A fading voice: Radio plays by the ear to stay in tune with the times

From getting into content production to becoming event managers, radio companies are doing everything to remain afloat

In January this year, Xiaomi was launching the Mi 10i. How could it get the attention of mobile dealers and franchisees who are perpetually flooded with new models from dozens of manufacturers?

“We said we will take our influencers to influence their influencers,” says Preeti Nihalani, chief revenue officer, Entertainment Network India (ENIL), which owns 73 radio stations. Over three weeks in January, various Mirchi “jocks”, or radio jockeys (RJs), including the immensely popular Naved, unboxed the phone at 67 dealer locations in 20 cities across India. This mix of events, mini-celebrities, dealers and consumers helped create buzz for the brand and additional revenues for ENIL. “Had Xiaomi done only a radio campaign, we would have got about 40 per cent of what we made,” says Nihalani. In the financial year ending March 2020, about two-third of ENIL’s revenues came from radio, down from over 80 per cent five years ago.

This combined selling of radio, social media, events et al is radio’s attempt to battle its rising irrelevance. From 4 per cent, radio’s share of the total advertisement pie has slipped to 2 per cent over the last three years. From a high of Rs 3,360 crore in 2018, the economic slowdown brought it to Rs 3,100 crore. The pandemic knocked this to less than half, or Rs 1,430 crore in 2020, according to the FICCI-EY report, “Playing by the Rules, India's media and entertainment sector reboots in 2020”. Compare that to the US or other developed media markets where it gets 10 per cent of total ad revenues.

“We don’t take radio as seriously as earlier because there are more alternatives. Earlier, it was a great frequency builder,” says Shrikant Shenoy, general manager, Lodestar UM, a Mumbai-based media buying agency. Radio now is the smallest of mass media despite a pan-India reach. Of the almost 900 stations, including All India Radio, barely a handful make money. Why?

Low frequency

By the time radio was freed up for private players to enter the industry in 2000, almost every other media — television, print, film — had raced ahead. And unlike the others, radio’s freedom came with a heavy licence fee burden and so many conditions that it was difficult to run the business efficiently. In 2015, during the Phase three of licensing for instance, FM radio operators forked out over Rs 3,100 crore as licence and migration fees. For an industry that had generated Rs 1,720 crore in ad revenues in 2014, this was way over the top.

“The biggest cost is the government licence fee. Radio is not a major growth area till the government doesn’t realise it can’t take everything. In 12 hours, there is only so much advertising you can sell,” points out Girish Agarwal, director, DB Corp, which owns MyFM that has 30 stations across cities like Chandigarh, Indore, Jabalpur and so on.

This is the first major reason radio never really took off in India.

If licence fee impacted costs, the associated conditions restricted radio companies’ ability to both monetise and grow in other ways. From owning multiple stations in the same city and sharing towers to not being allowed to broadcast news, the conditions limited programming innovation, reach and revenues. Many of these restrictions were lifted, but only by 2016. By then, it was too late. Jio, with its extremely low data prices and high online consumption, changed the media market for good.

“When we entered the FM radio space under the Phase two licensing regime in 2007-2008, the story was quite encouraging,” recalls K K Goenka, managing director, Neutral Publishing House, which publishes Prabhat Khabar out of Jharkhand and Bihar and owns two stations called Radio Dhoom. “But of late, with increased digital data consumption and availability of smartphones, the listenership of radio has considerably declined.”

As smartphones took off, many manufacturers simply stopped installing an FM receiver in the phone. This is the second reason why radio remains stunted in India – listenership never really took off after that first rush from 2000 to 2006.

While the monthly listenership numbers have increased from 200 million in 2017 to about 226 million in 2019, going by Indian Readership Survey (IRS) data, weekly listening has been stagnant at 105 million for some time now. This is the metric that most advertisers use.

Even if listenership grows, as it did during the pandemic, there is nothing to prove it. Besides the overall IRS numbers for big cities, there is little on the hundreds of towns where 385 private FM stations operate. “Measurement is a problem in radio, just like in out-of-home media,” says Shenoy.

“We are working with the information and broadcasting ministry and AIR to build a listenership system based on the telecom authority’s recommendations,” says Uday Chawla, secretary general, Association of Radio Operators of India. It may be too late though, say analysts, as spending flies to other easily measurable media such as TV, print and digital.

This brings radio to a sorry pass. Over 200 frequencies are still left after Phase 3 licensing in 2015, but there is simply no appetite for another auction now. “It is unviable to bid for any more stations,” says Prashant Panday, managing director and CEO, ENIL. That’s the sentiment most in the industry echo.

Promising tunes

Naveen Sreenivasan is head of media solu­tions (television, radio and digital) at Math­ru­bhumi, one of Kerala’s largest media firms that operates Club FM in Thiruva­nanthapuram, Kozhikode and Alappuzha, among six cities. He points out that unlike the national players, during the first wave of the pandemic in 2020, Club FM’s business did not halve. It went down by a third before bouncing back around August with Onam. This is because more than two-thirds of its advertisers are local brands such as Joy Alukkas and Gopu Nan­dilath. They need to reach people in, say, Kochi or Kannur and will pay more to adv­er­tise on Club FM than they would to be on Mirchi. Especially if Club FM is combined with Mathrubhumi’s print, TV or digital brands.

“Radio as a business was one of the fastest ones to become profitable,” he says.

This then is one of the ways forward. The more local and focused a network, the better its chances of thriving.

The second: “Radio is best suited to evolve into a podcasting medium, perhaps more than a Spotify or JioSaavn,” thinks Shenoy.

Some of the studies Lodestar did indicate that RJs are now celebrities and work very well for brand endorsement or for creating stickiness around a podcast. 

The third, of course, is derisking the business, a la Mirchi. In 2020, India’s largest radio company dropped the word “radio” from its name. Radio Mirchi became Mirchi Unlimited. “Our main business now is solutions. And solutions are not rooted in radio; they are rooted in an idea,” says Panday. About a third of its revenues come from solutions that include content production and on-ground events.

“Strategically, that means we are not limited to 5 per cent of the ad pie. We are transforming from a radio-alone company,” says Panday. Whatever it takes to come back into the big advertising game.
 

A fading voice
 

• From 4%, radio’s share of the total ad pie has slipped to 2% over the last three years
• From Rs 3,360 crore in 2018, the economic slowdown brought it to Rs 3,100 crore
• The pandemic knocked this to less than half, or Rs 1,430 crore in 2020, according to a FICCI-EY report
• In developed media markets, radio gets 10% of total ad revenue