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Why should FM channels be banned from broadcasting news? The Centre is considering allowing privately-owned FM radio channels to start their own news broadcast," said Prakash Javadekar soon after he took over as minister for information and broadcasting last month. If the chatter among the radio operators, many of whom met Javadekar on May 30, is to be believed, the broadcast of news could be allowed on private radio stations as early as the end of June.
"We have been promised fast-track resolution of all issues," is all Uday Chawla, secretary-general, Association of Radio Operators of India, will say. If news is indeed allowed on radio by the end of this month, what does it mean for the Rs 1,460-crore radio industry?
"It removes a huge anomaly from the market. Not carrying news is a logistical nightmare," says Prashant Panday, managing director and CEO of the Rs 385-crore ENIL, which owns Radio Mirchi and is a part of the Rs 6,700-crore The Times Group, India's largest media firm. Panday points to the ambiguous situations that not allowing news on private FM creates in a market bursting with news options. Should private radio stations ignore the day when votes are counted for the Lok Sabha elections? What if there is tragedy like the one that took place in Himachal Pradesh recently? Wouldn't it be insensitive to keep blaring banter from radio jockeys and music when bigger events are playing out in the country? Most radio operators do carry updates - "with a lot of fear," says Panday.
The lack of variety on radio has been a big bugbear with listeners, advertisers and with the trade too. So news on radio is more than welcome. Besides plugging an obvious gap in radio's offering, the ability to offer news will "bring additional reach and, therefore, more revenues," says Tarun Katial, CEO of the Rs 235-crore Reliance Broadcast Network, which runs BIG Radio and the television business of the Anil Dhirubhai Ambani group. "There is a huge section of our population, particularly in Tier III towns, who will listen to radio news, especially at 'happening' times like elections, sports and local social events," thinks Anita Nayyar, CEO, India and South Asia, Havas Media Group. Havas is a media planning and buying agency.
It's not about money
Everyone agrees then that news on radio will help increase the time spent on radio and create additional reach. But talk about the impact on revenues and the arguments get hazy. "News could bring revenues to radio in the long term. (However) it is not a money spinner," says Panday.
Priti Murthy, national insights director, Maxus, a part of GroupM, India's largest media buying agency reckons, "If news on radio had happened before the smartphone boom, it would have been big. But now it is not a big game changer. There are 185 million smartphone users in India and almost everyone has apps for news. Why would they go to radio for news?" Ashish Pherwani, partner, EY, concurs: "From a revenue standpoint news doesn't matter at all."
The only way news could be a game changer is if it is allowed along with the long-delayed third phase of licensing, say industry sources. If the auctioning of 839 stations takes place soon, then, says Harrish Bhatia, CEO, Synergy Media which runs MyFM, "from 86 towns, the reach of radio could go up to 300 towns. That increases the relevance of the medium." Synergy Media is the radio arm of the Rs 1,869-crore DB Corp, which owns, among other brands, Hindi daily Dainik Bhaskar. Bhatia has put his finger on the nub of the whole thing. Without the full Phase III policy in place, only allowing news on radio will not bring much joy to operator balance sheets or to advertisers.
Importance of Phase III policy
This phase of radio policy unlocks some of the things that are holding back both news and programming variety on radio. Besides allowing more stations, it enables radio companies to own more than one station in a city - the other barrier to variety. And then, while the policy talks of restricting FM channels to feeds from All India Radio (AIR), Javadekar is open to 24-hour radio stations with their own news set-up and feeds from news agencies like Press Trust of India (PTI). This opens up an entire gamut of possibilities.
Pherwani feels that if a radio operator uses AIR feed, there will be very little cost impact. But permitting 24-hour news and PTI feed could benefit existing brands with a strong local presence. The stickiness this brings could help "push up rates", according to Pherwani. Panday agrees: "There exists a nice sweet spot for a 24-hour news channel in cities such as Mumbai." For the Times of India, which is the largest selling paper in Mumbai, a local news-based Radio Mirchi station in the city is the lowest hanging fruit. It has in place a news generating machine that can easily feed a 24-hour radio station. The only cost would be for an anchor and the packaging.
If the Times of India has the metro advantage, you would find groups like DB Corp having an edge in Tier II and III towns because they have more editions and bigger news-gathering teams there. Incidentally, a bulk of the 839 stations due to be auctioned in Phase III are in such towns.
More stations offering local news at little cost is the only way news could have any financial impact on FM radio, say analysts. This is because, as Nayyar points out, radio is a very local medium. It is also a low cost (Rs 4,000-Rs 10,000 per 10 seconds) medium and mass-based in nature (reaches over 90 per cent of India).
However it is rolled out - by itself or conjointly with Phase III licensing - news on radio will bring joy to audiences, advertisers and radio operators. What then are we waiting for, Mr Javadekar?
