Financial Daily from THE HINDU group of publications
Sunday, Mar 16, 2003
Financial Daily from THE HINDU group of publications Sunday, Mar 16, 2003 |
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Industry & Economy
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Radio/TV Licence fees queer pitch for FM Our Bureau
MUMBAI, March 15 THE emerging scenario in the country's private FM is that of gloom. This, in a nutshell, summed up the session on radio at the FICCI-Frames 2003. A desperate call for rationalisation of licence fees was the main pitch for survival. "In our industry we have to think of survival,'' said Mr Sumantra Datta, Chief Operating Officer, Radiocity, indicating that closure of FM stations cannot be ruled out. The private FM players are now seeking a rationalisation of licence fees working in a revenue-sharing model between the participants and the Government. However, the Government is yet to respond to this proposal. "We have held many talks with the Government, obviously we have not been effective,'' said Mr A.P. Parigi, Managing Director, Entertainment Network (I) Ltd. The industry found itself in a situation wherein licence fees were pushed sky-high by participants who later backed completely out. Twenty-three parties bid over Rs 425 crore for 108 frequencies in 40 cities, but only 10 paid bank guarantees. In three years 13 stations were launched in nine cities. The private FM radio industry, confronted with high licence fees, is also faced with the grim scenario of low advertisement spend in favour of radio. FM radio's advertising spend is just one per cent, said Mr Datta. Therefore, the current FM radio business is unviable. Currently, FM's reach is 39 million people in nine cities. For viability, India needs a much higher reach. In comparison, the US has 14,000 radio stations, Italy 1,000, Spain 2,000 and India's small neighbour Sri Lanka has 20 stations. Suggestions to the effect that there is a need to have a new look at the licence fee structure, apart from making the existing licences viable and allowing stations to invest in quality programming did surface at the session. Radio stations are not only battling with high licence fees but also incurring operating costs for running the stations. "Bankruptcy is staring us in the face,'' said Mr Datta. In such a scenario, radio stations are chasing volumes. Therefore, the content across the FM stations are catering to the mass audience, said Mr Tariq Ansari, Managing Director, Mid-day Multimedia. This does not leave any scope for killer application. ``There is no killer application for radio in India. All stations are sounding the same as all stations are paying the same ridiculously high licence fees. But there is potential for niche stations, he said providing examples such as a station for Mumbai's 50 per cent Marathi-speaking populace, listeners of old Hindi film music, English music, devotional and classical music. The non-viability of the private FM radio has also created a unique situation of conflict between radio and the music industry while it should be complementary. According to Mr Shridhar Subramaniam, Managing Director, Sony Music, the compulsion to appeal to the lowest denominator audience is resulting in complete `stripping' of any album that has the potential to do well; an example being the music of Saathiya.
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