Post Show - Report

India’s Golden Age of Radio has finally arrived. Or has it? At the Radio Group’s FM Conference in Delhi on June 11-14, there was a sense of hopeful excitement among the hardware suppliers, an air of unease among the private broadcasters and more than a little skepticism on the part of their potential sponsors and advertisers. All of these emotions are somewhat justified and the next twelve months will give at least primary indication of who will be the real winners (not to mention losers) in this business. In the meantime, all of us in the radio business are well aware of the hurdles that must be overcome, and in this article I will attempt to address these one by one.

A NEW LICENSE RAJ FOR RADIO?

One of the primary areas of discussion at the conference was the outlandish figures arrived at in the course of the bidding process for FM licenses. Take Mumbai, for instance. An expected fee of two crore rupees, tops, turned out to be almost five times that. It was the same story in the other metros (except for Calcutta, which for some reason did not go beyond one crore). And if that’s not bad enough, there’s going to be an increment of 15% per annum.

Who’s to blame? In one sense, the central government can be faulted for not laying down bidding parameters, or devising a licensing procedure based upon merit rather than sheer monetary power – a system that works well enough in the UK. In the government’s defense, however, both of these solutions would have interfered with market realities. And any case, should the government be given the right to decide what should be broadcast and by whom? Moreover, think about the opportunities for graft - a danger that automatically looms its head whenever the subjective decision of a bureaucrat is involved.

On the other hand, perhaps the unrealistic license fees are the fault of the wannabe FM broadcasters themselves. In their initial excitement, numerous corporates have possibly leapt before they looked and are now trying to figure out how to make the numbers add up…. reminiscent, perhaps, of the recent dotcom boom ‘n’ bust. Again, take Mumbai. Aggregate cost of FM licenses: about 100 crore per annum (plus yearly increments). Aggregate startup costs: at least 50 crore. Then add total operational costs: staff, leases, royalty payments, marketing etc: another 20 crores or so.

Private radio depends upon corporate sponsorship and advertising, and the fact is, there’s just not enough to go round. Today, Mumbai’s aggregate radio-based advertising activity (i.e. ad-spots and sponsored shows placed on AIR) is something in the region of Rs. 20 crore per annum – a fraction of what the broadcasters are going to be shelling out as investment. No doubt, an explosion in private FM broadcasting will certainly boost radio as a medium of brand promotion, but to what extent? Amit Ray of the Mudra ad company reckons that as things stand, a station would to have to charge Rs. 10,000 per 30 seconds of FCT just to break even, which is many times what brand managers are prepared to pay today.

The license fee issue has ensured that the first few years of private FM are going to be a rough ride for broadcasters, and not everybody will survive. The initial huge losses might be all right for a company like Reliance, which has the capacity to offset a loss-making concern against taxation, at least in the short-to-medium term. But smaller players, depending upon radio as a revenue source, are having to think carefully before treading any further.

In the meantime, it’s up to the Radio Group to devise a licensing structure that is realistic, affordable and workable, and then lobby the government for its implementation. The current system has cast a spanner in the works of the private radio industry in its most delicate embryonic stages.

RESTRICTIONS ON BROADCASTING FREEDOM

Along with the license fee issue, private FM broadcasters have been severely shackled by the government in terms of both reach and content. First, a company can own any number of stations, but each station must be independent in terms of content. Thus, no national or even regional FM broadcasting. Second, there’s a ban on news programming.

The block on regional/national FM broadcasting is half-heartedness of the worst kind on the government’s part. Doordarshan is clearly paranoid about anybody encroaching upon its position as the sole national radio broadcaster. Rather than competing fair and square with the private sector (as the BBC has very successfully done in Britain, as well as Turkey’s state broadcaster TRT) DD reacts to a threat to its position by preventing anything more than the most local activity on the part of private FM operators. This is all the more galling if one considers that satellite TV broadcasters such as Zee and Sony are quite free to operate nationally, via thousands of neighborhood cable networks.

The need for national FM broadcasting does not really concern mass-appeal programming such as film music and western Top 40. One company can have 10 separate stations playing more or less the same kind of stuff in 10 different cities, and each of these stations is almost guaranteed a large audience. Niche programming, on the other hand, is only worth pursuing on a national level, at least while the number of private licenses remains limited.

Take indigenous classical music, for instance. There may not be enough potential listeners even in Bombay to profitably support a station based on this kind of music, however good it is. But nationally, it’s another matter in amongst a population of one billion, there’s a potential audience of many millions. And so long as operators are not given the opportunity to go national, or at least regional, those millions of people will be denied their choice.

