With general elections and the ICC Cricket World Cup and the IPL being scheduled this year, the radio segment is counting on good growth.
With general elections and the ICC Cricket World Cup and the IPL being scheduled this year, the radio segment is counting on good growth. Red FM COO Nisha Narayanan tells FE’s Asmita Dey about the policy and regulatory aspects which are restricting the growth of the industry. Excerpts:
How are ad revenues looking for the radio sector, especially with the digital sector fast catching up?
In the last four-five years, radio has been growing at 12%-13% as an industry. However, the overall ad pie has continued to be the same. Revenue from the radio segment constitutes about 4-5% of the overall media & entertainment sector. Now with phase II and phase III auctions coming in, multiple radio stations have been launched, but the ad pie has not grown. Purely from an advertising model, radio cannot survive. Some of the key categories which advertise very well with us like the FMCG and auto sectors are not doing well.
Mergers in sectors like BFSI (banking, financial services and insurance) and telecom have also affected some part of the business. Both the volume and value is a big struggle unless we expand the business in terms of other forms of revenues. Red FM has decided to encash the brand through other verticals like events and activation. Approximately, 20% is what we are looking at from non-traditional revenue where 80% of the business is coming from the FCT (free commercial time) business. This year with elections, IPL and the ICC World Cup, we are expecting good growth. But, there are a lot of policy and regulatory aspects which restrict growth.
What kind of policy relaxation would you want from the government?
There are multiple things. One is of course news and current affairs. It is a welcome move that news and current affairs have been allowed on FM radio but it has to be taken in the All India Radio (AIR) format. Ads that are playing on that AIR capsule need to be played in our stations as well which is free of cost. Why should we allow that? That is a concern. I am saying regulate but still allow us to have independent news. Then, the radio licensing policy is skewed. Also, many smartphones do not have in-built FM apps. That is a huge concern and it should be addressed by the government. We have put our case forward.
What kind of election ad revenues are you expecting this time? Are they going to be higher than 2014?
The advantage of radio is that the political message can be localised, and that I think has been utilised very well by the current government as well as other political parties. Given the talks we are having currently, we do see that radio is a part of the key plan and expect revenues to be higher.
Has the advent of over-the-top (OTT) platforms impacted your revenues?
There is no cannibalisation. Overall, existing revenues have grown. As there is a measurement tool on digital by virtue of how it functions, advertisers have spent more money on digital vis-a-vis radio. They have not taken a share from radio but advertisers have increased their ad spends to put an additional budget on digital. If radio also had a proper measurement system, it could have also gained a certain share.
Are you planning to share content with OTT platforms?
We are in talks. A deal will be finalised soon.