Frequency mismatch: Radio firms eye govt help to stay tuned

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Published: July 20, 2020 7:30 AM

Prashant Panday, MD & CEO at ENIL (Entertainment Network India), told FE that the firm is “definitely evaluating several cities that appear to be unviable but a lot will depend on what relief authorities provide to broadcasters”.

ENIL runs 73 Radio Mirchi stations across 63 cities and slipped into the red in Q4FY20 and the company posted net losses of Rs 2.15 crore, reversing net profits of Rs 19.80 crore reported a year ago. ENIL runs 73 Radio Mirchi stations across 63 cities and slipped into the red in Q4FY20 and the company posted net losses of Rs 2.15 crore, reversing net profits of Rs 19.80 crore reported a year ago.

With advertising revenues under pressure, radio companies may be forced to shut down stations unless they get some relief in the form of a waiver on licence fees, Prasar Bharati’s tower rentals and charges on WPC (wireless planning and coordination).

In the April-June quarter, advertisement revenues most of which come from the metros and big cities stood at a meagre 10-12% of last year’s levels. Inventories have not been utilised to the extent of even 10%, according to Nisha Narayanan, COO at Red FM and Magic FM.

Prashant Panday, MD & CEO at ENIL (Entertainment Network India), told FE that the firm is “definitely evaluating several cities that appear to be unviable but a lot will depend on what relief authorities provide to broadcasters”.

Radio City that operates 39 stations may consider shutting down some of them if revenues continue to remain strained and there is no help from the government, said CEO Ashit Kukian. “One must not forget that companies advertise only when their businesses are in shape, footfalls are steady and supplies are in place. I would bet against even a moderate revival in Q2,” Panday said.

ENIL runs 73 Radio Mirchi stations across 63 cities and slipped into the red in Q4FY20 and the company posted net losses of Rs 2.15 crore, reversing net profits of Rs 19.80 crore reported a year ago. Music Broadcast that runs Radio City recorded net profits of Rs 8.91 crore during the quarter, lower than Rs 18.35 crore posted in Q4FY19. Net profits for DB Corp’s radio business (MyFM) declined to Rs 3.5 crore in the January-March quarter from Rs 6.3 crore in Q4FY19.

With big events such as IPL under a cloud and consumer sentiment tepid, advertisers may hold back on spends. The cost of running 68 stations can be challenging and the daily expenses become a “major struggle”, said Red FM’s Narayanan. “We will continue to hold on as long as we can. We are hopeful some help from the government will come our way,” she added.

Typically, operating costs for a small station like Bharuch can be anywhere between Rs 60-75 lakh annually while for a medium-sized station like Kolhapur, it can run into Rs 4 crore (depending on the number of people employed). The expenses on running a station in a metro would be the range of Rs 10-40 crore, explained Panday.

Not everyone is despondent. Rahul Namjoshi, CEO at MyFM, said the firm’s radio business makes one of the highest Ebitda margins in the excess of 40%. “We expect Ebitda margins to reduce only for a period of two to three months due to the impact of the pandemic. I can safely say that there is a pent-up demand in the market and we are lacing up our boots for the coming quarter,” Namjoshi added.

Jehil Thakkar, partner at Deloitte, said national brands contributing a significant portion of ad revenues have cut back on spending and there has been a considerable drop in ad rates. The rest of the pie comprising local businesses has been lost since most of them have halted operations. “With hotels, restaurants and some retail gradually opening up, we should see some local advertisements coming back,” Thakkar said.

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