Top 3 FM firms gear up for big bites

Big 92.7 FM, Radio Mirchi and South Asia FM are set to control 55% of the market.

Advertising on Big 92.7 FM (Reliance Unicom), Radio Mirchi (ENIL) and South Asia FM (Sun TV group) may become costlier by up to 30 per cent.

The three leading FM radio companies are looking to capture nearly 55 per cent of the FM radio market, among themselves and through subsidiaries, after the final bidding of the remaining 97 additional FM radio stations concludes later this month.

According to sources, the three companies may end up bagging one-third of the 97 vacant FM stations after the bidding, thereby taking their overall market share in excess of 55 per cent.

This will help them increase their reach to a population of nearly 200 million across over 160 cities in the country. "As a result, the advertisers, who are looking to capitalise on their reach, may have to spend at least 30 per cent more on the radio ad-spots," an industry source said.

According to a media agency source, the effective radio ad-spot rates on the three leading FM stations in metros are Rs 8,000-12,000 per 10 seconds.

"In smaller towns, the rates are Rs 2,000-3,000. But with the effective reach of FM radio, advertisers still find it a lucrative medium for advertising in comparison with the costlier print and television media options," the source said.

"The three leading FM operators (Big FM, Radio Mirchi and Sun TV group) are expected to bag one-third of the 97 vacant FM stations. When that happens, there will be another round of increase in the ad-rates," said a Delhi-based senior media planner.

Currently, the three players have about 50 per cent of the 266 FM radio station licences, awarded in early 2006, leading to over 500 per cent higher ad-rates than in 2005, when there were only 21 FM stations. There was only Radio Mirchi before 2005.

According to the rules of FM radio bidding, no single company can hold more than 15 per cent of the allotted FM stations. Therefore, both Big FM and the Sun group, with 45 stations each, can add only 10 more stations while Radio Mirchi, with 32 stations, can add about 23 more stations in the bidding later this month.

Tarun Katial, COO of Big 92.7 FM, maintained that the channel would add "significant" numbers in the forthcoming bidding. "We would continue to hold a significant position in the radio industry even after the bidding," Katial said.

These 97 stations remained vacant after the second phase of private FM radio bidding, which was held in early 2006.

The business of FM radio became lucrative after the government shifted its radio policy from one being based on licence fees to a revenue-sharing model in 2005. The first phase of FM radio bidding, in 2000-01, was largely unsuccessful due to high licence fees.