A day after the government approved e-auctioning of a record 839 private FM radio stations in 227 towns and cities, the industry expects to double in size in the next three years.
The government’s guidelines were for the expansion of the third phase of FM radio broadcasting services.
Ashish Pherwani, associate director and segment champion (radio), Ernst & Young, said: “Once all the licences are sold, the number of stations will increase four-fold to over 1,000 centres. It would take three to four years to launch all stations, but the amount of inventory coming in, it would enable the industry to double revenues over the time.”
At present, the radio industry in India, which has 36 FM operators, is estimated to be valued at Rs 1,200 crore.
The country’s largest private radio operator, Entertainment Network India Limited (ENIL) which owns and operates Radio Mirchi, expects 22-25 per cent growth in annual revenues once new stations under the third phase start functioning.
“Our steady state growth expectation is about 15 per cent per annum. With Phase-III coming in, we would expect to grow at 22-25 per cent per annum. But this would happen from 2013-14....it will take another 18 months for the new stations to be launched,” Radio Mirchi Chief Executive Officer Prashant Panday said.
Reliance Broadcast Network Ltd, which runs channel Big FM, also appears upbeat.
“We expect to clock over 30 per cent growth annually, driven by expansion in key urban clusters and deeper reach in Tier-II and Tier-III towns,” said CEO Tarun Katial.
One of the significant policy initiatives that would drive growth in the sector is the government’s decision to allow multiple frequencies under a single licence, experts say.
Pherwani added, “Permitting multiple frequencies will enable radio companies to effectively generate revenues around the larger revenue markets — the metros. According to me, that's the most important policy change in Phase III. Further, the ability to network all radio stations will enable a reduction in operating costs and that is a welcome relief for number two and three ranked stations in smaller revenue markets. Given that companies can now provide a bouquet of over 150 channels across the country, we can expect to see more and bigger deals.”
Under the new policy, pan-Indian players with adequate infrastructure can broadcast content across metros and smaller cities by operating from a single city, instead of having studios across the country.
“At RBNL, we will be looking at multiple frequencies. This will be a revenue multiplier without huge incremental capital expenditure. In addition to key urban centres and a network of ‘C’ and ‘D’ category cities, the significant increase in radio inventory and the pricing power offered by multiple frequencies in cities will lead to content innovation and drive growth,” said Katial.
Stakeholders are also upbeat about the government’s decision to allow private operators to broadcast news content from All India Radio in an unedited format. Sporting events, traffic and weather updates, and news would work excellently for them as it would grow audience base, informed Katial. With the policy framework in place, the share of radio in the overall advertising pie is expected to go up to 7.5-8 per cent from five per cent. In most advanced economies, the share of private radio operators in this segment amounts to 8-12 per cent.
Once the expansion programme is underway, the sector is additionally expected to create 4,000 jobs to operate the 150-odd channels which would be on air by 2015. Currently, there are 30-40 channels on air.
