If one speaks to the stakeholders from radio industry, there are higher chances of the conversation starting with how radio was the last medium to get liberalised and then, veering towards how it needs to be liberalised further to achieve its full potential. According to the latest media and entertainment report compiled by industry lobby Federation of Indian Chambers of Commerce and Industry and audit and consultancy firm KPMG, radio is the second fastest growing medium in India after the digital platform. The study notes that with increase in scale, expected changes in regulation from Phase III licensing, and the music royalty structure, the radio industry, currently estimated to be around Rs800-1000 crore, is expected to grow at 20% per annum, and become more profitable. The impressive rate of growth notwithstanding, the industry has a lot of catching up to do with traditional media platforms such as TV and print. It is extremely small when seen in the context of the global radio industry currently estimated to be around $58.8 billion.

Radio broadcasting in India started in 1935 with All India Radio (AIR) which operated on AM (Amplitude Modulation). The first FM station started in 1977 in Madras. However, the FM industry did not grow much since the private players were not allowed to participate. As part of Phase I licensing, the Government of India privatised FM industry in 1999 and 37 licenses were granted of which 22 became operational and one was closed down. Operators had to pay an annual licensing fee. In 2005, Phase II of licensing allowed existing shareholders to migrate to revenue sharing. Government did away with the fixed annual fee with an escalation clause and allowed operators to pay one time entry fee coupled with an annual payment amounting to 4% of gross revenues or 10% of the reserve one time entry fee for the city, whichever is higher. Currently, some key players in the Indian Private FM Radio Industry include Adlabs (Big), ENIL (Radio Mirchi), SUN TV (South Asia FM) and SUN TV (Kal Radio). Most of the players have created distinct positioning for their stations with the help of radio jockeys (Rjs) and programming. As of now, all the stakeholders in radio have their eyes set on Phase III of licensing which will transform the radio business forever. While there are around 245 radio stations across 83 cities and towns, the number will rise to 800 stations post phase III. As of now, only around 37% of the country has been covered by FM, so industry observers feel the industry has a lot of unexploited potential.

But the journey ahead may not be too smooth, argue players for there are several big and small challenges that remain unaddressed by the industry regulators as well as within the industry. Recently, at the second edition of the Radio Congress 2011, organised by Association of Radio Operators of India (AROI), Rajiv Takru, additional secretary, Ministry of Information and Broadcasting, shared how the ?ministry is planning to provide two-minute news capsules to the radio stations which can be carried without any tampering?. The industry that has been clamouring for allowing broadcast of news, obviously, is not impressed with the proposal. G Krishnan, CEO, TV Today responded by saying, ?If we have been successful in running news channels, why can’t the government allow us do do the same with radio? Such an attitude is not fair.?

While earlier radio was considered a poor man’s source of entertainment and was supposedly more popular in smaller towns and cities, currently, most players get 75% of their overall advertising revenues from the top eight cities of the country. Industry players feel there is a need to focus on smaller cities and towns but it is easier said than done. There are two sets of advertisers on radio ? big brands and booming small scale entrepreneurs. While big brands are mostly focussed on bigget towns, tapping smaller and local entrepreneurs needs focussed sales and marketing skills. The industry has also been demanding the relaxation in the 20% restriction on foreign investment in the sector.

?Unlike other mediums, in radio there is never a transaction between the listener and the operator. And the only way to sustain the business model is through advertising revenue only,? says Anurradha Prasad, president of AROI and chairperson and Managing Director of BAG Films & Media. AROI is the official association of the private commercial radio stations in India.

FM Radio operators feel change in the policy guidelines will help the industry from unleashing its potential. ?It’s high time for the ministry to become a facilitator rather than a regulator. There is need for a dialogue between the ministry and the operators to sort out matters related to news on radio,? adds Prasad.

Besides, the industry also needs to do some firefighting in its own backyard. Measurement of listnership has been a contentious issue among the industry players. Convincing the advertisers that the platform is universally popular among youth, office goers as well as house wives has taken the industry a lot of doing. Some reluctant advertisers were of the view that FM radio is mostly heard by people driving down to their offices or other commuters. Besides, some felt that the medium is mostly accessed by the youth and the woman in the house, who makes maximum purchase decisions for the family, wasn’t particularly interested in the medium have been proved wrong by research conducted by various industry players. According to industry estimates, contrary to the belief that radio listenership dropped over the weekends, it has been found that it actually goes up on the weekends, which essentially means its not just office goers who are tuned in to the FM. Also, home listenership accounts for 70% of the total audience and it’s the housewives who drive the listenership between 11am and 4pm time band.

The participants in the AROI conference felt the industry needed to collaborate in a more constructive manner to garner advertisers’ support. While some felt the coming in of new radio stations with the third phase of licensing will bring in more advertisers to the FM fold, some also felt it will mean more competition for the current players and will call for strategies to differentiate themselves and give the listeners something different from the competition. Apurva Purohit, CEO, Radio City said, ?It is essential for operators to reach out to the clients and listeners and make them realise about the possibility of innovations on the medium.?