And what about the rural population? It’s only the forty largest metros in India that have been given private FM licenses. Even the second tranche of licenses if and when it arrives will almost certainly be limited to cities and large towns. As long as private FM is limited to the metros, and regional broadcasting is not allowed, over half the population of India i.e. those living in villages will still be confined to the same old diet of AIR on medium wave.

If at least relay transmission were permitted, then a station in Delhi, for example, could reach large parts of UP. Radio operators apart, the current scenario is especially frustrating for marketing companies, who are still denied an alternative to DD TV and AIR MW as a means of reaching the rural masses. And once again, it’s the man on the street - or in this case, the man in the field - who will be the biggest loser.

The ban on news programming is another story. Why is the government denying radio operators the right to broadcast news when newspapers have been disseminating the same for well over a century? This is anybody’s guess. Local news is one of the USPs of a radio station. Without it, a station is denied its true role as an active community participant and neighborhood watchdog. If the government is serious about broadcasting liberalization, it has to go the whole hog radio is not just about entertainment, it’s about information and local involvement. Gurucharan Das, speaking at the conference, spoke of his anger about the fact that Indian citizens have been missing out on this powerful medium for all these decades. As long as the ban on private news broadcasting continues, they will continue to miss out and radio stations will remain crippled and disempowered. So much for true liberalization.

It’s up to The Radio Group to take up the mantle and convince the powers-that-be to give private radio operators the freedom to operate freely and independently, within the limits of public decency and national security.

PUBLIC PERCEPTION: THE PAST IS NOT THE FUTURE

Having paid the license fees, invested in the hardware and hired the staff, the radio broadcaster’s next big task is to convince potential sponsors and advertisers, not to mention Joe Public, that radio is a sexy proposition. Mention FM to most young people and they’re likely to respond, Radio? That old AIR crap? Forget it! or, Who cares about radio when we’ve got TV and the internet?. Likewise, there’s a suspicion on the part of marketeers and ad-execs; in perhaps the most interesting discussion of the FM conference, broadcasters themselves were having a hard time convincing brand managers that radio is really worth putting money into.

Like so many other things in India, the evolution of private electronic media has been somewhat back-to-front. In most countries, private radio was followed by private TV, followed by satellite TV, followed by the internet. Here, almost the reverse has happened, and private radio a long-time staple in most of the world has yet to prove itself. The problem is, the lacklustre sound of AIR is the only form of radio that most Indians have ever been exposed to.

As Mr. Das pointed out, however, the future cannot be judged by the past. The sound of private FM is going to take a lot of people by surprise. It’s powerful, fun and highly addictive. Anybody living in London or New York will tell you how much he loves his favourite station. High production values, slick presentation, good hardware and software, skilled presenters, canny producers, catchy jingles, and a keen empathy with the listener.these are the factors that have solidly established private FM all over the world, and that will blow AIR’s metro stations out of the water unless it gets its act together like pronto.

The battle for the heart and mind of the listener is all about understanding who he is, and what he wants to hear. There’s no way that every broadcaster can satisfy every listener, so each station has to carefully target its audience and quickly build up a close relationship with it before another station does. It’s this relationship, above all, which is going to attract the brand manager and the advertiser, or to put it more bluntly, the moolah. Which is what every station depends upon.

At the conference, there was concern amongst some parties (those ad-men again) that there’s simply not enough room for ten FM stations in each of the four biggest metros. Baloney. Look at London or New York, each of which have dozens of stations, large and small, profit and non-profit, private and public, not to mention the numerous pirates all of which are thriving. There’s no reason that Indian metros, with their diverse communities, languages and age-groups, will not be highly fertile ground for a richly diverse radio culture. 

So the question remains: is India really set for a Golden Age in Radio? Well, the elements are all in place. There’s no shortage of ears, that’s for sure enough, by some estimates, to justify as many as one hundred thousand stations throughout the country. Neither is there a shortage of on-air talent, loquaciousness being a particularly desi virtue. Lack of content will certainly never be an issue in a country that’s a positive hothouse of musical creativity. And finally, there are hundreds, if not thousands, of rich corporate sponsors around, all of whom are looking for a cheap and effective medium of promotion, which radio certainly represents.

No, the problem is not with the broadcasters, the listeners or the sponsors. As in so many areas of development, it’s the government that represents the greatest obstacle of all. Having started something good with radio privatization, the government must now go the whole way, allow a multitude of FM stations to broadcast freely, profitably, without hindrance.and let the Golden Age unfold.