Tune in, India!

Prasar Bharati's second round of bidding has media houses excited about the possibility of 24x7, pan-India FM radio

Come 2006, driving around in the country is set to become a whole lot more interesting. For there's going to be round-the-clock FM radio entertainment to take care of soaring tempers at traffic snarls, and not just in the metros but in far flung towns like Muzaffarpur (Bihar), Akola (Maharashtra) and Sagar (Madhya Pradesh) as well.

Prasar Bharati's decision to invite bids for 338 FM radio stations across 91 cities in the country is positioned to bring about a revolution in radio broadcast in the country.

Besides the magnified scale of business this time "" in 2000 bidding took place for 21 stations, only 12 of which were finally set up in 2001 "" is the highly liberalised policy of the government that seems to have caught the imagination of media houses and entertainment companies who are making a beeline for Prasar Bharati to file their intent before November 11.

As against the previous stifling regime of an annual license fee of about Rs 9-10 crore, the one-time entry fee for a 10-year licence along with a revenue sharing scheme of a minor 4 per cent seems to have finally brought about the long due breather to the industry.

According to industry observers the Rs 250 crore radio industry comprising a minuscule 2 per cent of the whopping Rs 11,000 crore advertising revenue is bound to go on a fast track now.

Small wonder that there seems to be hectic activity among not just existing players who are hoping for a pan-India network, but all big media houses to boot.

Some of the names doing the rounds include Malayala Manorama, Enadu, Ananda Bazaar Patrika, Prabhat Khabar, Rajasthan Patrika, Dainik Jagran, Dainik Bhaskar, Hindustan Times and Anil Ambani's Reliance Entertainment Ltd, apart from the existing players.

"This is the only big chance for any serious player to get into radio," points out Sanjay Salil, CEO of Mediaguru, which provides consultation and business plans to set up television and radio channels.

Sensing the big opportunity in radio, Mediaguru has tied up with Broadcast Engineering Consultation India Ltd (BECIL, an autonomous body under the I&B ministry that provides technical know-how) to provide turnkey solutions to interested parties in setting up radio channels anywhere in the country.

Although refusing to name his clients, Salil confides that at many as 15 media houses have approached him for a business model.

Interestingly, radio has not been a profitable venture so far with existing players struggling to stay afloat, even as several of them (like Midday in Mumbai) called it quits midway. "Each of us have borne losses. The larger you tend to be, the bigger the loss," admits A P Parigi, CEO, Radio Mirchi.

The first phase of FM radio has obviously been a harsh learning exercise for both the players as well as the government, he says.

Unlike the first phase when the open bidding led to unrealistic quotations and subsequent withdrawals, this time round Prasar Bharati has come up with a two stage "closed" tender auction.

So players had to first register their intent by November 11 which will be followed by a sealed financial bid in January. Moreover, clauses such as a 15 per cent ceiling on the number of channels you can bid for, transfer, trade or merge before five years, have been included to eleminate speculative bidders, points out a senior Prasar Bharati official.

This falls in line with the larger vision of the government to ensure 100 per cent radio coverage for the country in terms of national programming as well as local content, he points out.

Incidentally, although less expensive than television (which rakes in higher revenues), the initial investment for setting up a radio station can be substantial.

Add to it operational costs, the license fee, the 4 per cent annual revenue share of the government and the cost of content, and what emerges is not a very financially lucrative business "" at least for small players.

Then why the fuss? That's because even though it may not be currently profitable, but certainly has the potential of turning into one, point out media experts.

Says Apurva Purohit, CEO, Radio City: "Radio is a highly cost-efficient and effective medium for advertisers to interact with their consumers in a very personalised and response oriented manner."

That's the reason why from FMCGs to financial institutions to durables and even other media like television channels and publications are turning towards radio for advertising. No wonder radio share is tipped to grow to 8 per cent in the next two years.

But the new found interest in radio goes beyond the simple expectation of radio share increasing in the coming years. While all business ventures continue to follow the mantra of diversification, media houses appear to be keen to safeguard their retail business.

"Most media groups know radio may not be a huge moneymaking machine but feel it's a necessity to own one," says brand consultant A S Raghunath. Big newspapers have the power to brand and market their channels.

Agrees a senior Hindustan Times official: "We certainly have an edge as we already know how to sell space in print. Moreover, we have an additional advantage of offering an advertising bouquet, both in print and radio, to consumers."

Providing 360 degree solutions to consumers is the motive behind venturing into radio, points out Rajasthan Patrika's national marketing head, Arvind Kalia.

Whether it's advantage consumers or media houses, what everybody seems unanimous about is the untapped opportunities that radio in India offers.

No wonder existing players aren't sitting up in their chairs to take notice of the new entrants wanting to nibble at the growing share of the pie: "We've been running at only 10 per cent capacity of the market," a Radio City executive sums up; "there's enough for everyone, at least for a few years."