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India Inc goes ga-ga over radio foray
Prakriti Prasad | December 28, 2005
Business houses everywhere are going radio ga-ga, and who can blame them? With the government having invited bids for 338 FM stations across 91 cities for a period of 10 years, corporates are in hectic parleys for tie-ups and business plan evaluations.
Once the ministry of information and broadcasting readies the final list of bidders for the radio stations, the financial bid is likely to begin on January 15. It will go on till February 3 in a phased-out manner.
I&B sources maintain the final picture will emerge only after the letters of intent have been scrutinised and found to fulfill the eligibility criteria. Altogether, 99 players have filed their applications.
The existing list presents an interesting mix of leading media companies, production houses, small regional players and surprise elements like steel casting and computer hardware companies, even car dealers.
Among the existing media giants looking at a pan-India presence are the Hindustan Times, Bhaskar Group, Red FM and Entertainment Networks of India Ltd, which owns Radio Mirchi.
Other significant players like Adlabs, Anand Bazaar Patrika, Malyalam Manorama, Sri Adhikari Brother Films Division, ETV (Eenadu Group), BAG Films and Century Communications have jumped in the fray too.
Also in the mix are cash-rich companies like Creamline Dairy (Hyderabad), Muthoot Finance (Kochi), Devyani Enterprises (New Delhi) and Indigo Mass Media Communication (Bangalore), which are likely to emerge as key players in radio, according to media experts.
Creamline Dairy, with an estimated turnover of Rs 200 crore (Rs 2 billion), is evidently diversifying into areas other than milk products, and radio seems lucrative as it would help cut down their advertising costs.
This may also be the reason behind the forays be ing made by Ravi Jaipuria's Devyani Enterprises and the Rs 8,000 crore (Rs 80 billion) Muthoot Finance, which owns hotels and resorts in Kerala.
The excitement around radio is based on the fact that the Rs 250 crore (Rs 2.5 billion) radio industry, hitherto comprising a minuscule 2 per cent of the country's whopping Rs 11,000 crore (Rs 110 billion) advertising revenue, is bound to go on a fast track.
Says Anuradha Prasad of BAG Films: "Radio is an important platform and will grow along with retail. It's one of the cheapest media, but unfortunately in India it hasn't grown the way it should have."
BAG Films is looking at a substantial number of stations. Anand Tiwari, director of the Rs 125 crore (Rs 1.25 billion) Century Communication, also feels that "it's a good time to enter radio, which is in a nascent stage". His company will focus on B, C and D class cities.
Of prime concern to players, big or small, is what figure they should quote as the one-time entry fee. This is giving sleepless nights to players, particularly those keen to secure their regional strong belts.
And this is where the media consultants and experts come in. "Our job is to study individual cities, evaluate the costs and revenue models and lay out the business plans for our clients," says Sanjay Salil, director, Media Guru, which is offering services to many big players.Salil claims his common refrain to all his clients is, "Don't over-bid. It will not benefit the industry, just the government."