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Radio

KEY ISSUES AND CHALLANGES
In the third phase of FM radio broadcasting in India, the government plans to issue licenses for 680 FM radio stations across 237 cities in the country, mostly very small towns like Achalpur, Bettiah and Churu. Experts have already cast a doubt on the wisdom of this initiative as nearly 80 per cent of the proposed FM stations fall in very small towns where the FM radio business looks non-viable.
While estimates say that nearly 190 of the proposed cities are so small that a FM radio company cannot earn more than Rs 20 lakhs per year per city from advertising revenue on an annual expenditure of Rs 50-70 lakhs, the current scenario in small towns where FM is already operational is no rosier.
In the earlier format, FM radio broadcasters had to pay an annual license fee of Rs 10 to Rs 110 million, depending on the station, with a built in escalation clause of 15 per cent. In 2005, the system changed - operators now have to pay a one-time entry fee and give the government four per cent of their revenue thereafter. While stations in metros have been able to stay afloat on the changed regulations, players in smaller towns are not being able to generate enough advertising revenue to keep their heads above the water.
The key challenges faced by radio industry are:
INTANGIBILITY, INSEPERABILITY, PERISHABILITY, HETEROGENIETY: Like any other service industry, Radio industry also faces the challenge of being intangible in nature. The consumers who here, are the listeners have to listen to the radio to experience its service. There is no visible attribute or feature of radio which can increase its brand value and brand recall value. To overcome this challenge, FM channels regularly conduct road shows, contests, game shows to increase its visibility and create its brand value.
The show once missed on FM cannot be repeated. The service missed is service bygone. This perishability leads to loss in revenues. Thus, radio loses on...