The Resurgence of Radio in India

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A Bright Future?

Though private companies obtained licenses to set up 37 FM stations in 19 cities by December 2001, only a few channels became operational. This was due to difficulties in setting up radio towers and the lack of basic infrastructure facilities. As a result, in December 2001, Prasar Bharati extended the deadline to April 30, 2002, and signed a memorandum of understanding (MoU) for a period of 10 years. This MoU allowed private FM operators in five cities to use AIR resources against payment.

In spite of these developments and the 'bright future' predictions for radio broadcasting, there were some doubts regarding the industry's future. Given the huge amount of money spent on acquiring licenses and setting up stations, analysts pointed that it would take four to five years for the companies just to break even. Moreover, radio was not very popular in the media market and its revenues accounted for a negligible percentage of total media revenues (Refer Exhibit V For Projected Media Revenues). Thus, it seemed rather difficult for all the players to sustain the competition for long without earning any profits. Added to this, the restrictions imposed by Prasar Bharati on the programming content (exclusion of news and current affairs programs, the core of broadcasting industry) of private players were expected to severely limit the success of these players. With the kind of programs the private players were allowed to provide, they could target only a few selected sections of the audience.

This kind of programming was bound to restrict their growth. And with more than 24 languages spoken in the country, the radio networks need to develop multilingual programs to attract a nationwide audience. Developing such programs would demand heavy investments. As all the players were focusing only on the urban areas, severe competition between the channels operating in the same city was expected to result in the survival of only two or three dominant players.

To increase the audience base, private players would have to spread to rural areas. But the paucity of hardware and advanced infrastructure in rural India was a major hindrance to such expansion. However, the greatest threat to Indian radio broadcasting seemed to be the advent of satellite radio.⁷ In light of this, the future of private channels and AIR, with their huge infrastructure costs and limited reach, appeared to be bleak. The world's first satellite radio service, WorldSpace,⁸ had already started operations in India and was gaining acceptance rapidly.

However, to be able to access satellite radio, listeners had to buy special satellite radio sets, which were priced very high. Analysts felt that Indian consumers would not be willing to pay huge amounts when small radio sets and transistors were available at very cheap prices. Thus, it remained to be seen whether the aggressive efforts of private FM radio players to rejuvenate the Indian radio industry would succeed and help radio regain its position as an integral part of the communication and entertainment business in India.

Exhibits

Exhibit I: Working of a Radio
Exhibit II: History of Radio Worldwide
Exhibit III: Indian Radio Market (1975-1998)
Exhibit IV: Advantages and Disadvantages of Major Media Types
Exhibit V: Projected Media Revenues

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7] Satellite radio stations broadcast their signals from their earth stations to the satellites positioned in geo-stationary orbits above the earth, which covered the whole earth, while remaining stationary with respect to the land below. This enabled the satellite radio's signal to reach to all corners of the world as compared to the limited area access of AM/FM stations. Thus, satellite radio companies operate throughout the world from a single radio station. This resulted in huge cost advantages.
8] WorldSpace digital radio is aired worldwide with the help of three satellite beams including AfriStar, AsiaStar and AmeriStar. WorldSpace India, a wholly owned subsidiary of WorldSpace, manages the Indian operations of the company.