A glimmer of hope for radio

Amidst challenges, telecom regulator's recommendations show the path ahead for a brighter future for radio

Is there any hope left for radio? Last year, radio operators earned Rs 2,100 crore in revenues, which is not even a drop in the Rs 2.1 trillion that the entire media and entertainment business earned in 2022.

Radio is simply not seen as an important medium by media planners. At its peak in 2018, it had hit Rs 3,360 crore in revenues. In 2020, the pandemic halved that to Rs 1,430 crore. That is also the year India’s largest radio brand dropped the word “radio” from its name. ENIL’s Radio Mirchi became Mirchi Unlimited. While most operators haven’t changed their name, many now get anywhere from 30-40 per cent of their top line from digital content, events, or anything other than radio. That is the only way they could survive. 

That is why the September 5 recommendations that the Telecom Regulatory Authority of India (Trai) made to the Ministry of Information and Broadcasting bring a glimmer of hope. These include allowing news on FM channels, rationalising the licence regime, and mandating FM receivers on mobile phones. If implemented, they could help double listenership, cut costs, and attract better ad rates.

A quick flashback might help to understand why so much rests on these suggestions.

By the time radio was freed up in 2000, almost every other media — TV, print, film — had raced ahead. Unlike the others, radio’s freedom came with a heavy licence fee burden. For instance, in 2015, during the phase three of licensing, FM radio operators forked out over Rs 3,100 crore as licence and migration fees. That is almost twice the Rs 1,720 crore the radio business generated in revenues in 2014.

What was worse is the guidelines pegged licence fees at 4 per cent of gross revenues (including goods and services tax or GST), or 2.5 per cent of the one-time entry fee for a city, whichever is higher. For example, in Delhi, the highest bid was Rs 169 crore. So the licence fee would be about Rs 4.2 crore even if the station was not earning in the first few years. This applied even to companies that had migrated from phase two to three, punishing players who had not bid at those prices. Going by Trai’s analysis, 182 stations paid a licence fee of over 4 per cent of revenues and 34 stations paid a licence fee that was 30 per cent of revenues in 2021-22.

If the licence fee impacted costs, the conditions of the licence dampened their ability to monetise. From owning multiple stations in the same city to co-sharing towers to not being allowed to carry news, almost all the conditions limited programming innovation, reach, and revenues. Many of these restrictions have been lifted, but by 2016, it was too late. Jio, falling data prices, and online consumption changed the media market for good. Radio continued to bleed through the economic slowdown of 2019, and the pandemic.

Now, Trai recommends that the licence fee be de-linked from the non-refundable one-time entry fee and that it should be calculated as 4 per cent of gross revenue, excluding GST. If this happens, it will help push costs down by anywhere between 10 and 40 per cent, depending on the stations and cities an operator is in.

Even then, the fact remains that radio — at 262 million listeners — is a small medium compared to, say, TV that reaches 892 million, or streaming, which gets over 500 million unique visitors a month. There are 867 radio stations, including those from the state-controlled All India Radio, which collectively got just about 2 per cent of total ad revenues. After more than two decades of privatisation and crores of rupees in capital, radio remains an insignificant medium in terms of both revenues and reach. Not surprisingly, then, there is no appetite for bidding for the next round of over 200 frequencies left over from phase three.

This is not just about digital. The US, a country with a population of just about 330 million people and the hotbed of all things digital, has over 15,000 radio stations generating almost $22 billion in revenues. The medium thrives there because of its large national and local presence.

One reason radio reach in India has stagnated is that many manufacturers disable the radio receivers in the handset to promote their own music streaming service or apps. This is why the recommendation that, “functions or features pertaining to FM radio should remain enabled and activated on all mobile handsets having the necessary hardware, and a standing committee will monitor compliance by phone manufacturers and importers,” helps.

There is a more practical reason for this regulatory push. Radio’s reach doesn’t depend on bandwidth and electricity but on radio waves (frequency), making it the only communication medium that works during a disaster. In April this year, the Ministry of Electronics and Information Technology released an advisory to mobile manufacturers’ associations emphasising this. If manufacturers comply, FM radio could potentially reach the billion-plus mobile population. That means a safe doubling of listenership to over 520 million people.

The third key recommendation, allowing news for 10 minutes every hour, then becomes more fun. It brings more programming variety and an entirely new category of advertisers to radio. DB Group, the publishers of Dainik Bhaskar and several other newspapers also operate 30 radio stations under MyFM. Ditto for Sun Network, which operates Red FM and Magic FM. It becomes a nice way of leveraging their news generation capabilities.

More listeners, more revenues, better programming, and economies of scale; radio operators couldn’t ask for more. Now, if only the ministry would oblige and convert these into policy. 

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