Is Fever FM shutting down? Dropping the 'radio' to amplify the game

Fever FM's announcement puts the spotlight on why radio can't seem to grow and what would help it to

Ramesh Menon looks deadly serious. The chief executive officer of audio business for HT Media’s Fever FM, Radio One and Radio Nasha is announcing that Fever will be shutting down its station because of market conditions. 

His video address, released on LinkedIn on Tuesday, promptly triggered speculation on whether this was a gimmick. The Rs 1,862 crore HT Media (revenues FY23), which publishes Hindustan Times (English) and Hindustan (Hindi), is after all a publicly listed company. Any announcement on shutting down a business would first be made to the stock markets. HT Media has done nothing of the sort, so far.

When contacted, Menon did not respond to a request for an interview. Observers say the video is (probably) a precursor to a rebranding exercise or a startling way of announcing a shift of priorities away from radio to streaming audio content.

That wouldn’t be a surprise given the shape the radio business is in. Even as listenership and advertising volumes rise, radio’s share of ad revenues has dropped from 3.5 per cent (Rs 3,100 crore) of total ad spends in 2019 to 2 per cent in 2022. All of India’s 867 commercial radio stations (FM and AM) put together clocked a revenue of Rs 2,100 crore.

“Radio is in a big mess,” says Rahul Namjoshi, CEO, My FM, the radio arm of the Rs 2,168 crore DB Group, which publishes Dainik Bhaskar and Divya Bhaskar and operates 30 radio stations across India. He reckons that the internal rate of return, or IRR, on radio for the group is about 5 per cent. On individual stations, it might be negative. 

With barely six years left for licences to expire, operators need to have better returns than a bank deposit, say analysts. My FM, Mirchi and Radio City are profitable brands, but the business has simply not generated the scale expected of a medium that can reach over a billion listeners. Ad rates, which had dropped by 30-50 per cent during the pandemic, have stayed there. “Radio has been a bit of a challenge in spite of our best efforts,” said Piyush Gupta, chief financial officer, HT Media Group, in an earnings call in January.

The pandemic, the rise of streaming and a host of structural issues have weakened it to a point where “radio is not seen as a strategic medium for frequency or reach by clients,” said Shrikant Shenoy, associate vice president of media buying agency Lodestar UM, in September last year.

Most operators have turned to adding events, social media, activation and other things to the main radio offering. Some have gone into programming and digital, which now brings in 20-40 per cent of the topline for most large operators. 

“Pure radio is good, but topline growth comes from non-radio,” says Yatish Mehrishi, CEO, Entertainment Network India, which operates 73 FM stations under the Mirchi brand. In 2020 the firm had dropped the word “radio” from its brand name. 

“Radio has to metamorphose into audio plus tech plus data-driven marketing,” says Ashit Kukian, CEO, Music Broadcast, which operates 39 FM stations under Radio City. The Rs 199 crore firm is a subsidiary of the Rs 1,962 crore Jagran Prakashan, the publishers of Dainik Jagran among other brands.

On September 5 last year, the Telecom Regulatory Authority of India (Trai) made four recommendations to the information and broadcasting ministry. These include allowing news on FM channels, rationalising the licence regime and mandating FM receivers on mobile phones. If implemented, these could address the damage done by poor licensing.

The radio saga

By the time the government opened the sector for private participation in 2000, almost every other media – TV, print, film – had raced ahead. Also, unlike the others, radio’s freedom came with a heavy licence fee burden. 

In 2015 during 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 too much. 

The guidelines pegged the licence fees at 4 per cent of gross revenues (including GST) or 2.5 per cent of the one-time entry fee for a city, whichever is higher. For example, in Delhi, the highest bid was Rs 169 crore. So the licence fee would be about Rs 4.2 crore even if the station wasn’t earning anything. This also applied to companies that had migrated from phase two to three. 

Going by Trai’s analysis, 182 stations paid a licence fee of over 4 per cent of revenues and 34 paid 30 per cent of the revenues. If the licence fee is rationalised, it will help push costs down by between 10 and 40 per cent, depending on the stations and cities an operator is in.

The conditions for the licence – from owning multiple stations in a city to co-sharing towers and not being allowed to carry news – almost everything limited programming innovation, reach and revenues. While many of these restrictions are gone, by 2016, it was too late. Jio, falling data prices and online consumption changed the media market for good.

The rising penetration of smartphones could have taken radio listenership to new highs. It didn’t. Many operators disabled FM receivers to promote their own music streaming service or apps. As a result, listenership never really took off after that first burst from 2000-2006. 

Today, monthly listenership stands at 262 million. Compare that to TV, which has over 890 million viewers, Or digital, which has over 510 million people surfing online everyday. There’s no reason radio shouldn’t reach similar numbers – provided it is available on every device.

In April 2023, the Ministry of Electronics and Information Technology released an advisory to mobile manufacturers’ associations emphasising that during a disaster, radio is a critical means of communication. Trai recommendations mandate FM receivers on mobile phones. Assuming they become policy, listenership could easily double to over 540 million. This, reckons Namjoshi, could be the single biggest game changer.

Also lacking is a proper metric to measure the growth. The last Indian Readership Survey (IRS), which also covers radio, was in 2019. RAM, a listenership measure from TAM Media Research, covers only the four metros. Most operators, who get 50-70 per cent from local retailers, don’t seem concerned. Their eyes are set on another market: audio streaming. Last year, Indians paid over Rs 1,000 crore to listen to audio books, drama series, political discussions and so on, shows data from London-based research firm Omdia.

Of the over 510 million Indians online, about 200 million listen to streaming music and are potential or current users of the spoken word on streaming. Tackling this market will need dropping old tags such as radio or station. That’s what Fever FM could be playing at.