The Resurgence of Radio in India

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Radio's Untapped Potential Contd...

Pal endorsed this belief saying, "Radio is a far more intrusive medium compared to television. There is great future for radio. Even worldwide, radio is becoming a very important medium. In the US, some $ 19 billion are spent on radio advertising (India's entire advertising market is worth $ 2.2 billion). I am certain that in a few years' time, here too radio will make a comeback. Now you have players like STAR, the Times Group, Mid-Day etc moving into the arena. Things will become more professional, monitoring will get better and advertising will increase."

FM Radio's Success Story Though the government's invitation to private players resulted in an initial rush for licenses, many companies decided to stay away from the sector because of the high license fees demanded by Prasar Bharati and the risk involved in investing heavily (licensees were required to invest a minimum of $ 690,000 as capital and $ 460,000 as working capital for every station). Prasar Bharati had also imposed certain strict conditions that created resentment among the private players. These players were not allowed to offer news or current affair programs, and they were given only a fixed number of slots per city. As a result, only a few players remained in the race. They were given licenses to set up 37 stations that would operate across 19 cities in India (Refer Table II for the key private players in the Indian radio industry). With the launch of 'Radio City FM91' in July 2001, in Bangalore, by STAR5 and Music Broadcast Private Ltd. (MBPL), the industry began its second innings.

Besides Bangalore, MBPL had FM radio licenses for five other cities: Delhi, Mumbai, Patna, Nagpur and Lucknow. The Lucknow and Mumbai stations began operations in the next few months. The other three stations were yet to become operational. STAR functioned as a content supplier and provided sales and marketing support to Radio City.

Commenting on the rationale behind Radio City's launch, Peter Mukerjea, CEO, STAR, said, "Radio's strength is its immense flexibility, adaptability and suitability for a modern and active life. Radio City's launch marks the introduction of a new age for radio in India. Through our participation in this emerging sector, STAR will be able to extend its relationship with audiences in India by connecting them in more ways than television."

The next player to launch its FM channel was Bennett Coleman & Co. Its 'Radio Mirchi' was launched in October 2001 in Ahmedabad and Indore.⁶ Radio City achieved significant success in Bangalore and Lucknow, registering high listenership ratings. With the launch of Radio City, overall FM radio listenership increased by 56% while the time spent on listening to radio tripled (from 1 hour to 3 hours). Home listening increased to 85%, with listenership at the workplace also growing at a rapid pace. Similar trends were observed after the launch of Radio City in Lucknow.

By late 2001, FM transmission reached 21% of India's population and covered over 17% of the country's area. The strategies followed by the players varied from one radio channel to another. Radio City's market strategy was developed after six months of intensive research conducted in Bangalore. As part of this strategy, the company focused on creating brand name and brand awareness, before moving on to specific target programming.

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5] A leading multi-platform content and service provider in Asia, STAR is a wholly owned subsidiary of Newscorp. The US-based Newscorp is one of the world’s largest media companies involved in the motion pictures, television programming and broadcasting, publication and various other related businesses.
6] Over the next few months, Radio Mirchi entered the Pune and Mumbai markets. Mumbai seemed to have become the hottest FM radio market with Living Media’s ‘Go’ and ‘Red’ channels and Millennium Broadcast’s ‘Win’ channel also entered the city by June 2002.