[cr-india] Slow growth of FM likely to affect frequency auction

[sakthi vel]

Slow growth of FM likely to affect frequency auction

Even as the government puts up 97 FM radio frequencies
for auction, the pre-qualification bids for which have
to be submitted by July 23, India?s Rs 480 crore FM
radio industry is stumbling.  
  
The growth rates for listeners in the metros have
declined and the operating costs, especially, content,
marketing and HR, have gone up.  
  
According to the Media Research Users Council?s
(MRUC?s) latest listenership study, despite new radio
stations launched under the revenue share scheme,
Mumbai added barely 300,000 listeners to its 5
million, while Delhi fared a little better and added
450,000 new listeners to its existing 6.2 million. In
Kolkata, listenership grew by a mere 1.14 per cent.  
  
Says Entertainment Network India Ltd.?s deputy CEO
Prashant Panday: ?The market did not expand as much as
expected when competition arrived. Mumbai?s FM radio
grew barely at 6 per cent.? Adds radio consultant
Sunil Kumar: ?Growth has been slow primarily because
FM radio has a disconnect with the audiences. There?s
no content differentiation among rival channels.?  
  
Operators claim that viability of the business is also
a concern, especially, with escalating cost of music
royalty, marketing and salaries.With cut-throat
competition in the metros, radio stations are spending
big time on outdoor and print. To push audiences to
tune in, a Mumbai station is said to have spent Rs 1.5
crore on Outdoor in Mumbai recently. Manpower shortage
has pushed up HR costs by 70 per cent.  
  
However, the biggest hitch in the radio story is the
steep music royalty cost. Currently, the radio
industry pays approximately Rs 660 per needle hour to
PPL (Phonographic Performance Limited) and the same
amount to the Indian Performing Rights Society (IPRS).
But since some major music publishers such as T-Series
and Yash Raj Music are not part of PPL, the radio
operators pay them separately for their music.  
  
Radio company executives claim that in developed
markets, music companies charge a royalty of between 1
to 4 per cent of a radio station?s revenues.  
  
?Here we pay nearly 20 per cent share of our revenue
which is making the business unviable,? says Sajjad
Chunawala, Mumbai station head of Hindustan Times?
Fever 104. Radio operators say that PPL also charges
the same rate from stations in the metros which have a
higher earning capacity as well as the stations in
class C and D towns like Hisar and Karnal.  
  
?Without differential pricing smaller stations will
never make money,? says Rahul Gupta, director Shri
Puran Multimedia (part of Dainik Jagran group) that
runs Radio Mantra in six cities.  
  
Such complains do not faze PPL CEO Vipul Pradhan.
?Music is the main raw material for the radio
industry. Isn?t content the highest cost component of
the television industry too? In the entertainment
industry, content cost is between 50 and 80 per cent
of the total cost of operations, and that?s known.?  
  
His contention is that the operators knew the cost of
music rights when they bid for stations. ?These are
just tactics to pressure us for discounts,? he adds.  
  
Radio operators say that the new frequencies being
auctioned may find few takers if music continues to
stay expensive and news and current affairs is not
allowed on private radio. High music royalty is
affecting the feasibility of radio stations in smaller
towns.  
  
If the issue remains unresolved, the response to the
auction could be poor. Only ten frequencies of the 97
are in A or A+ towns with the rest being in small
towns, says Radio Mantra?s Rahul Gupta.  
///////////////
Source:http://www.business-standard.com/iceworld/storypage.php?leftnm=8&subLeft=4&chklogin=N&autono=289973&tab=r

///////////////////////
For Contact: Jaisakthivel,59,Annai Sathya Nagar,
             Arumbakkam,Chennai-600106,India 
Visit: www.dxersguide.blogspot.com
       www.sarvadesavaanoli.blogspot.com
Join: www.groups.yahoo.com/group/sarvadesavanoli
Mobile: +91 98413 66086
///////////////////////


		
__________________________________________________________
Yahoo! India Answers: Share what you know. Learn something new
http://in.answers.yahoo.com/