Extend licence period to 15 years: Vineet Singh Hukmani

By Sangeeta Tanwar , afaqs!, New Delhi | In Media Publishing | November 12, 2009
To overcome scarcity of talent, the radio industry needs to invest money in schools and colleges and have radio curriculum included in the syllabus

Ahead of the first ever radio operators' conference, Vision 2010, being held today in New Delhi, afaqs! engages Vineet Singh Hukmani, managing director, Radio One, in a conversation where he talks about the expectations of the radio players from the government and other key issues that the industry faces.

Q. What are the regulatory issues that the radio players will be raising at Vision 2010?

Hukmani: To breathe life into the medium, the government needs to urgently address radio operators' demand for extension of licence fee period for players from the existing 10 years to 15 years. The government's support on the matter will act as a big incentive for an industry in which even the leader, commanding as much as 42 per cent market share, is struggling to break even.

Currently, foreign investors are shying away from the industry as they are reluctant to invest in a medium that has already used a part of its licence and is nowhere near making a profit. Additionally, the government needs to increase the FDI limit to 49 per cent from the current 20 per cent to bring parity between radio and TV. Regulation should not be the issue while deciding the cap on FDI in the medium.

Q. What about the government's role in the music royalty issue pending in court?
Hukmani: Music costs are threatening the industry. But here, the government can only play the referee: it can only suggest and it is for the radio stations and music companies to come to the negotiating table to decide the way ahead. The industry's representative body, AROI, is arguing for a revenue based model in place of the existing fixed fee model.

Q. What are the bottlenecks that the industry faces on the sales front? What are the steps that can be taken to ensure a robust stream of revenue?
Hukmani: The radio players face a situation where receivables in the market stand to go out of control sooner or later, with the players operating on a credit period of 180+ days. In some cities, the credit period stretches even longer, resulting in revenue outstanding almost for the whole year. With the Indian Newspaper Society (INS) and the Indian Broadcasting Society (IBF), collection of payment takes prime importance for print and TV industry. These bodies can have a radio chapter to help make things better for the industry.

Secondly, to encourage advertisers, marketers and media planners to look beyond the Delhi and Mumbai markets, the monitoring system (RAM) has to be made more robust by ensuring better sample size and more robust electronic monitoring. Currently, RAM just functions as a cumulative reach-recall study. We need to educate the media fraternity that the premium on innovation for a particular audience is justified and the medium should not only be evaluated on 'spot buys' for 'All 12+ audiences'.

Q. What are the key areas where radio channels can strive for differentiation?
Hukmani: In a place where services are not differentiated, players need to create different products and the reward for doing so would be a good brand that will be an outcome of listeners giving you a brand status. We have to learn to differentiate between 'show' and 'time band'. The show leads to appointment viewing, whereas a time band is just about playing music with RJ talk. RJ is at best an ingredient of the format and is not 'above' it. One also needs to break the mould and talk to select communities and audience. Programming has to work towards integrating client properties and ensuring entertainment value for listeners.

Q. What are the steps that the FM industry needs to take to override the talent scarcity?
Hukmani: Radio witnesses a lot of movement as the young crowd associated with the medium complains of boredom with the repetitive formats. With the same content, all the brands appear same, leaving no room for creativity. Unlike TV, where one can choose to be a part of a genre, say general entertainment channels, sport or news, radio offers no specialisation and thus disappoints the youth.

It's here that the third phase of radio licensing should be format and genre based, offering choice and variety. To get good talent in the industry, radio companies need to invest with universities and colleges to include radio in their curriculum.

Q. What's the way forward for the industry to survive and aim for growth?
Hukmani: The medium promises a growth of 14 per cent CAGR(compound annual growth rate), the only double digit growth medium next to the Internet - is that enough? Industry stakeholders and media experts are of the view that a CAGR of more than 30 per cent will see various operators making money, given that 40 per cent of the license period is already over for many.

At the same time, the slowdown has resulted in a lot of cost-cutting measures as well, but this can only be done to a certain extent. Thus, more than ever, it's time for the organisations to move the workforce from being revenue oriented to an ROI (return on investment) profit orientation, thereby ensuring that everyone in the organisation is on the same page.

Though the radio players are increasing their listenership numbers, they are falling short of achieving corresponding growth in revenue.

There has to be a balance between the market share and the value share of a brand. The market leader has to protect the market and avoid dropping prices frequently, thereby infusing value into a volume ridden industry. This will also help the market leader to break even quickly, which is most crucial for the industry. Non-metro and metro radio brands of different companies should come together to create national synergies and better value for brands without the 'self survival' ego mindset.

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