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Reduce reserve fee, let broadcasters launch more channels, says ENIL CEO Prashant Panday

After a sluggish growth during the past few quarters, Panday expects Q4 to be a rebound quarter and foresees better growth in FY19 on the back of state and general election spending

Prashant Panday

The subsequent roll out of demonetization, RERA and GST along with a cut in government ad spend has spelled trouble for the growth of radio industry. The FM industry has either seen de-growth or muted growth in the past two quarters.

Entertainment Network (India) Ltd (ENIL), the company that operates country's leading radio station Radio Mirchi along with Mirchi Love/Mirchi 95, posted a total revenue of Rs 125.7 crore for Q2FY18, down from Rs 129.6 crore in Q2FY17. EBITDA during the quarter was Rs 28.4 crore, up 22.8 per cent, in the quarter ended September 30, 2017.

In an interview with BestMediaInfo.com, Prashant Panday, Managing Director and Chief Executive Officer of ENIL, said that the revival of the industry will happen only with the rebound of economy.

He said that though there has been an upswing in ad spend in auto, retail and electronics, sectors such as real estate, health and pharma are yet to revive. Talking about the future growth potential, Panday said that the industry has now pinned hope on the upcoming election season. "Election season is a good time for radio broadcasters. I expect FY19 to witness good political spending on radio," he said.

Speaking about the growth potential of Mirchi Love/Mirchi 95, Panday said that the new channels were doing exceedingly well in their respective markets. "It is only new the Phase-3 stations that have shored up radio sales," he said.

Excerpts:

What are the reasons behind the sluggish growth in revenue?

Sluggish sales are true not only for Mirchi, but also for other radio broadcasters. All radio broadcasters have reported sluggish sales in their core (old) radio business. As an industry, radio has reported de-growth in core stations. It is only new the Phase-3 stations that have shored up radio sales. Even here one must be careful. Some broadcasters have started doing activations and the revenue growth you see are really activation numbers in a start-up year. Even their core radio numbers have de-grown.

How big is the impact of new stations?

In the case of one broadcaster, which was doing just Rs 30-40 crore per quarter, and which invested close to Rs 325 crore in Phase-3, the impact of the new stations is tremendous. That is why they report high growth on total basis. Basically, in this period of time when Phase-3 stations are being rolled out, it is not easy to simply look at “reported” numbers and conclude who is growing fast and who slow.

What are the revival chances of private FM radio business?

The FM radio industry will revive when the other media segments revive. That depends on when economic growth rebounds. I hope Q4 is a rebound quarter. I believe Q3 will remain slow.

If chances are bleak then do you think the party for FM radio sector is over?

Not at all. What is one year of slowdown in a 15-year licence. Radio has its best time still ahead of itself.

How are your FM stations doing and when do you think it can break even?

Our second station network is doing exceedingly well. In all markets, the brand Mirchi Love has been well accepted. Clients personally consume love and so they are putting their money on it. We have priced Love a notch lower than Mirchi, and we are promising advertisers that our advertising will be capped at 10 minutes. In Bangalore and Hyderabad, we have the Hindi product Mirchi 95 (not Mirchi Love), which is doing exceedingly well. We are the clear leaders in pricing, and as per car track, in listenership as well.

Post GST and with the start of the festive season, which sectors seem bouncing back and contributing in your growth?

In Q2, we saw BFSI, auto, organised retail, media and entertainment, durables, mobile handsets and even jewellery do well. The sectors that did not do well are real estate, telecom, petroleum/ power. The sectors that were flat are government, FMCG, dotcom and health and pharma.

Are you expecting any revival in government ad spend, given that it's a major revenue stream for radio?

I guess so. The government has been a regular spender on radio.

The election season has kicked off and this momentum will continue till 2019. What kind of a business are you expecting from political advertising?

Political parties have realised the power of radio. Election season is a good time for radio broadcasters. I expect FY19 to witness good political spending on radio.

Real estate also showed some revival during Dussehra. Was this revival only seasonal after badly being hit by Demonetisation, RERA and GST?

Real estate did not show any revival, except in Mumbai.

What kind of relaxation or intervention are you seeking from the government for the overall of growth of the industry?

The government has always been supportive of the radio industry. As an industry, we do believe, however, that the government can do a lot more for the growth of radio. The government should reduce reserve fees, allow news and current affairs and remove the restrictions on how many channels a broadcaster can hold in a market.

News on private FM is still a far cry. When do we see that happening?

I don’t think the government is mulling this right now.

The government proposed a measurement system on the lines of BARC? Where are we on that front?

MRUC is working with broadcasters on this. Hopefully, we will have a currency soon enough.

As new listeners push real growth, are private FM stations acquiring new audiences?

There is no research nationally that measures how radio listenership has been changing. Anecdotally we do hear a significant growth in FM listenership. Hopefully the IRS that comes out in the next few months will shed some light.

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