HT Media and Next Mediaworks on Wednesday announced the signing of the binding term sheet for their proposed merger of radio businesses – Radio Fever/Nasha and Radio One. The merger is subject to approval by the respective board of directors and shareholders besides regulatory approvals from the ministry of information and broadcasting and NCLT.
As part of the deal, it has been proposed to merge seven metro stations of Fever and Nasha and six stations of Radio One into Next Mediaworks, thereby creating a new and already listed radio company.
HT Media, which runs Hindi radio stations under the brands Fever and Nasha, operates two stations in Delhi, two in Mumbai, one each in Kolkata, Chennai and Bengaluru. Radio One, which is an international format FM network in English, operates six stations – in Delhi, Mumbai, Kolkata, Chennai, Bengaluru and Pune.
“Radio One’s merger with our metro operations gives us both a complete bouquet across English and Hindi in all of the country’s biggest radio markets and will help us serve listeners and advertisers better. Such consolidation is another sign of the growing maturity of the radio market,” said Shobhana Bhartia, chairperson and editorial director, Hindustan Times.
Based on the definitive term sheet, HT Media and its shareholders will hold 74% while Next Radio and Next Mediaworks’s shareholders will hold 26% in the merged entity. During the interim period till requisite approvals are obtained, both entities will continue to operate independently under the current management structure.
Harshad Jain,CEO, Fever FM and Vineet Singh Hukmani,CEO, Radio One, will continue to function in their respective leadership roles. Also, the ad sales team of both radio firms will operate independently and will not sell any combined ad inventory. “There is a strong operating logic for this combination – multiple formats in the most lucrative urban markets in the country with all the cost synergies and complementary skills to better service listeners and advertisers,” said Tariq Ansari, chairman, Next Mediaworks.
According to filings with Bombay Stock Exchange (BSE), HT Media’s radio business reported turnover of Rs 1,388.5 crore in FY18, while Next Mediaworks, the parent of Next Radio (Radio One), posted a turnover of Rs 1.88 crore. Next Radio’s turnover stood at Rs 79.6 crore in FY18.
According to Ficci-EY report, radio industry in terms of advertising revenue is valued at Rs 2,580 crore in CY2017 and is expected to reach the Rs 2,840-crore mark by end of CY2018. Fearing a drop in listenership as listeners move to OTT music streaming space, private FM radio broadcasters have begun to air fewer advertisements. From 18-20 minutes for every 60 minutes of programming, advertisements now account for just about a fourth of the time every hour. However, in an effort to protect their toplines, they’ve upped advertising rates by about 7-8%. In some smaller markets, the rates are up by as much as 20%. In absolute numbers, though, the increase isn’t too much because prime time spots in the metros cost between Rs 800 and Rs 1,200 while in the smaller towns the rates are only Rs 200 to Rs 300.
“The merger will allow the new entity to command a high ad rates, as it will have English channels and provide advertisers in metros with a complete package of content, which includes both Hindi and English,” said Jehil Thakkar, partner, Deloitte.
English content-based FM network like Radio One commands a higher ad rate in the range of Rs 1,500 – Rs 1,700 for per ten ad second spot. Also, the addition of newer stations will further increase the ad inventory allowing to play more songs.
Asheesh Chatterjee, CFO, Reliance Broadcast Network, said it’s easier to broadcast fewer ads now because post Phase-III auctions, the inventory has increased. “With fewer stations, it was hard to sustain the business without 18-20 minutes of advertising,” Chatterjee said.