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FM radio making rapid strides

T E Narasimhan in Chennai | August 27, 2008 10:55 IST

The entry of private players has boosted the fortunes of FM radio in a big way in the country. This has been consistently reflecting in the revenue earned by the industry, which grew to Rs 550 crore (Rs 5.5 billion) last year from Rs 350 crore (Rs 3.5 billion) a year ago. The industry is expected to close with over Rs 800 crore (Rs 8 billion) in revenue this year.

Apurva Purohit, president, Association of Radio Operators of India, and CEO of Radio City 91.1FM, said that FM radio channels are making rapid strides by having a presence in 91 cities as against 30 cities about two years ago. This has resulted in a growth in reach, which is faster than TV, reaching out to over 85 per cent of the Indian audience.

On cost, radio campaign turns out to be 65 per cent less expensive than TV while delivering 64 per cent larger reach. Speaking of print, the same investment on radio delivers 760 spots compared to a 3-print insertions at 11 per cent lower cost.

Again, a radio campaign with the same outlay as television runs longer with a 54 per cent lower cost.

Purohit also said radio is one of the preferred entertainment medium available today since people look for mobile entertainment. Indians spend over 75 minutes on radio per day. This is three times more than the time spent on print, said Purohit. She also noted that around 16 per cent of the listeners tune to FM through mobile phone.

Again, the FM audience is greatly skewed towards decision makers - be it working males or home makers. Thus, when it comes to quality of audience, radio reaches out to these two core groups which comprise every advertiser's target, mainly for FMCG, retail, automobile, finance and interestingly TV programmes. As the television and print mediums are becoming costlier, radios are now attracting more advertisers.

This has attracted more players - currently there are about 40 entrepreneurs in the industry. From 2005, the government has earned around Rs 1,160 crore (Rs 11.6 billion) as licence fee. These players have invested over Rs 900 crore (Rs 9 billion) in expansion and are investing over Rs 800 crore (Rs 8 billion) as running cost.

The investment will go further if the government opts for de-licensing the industry. "At present, multiple frequencies are not allowed for a single channel. This stifles growth for channels like ours to experiment. We will be interested to participate in phase III of the FM channels bidding, if government allows, we would like to start a chat station, classical music to increase niche listenership and increase ad revenues from the medium," said Purohit.

The foreign direct investment limit is also low at 20 per cent compared with other industries. If the government raises the FDI limit, many foreign investors are likely to enter the Indian market.

FM broadcasting is also facing manpower problem, said Purohit. Attrition level is around 25 per cent. Companies like Radio City 91.1FM have to take fresher and invest heavily in training them.

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