.

"A concessional consideration by policy makers will also help the industry tremendously. Additionally, the policy has been restrictive, particularly with the ban on news and current affairs. Allowing news content would attract a new category of advertisers, boosting revenue. Correcting anomalies, such as outdated DAVP rates based on 2019 IRS results, is also necessary for growth,” she says.

Operationally, Narayanan says, bridging the gap requires a balanced revenue mix—50% from FCT and 50% from non-FCT sources. For this reason, radio stations, including Red FM, have diversified beyond traditional radio. They now engage in influencer marketing, branded content on digital platforms, events, IPs, and festivals. 

“Today, Red FM is more than just a radio station; it's a content creation hub across 69 stations in multiple languages, offering a 360-degree approach. This shift towards becoming a multimedia, multi-channel product is crucial for survival, especially as FCT rates have dropped and haven't stabilised,” she says.  

In 2023, according to the FICCI EY report, radio ad rates fell by 8%. Meanwhile, the ad volumes are rising. Narayanan says the industry needs to unite and maintain standardised rates, avoiding undercutting. 

“Unfortunately, we've struggled to build that level of trust among ourselves. The drop in ad rates has largely been a desperate attempt to return to pre-COVID levels. While ad volume is high, the value hasn’t kept pace, leading to complaints about too many ads on the radio. This approach isn't sustainable, so we're consciously capping our inventory and shifting focus to non-radio activities like content creation and innovation,” she says.