In the recent round of radio frequency auctions, HT Media emerged as the top spender, shelling out Rs 340 crore for 18 frequencies. Harshad Jain, chief executive of Fever 104 FM, the radio division of HT Media, talks to Urvi Malvania about plans for the acquired frequencies. Edited excerpts:
You have bought two of the most expensive frequencies, one in Delhi and the other in Mumbai, amounting to Rs 290 crore. What was your strategy for the auction?
The money we deployed is a function of our business model. Yes, Rs 340 crore is a lot of money. The rationale is simple: The bulk of our investment has been in Delhi and Mumbai. The rest of the frequencies we picked up were practically at the reserve price. When we moved into the auctions, we had two aims: to complete our six-metro strategy and focus on Mumbai and Delhi.
We have just completed an acquisition in Chennai, of a company called Aha FM. So, we have Chennai and we have picked up Hyderabad, too.
Delhi had only one frequency up for grabs. We have had the leadership position in the city for the past three to four years, in terms of listenership and revenue. And, we have our existing cost structure, which can be leveraged (for the new frequency). Second, as a newspaper company, we have very strong presence in Delhi. It made a lot of sense for us to bid heavily.
Had we missed the bus, there was no way we could have got that frequency, as no merger and acquisition is allowed for three years after a licence is bought in the auction. There is a promoter lock-in period. So, this was the frequency we had to get.
In Mumbai, we are the fastest-growing radio company and once again, we have significant newspaper presence here. Together, both cities account for 35-40 per cent of the entire FM market. We have always focused on depth rather than width. At about Rs 340 crore, we could have picked up 40-50 stations. We did not because we had a strategy for the two metros and we stuck to it.
But you ended up paying big bucks for Delhi and Mumbai. Was that in line with your strategy?
I don't see why we say Delhi is expensive. If Bengaluru can be sold for Rs 109 crore, Ahmedabad for Rs 42 crore and Varanasi for Rs 18 crore, Delhi, as a more mature market, is reasonable at Rs 169 crore.
What is your plan for the recovery? What revenue streams do you plan to exploit?
For us, ad rates will continue to be the core revenue driver. With Mumbai and Delhi under our belt, we are confident on that front. Activations form a very small part of our business and, consequently, the revenue stream. In case of radio, it is a one-time investment and then, revenue starts coming. In case of activations, that might not be the case. So, we want to stick to the radio business as the main revenue driver.
