For FM channels, innovation is the key

It's going to be tough for FM channels. Only a few will survive.

And the channels that do will be those who can innovate - in distribution, in content, in programming. "With so many channels, FM radio will be like a commodity market. What will decide the victors is brand differentiation," says Sanjay Garg, general manager, Enterprise-Nexus.

Currently, radio has just 2 per cent of the Rs 6,000-crore Indian advertising market, according to Arthur Andersen's survey of the entertainment industry. Television, on the other hand, accounts for 36 per cent of the ad revenues.

Add to that, FM programs at present have a very limited focus. Most of them are geared to the metropolitan youth, and feature a weird mixture of talk shows, sponsored shows, and direct call-ins. Says Gopinath Menon, executive media director, TBWA

Anthem, "Right now it is the same old monotonous stuff. There is a lot more that can be done." The focus on the metros was very much evident in the bidding for licences with the 11 FM radio stations for Delhi going for a whopping Rs 7.125 crore each.

Industry analysts say the clustering of channels in urban areas, fighting viciously for a small share of the pie, will lead to a shakeout in the industry. Says N Bhaskara Rao, chairman of the New Delhi-based Centre for Media Studies, "There is hardly any rural orientation in the way the licences are given. At present, in some cities there are more than six FM channels, and they converge. This is not viable, and there will be a shakeout, with two or three companies becoming dominant, and the rest closing down."

Yet, consider the money going around. Industry sources say that ad slots in Bangalore are being sold at around Rs 4,500 per 30-second slot, and Rs 2,000 per 30-second slot in Delhi. And then, with billboard advertising out in Delhi, there is always room for a cheap low cost advertising option that appeals to back up advertising such as price promotions etc. But continuing to sell at those rates depends on how boring you will not be.

Given the huge amount of money that has been spend on getting the licences, analysts say that it will take at least two to three years for most channels to break even.

Add the shackles. In tune with archaic communications policy, the new licences for free to free-to-air broadcasts on FM, specifically excludes news and current affairs programmes, which form the core of the broadcast industry. Under current law, FM licences only allow broadcast of music, education, entertainment-based programmes and local information on subjects like business, capital market and local market, airline/ railway and bus schedules, traffic, sports and weather. FM channels, which have a range of 30 to 40 kilometres, are much clearer, and less affected by weather conditions than AM broadcasts.

The Net could also cause trouble. As Internet bandwidth increases, and rates come down, it will be possible for radio fans to access Internet radio, which scores over traditional broadcasting in that listeners can access their favourite programmes from anywhere in the world, and at anytime of the day. However, the main advantage that radio broadcasters have is that Internet penetration in India is extremely low, at less than 5 per cent. However, this again means a change in current programming styles, which are aimed at the urban youth. It is precisely this audience that is most likely to be charmed by the Net.

One way to get out of a narrow focus on urban India is to spread to the rural market, where a fresh target audience lies. But such efforts are hindered by the paucity of hardware in rural India, and archaic policy laws. The cheapest transmitters cost Rs 300 to Rs 400, quite expensive for the rural household. AIR programmes for rural audiences have not met with much success either.

So FM companies need to spread their wings, and fast. And the government should allow them to fly.

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