MxM Monday: Expectations from Phase III FM radio licensing

24 Dec,2012

 

By Ananya Saha

 

FM Radio is set for exponential growth. Even as advertisers are yet to take this medium seriously, the industry players are waiting for Phase III with anticipation. The industry is positive that the third phase would result not only in differentiated content but will also interest the advertiser and listener alike.

 

We speak to private FM players for their expectations from Phase III of licensing.

 

By Ananya Saha

 

Harrish M Bhatia, CEO, DB Corp Ltd - Radio Business (94.3 My FM)

We all want Phase III to happen. It is an industry’s requirement to grow. But it is important for the government to remove hurdles like the issue that happenedinChandigarhor not allowing us to carry news. What is the objective of taking AIR news? If it the issue of keeping tab or administering the news we carry, they can ask us to keep our news recordings for 30 days and they can review it. How does the government control cable telecast? Why cannot they trust us?

 

From the advertisers’ front, I am sure that the advertising in the medium’ will continue to grow. What is required is proper decisions by the government to ensure that the private FM players also gain.

 

Asheesh Chatterjee, CFO, Reliance Broadcast Network Ltd (92.7 Big FM)

The more number of Spectrum licenses in Top A, B cities will only benefit the industry. It will add to content loyalty. Phase III licensing will result in closure of music royalty issues when the tariff rates will resolve the ambiguity issues that exist at the moment. And yes, the FM players will be investing in Category C and D towns. Kozhikode, Chandigarh and the South will make the things uncomparable. Those areas need a bit of correction.

 

These three are broadly the issues, apart from smaller issues such as news. Even while protecting the identity of your brand, we will be able to cover news in the same manner or better manner. Otherwise you are too restricted in communicating it in the same manner.

 

Harshad Jain, Business Head, HT Media (Fever FM)

The highest bidding of Phase II will becomes the lowest bidding price in Phase III and that is a cause of concern. I hope the government understands the fact that the cost of doing business is high. And I hope they do pay attention to this fact apart from solving the issues such as transmitter and infrastructure.

 

It is no doubt that the Phase III is going to do better to the industry, but the back-end processes will have to be taken care of and sorted.

 

Anurradha Prasad

Anurradha Prasad, President, AROI and CMD, BAG Networks

We want the processes of Phase III radio licensing to begin as soon as possible. We, as an industry, do not want something that becomes unviable. Hence, we are awaiting the process to begin soon so that industry gains. You cannot compare telecom and radio spectrum together. The consumer does not pay for radio. The medium requirements are different.

 

It looks like the issue of music royalty will get sorted as Phase III licensing comes into play. However, I am concerned that in Phase III, the bidding prices might go haywire and people will not be able to pay, nor would they be able to make it profitable.

 

 

Prashant Panday, CEO, Radio Mirchi

The objective of any policy should be to ensure growth of the sector. In the case of FM radio, Phase-3 policy should attempt to expand FM in a big way.

 

The Phase-3 policy as it stands today only partially addresses the objective. It does seek to expand geographically into some 250 new towns. However the auction methodology (electronic ascending auctions) and high reserve fees (highest bid received in Phase-2 in a similar category town in the same region) will frustrate this goal. The radio industry believes that FM auctions will be a flop with most new cities not being taken up. The industry prefers electronic tendering, just like done successfully in Phase-2. This would also take care of the problem of reserve fees, since they are set post-auctions (25% of the highest bid).

 

The policy allows for networking across the network, which should help cut operating costs in small towns. It also allows broadcasters to operate more than one channel in the bigger cities, which should help in consolidation. The policy also allows news broadcast, but limits the content to AIR feeds. This is blatantly unfair, since news without restrictions is allowed to all other media.

 

However, the biggest problem is conducting auctions under scarcity conditions. There is only 1 channel in Delhi, Bangalore, Chennai, Ahmedabad and Pune and 2 in Mumbai. This will lead to exorbitant “desperate” bidding. Further, this high bidding will become the base for the next round of auctions, which will put the radio industry into a cost spiral. Instead, the government should accept TRAI’s recommendation of halving “channel separation” to 400 KHz and doubling the number of channels. This way, the government will get more overall license fees, the public more programming variety and the broadcasters reasonable license fees.

 

Suresh Sanyasi, National Sales Director, Radio Indigo

Our expectation from Indigo are fairly simple: we are looking at larger market space in terms of international quality music available pan India. We current fall into very niche A+ segmentation. We are looking at Mumbai,Delhi as a market and may be a couples of Town A and B where we see potential like the way we got Goa where we can harness our brand and give listeners good music. Invariably connecting them with good brands and advertisers and giving them pan-India reach. Currently, if any advertiser wishes to advertise with us, they have to locally listen to our station in Mumbai and Goa. Once, we get license, the advertisers will be able to connect with our brand pan India. We already have offices in Delhi and Mumbai and once we get license, we will start expanding horizontally. We have, maybe about 20%, of business coming out of Mumbai and Delhi irrespective of the fact that they do not have touch-and-feel of Radio Indigo and they have only heard about our brand.

 

Once Phase III begins, the market will grow. More radio stations coming in, licensing will become larger, the government is definitely going to get lot of revenues and a lot of employment will be created. There is huge amount of growth that we are looking at.

 

However, radio in India has not reached maturity yet. By maturity, I imply, consumption of radio is not a very-well accepted norm right now. I say it comparing it to more mature medium like a television. People buy in terms of brand and advertising people do not know how to use radio. Radio is a very tactical medium. Advertisers do not understand the medium since it is not a visual medium, even as it remains the most cost-effective medium to advertise and there is a definite return that comes through. With larger number of stations coming in, people would like to try out and understand the value of radio in itself.

 

We are looking at Phase III with much positivity and optimism.

 

Post a Comment 

One response to “MxM Monday: Expectations from Phase III FM radio licensing”

  1. Siddharaj Parmar says:

    How about doing in Ahmedabad? Is there any of u Respective brands supposed to start a new srarion in ahmedabad or gujarat as well? Expecting regarding information and reply from all of Radio Brands.

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