Radio industry may see a lot of mergers and acquisitions: Nisha Narayanan, COO, Red FM

In an interview with, Narayanan said smaller players would find it difficult to survive and large ones will stay afloat on strength of the network. She said it was about time government opened FDI in the sector

Raushni Bhagia
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Radio industry may see a lot of mergers and acquisitions: Nisha Narayanan, COO, Red FM

Nisha Narayanan

Policies such as not allowing broadcast of news and sports on private radio and restrictions on foreign direct investment in the sector is hampering the growth of the industry in India, says Nisha Narayanan, COO, Red FM.

In an interview with, shesaid the absence of a third-party measurement system was also holding back its potential as brands are yet not aware about the reach of the medium.

Narayanansaid the impact of demonetisation and the Goods and Services Tax are not visible anymore and the industry, including Red FM,was poised to post a healthy double-digit growth.

“Political advertising because of the upcoming general elections would add to the revenue growth,” she said, adding that Red FM was trying to increase its non-traditional revenue.

Speaking on the possibility of mergers in the industry, she said, “Economy of scale is going to come into play and larger networks are able to survive. Eventually, if the policies are not very conducive then smaller players, who are not regional-focused and have 1-2 stations, will find it very difficult to get business from the more national and corporate advertisers.”


Radiohas been one of the oldest mediums of communication and the share in the total adex still remains at a miniscule 3%. How do you see this?

Interestingly, the radio industry is the second-fastest growing industry, after the digital medium. So, growth is more than the other traditional mediums.

Secondly, there are policy restrictions that will always hamper the medium. There are restrictions on news and current affairs or pending copyright issues, which is preventing a lot of radio companies from going digital because they can’t play the same music online. It will never be a growth facilitator. The third reason is the lack of any third-party measurement system to prove what radio can deliver. All the data available today are internal researches done by individual channels, and not industry research. Also, the huge licence fees, which is to fully paid in the market.

A level playing field is what radio needs to grow at the pace of the other industries. The moment you allow FDI entry on the same level as other media and entertainment industries, growth in radio will get a big flip. Not just that, it will also help in bringing more variety in content and experimentation in the product itself because more money will flow into the industry.

How were the last two years?

There was a major slump because of demonetisation and GST, which is why the market got very conservative. It’s on its way up. Certain categories are not growing on the medium, but there are a lot of newer categories hopping on to the medium —bringing in a lot of aggressive growth.

What's your view on the phase III auctions and the markets for which licences were acquired?

There are two ways of looking at it. One, multiple licences were given in the bigger markets. The licence fees in the bigger market are very high. Some of the markets like Delhi and Mumbai went up to Rs 177 crore and Rs 123 crore for a 15-year licence. This is a huge amount. The businesses will take more time to get stabilised, so it is a risk that one takes to be in that market and there is no assurance.

Secondly, it will take time to settle down in the smaller markets since radio is a new medium there. Other than these, issues like licence fees, copyright and readiness of infrastructure to launch the channels on time factor in. Everyone has taken time to get on to the phase III markets.Even we were waiting for some final approvals and hence the launch was delayed. Some players also boycotted the auctions. So, from this point of view, it wasn’t as great as it could have been, but as long as the government is more open to ease out regulations for radio, the industry can grow faster and deliver better results. It is both from the growth perspective for the industry and delivery perspective for the listener.

I often hear people complaining how all radio stations sound similar and there is no differentiation in content. The moment the break happens, there will automatically be much bigger and better variety of content that will come in. Nobody wants to take the risk of making completely different content, with so many restrictions. If it was a business with easier operations, then corporations can come in with much more innovation, may be programing focused only on children, or devotional.

The pressure on profitability is increasing with infrastructure issues and the longer gestation period for the new stations. How do you plan to combat that?

I have always believed that for the radio industry to survive and flourish, one has to go beyond the FCT-driven model. One needs to develop other revenue generating verticals. At Red FM, we have a lot of focus on non-traditional revenue (NTR businesses), including events and activations (concerts, events and others), digital space and content monetisation. As long as the brand is strong, it has to move to other verticals, mediums and platforms.

I always say that the fight is not between Red FM versus Mirchi versus Big FM or anyone else. The fight is against the ecosystem, technology where people are consuming content differently. We need to focus on both — building the brand and building alternative revenue streams.

What is holding back the brands from investing in the medium?

A lot of brands are looking at radio as a very important part of their plans. The best way to increase the share of spends on radio at this point in time is to set up an industry-led measurement system in place. It cannot be an individual measurement where every radio station claims to be No. 1. Be it a weekly, monthly or quarterly report which should capture not just the top 3-4 towns but the major 15-20 markets and it is the only way to bring more business to radio. It is obviously the only way to warm up the advertisers about the impact and performance of the medium.

It is often said that radio spots are highly undervalued/ devalued. Do you agree? What would it take for the industry to come together and put a higher valuation to the whole game?

I don’t think so. If that was the case then brands would be spending a lot on radio and your earlier question wouldn’t have appeared.

I do think that it is a competitive space. There are no category-wise rates that can be improved. For instance, the DAVP/ government rates in some markets can be very good, but in some newer markets, despite paying huge licence fees, all radio stations get Rs 52 per slot from DAVP, especially when ERs are over Rs 800-1000.

If the rates were undervalued then a lot of advertising categories will be making the most of the medium. The rate increase will come in a more balanced and easier way when there is a third-party currency. Not having a proper measurement is restrictive and this is one point where the industry needs to come together.

However, the growth of the industry in terms of listenership, revenues and effectiveness of the campaigns is quite robust.

What are your expectations of growth for Red FM and the industry, in view of the upcoming general elections?

We are quite upbeat about the upcoming elections and we know in particular that the government and the other political parties believe in radio. In all the past elections (both state and general), they have effectively used radio. Radio has a big advantage of not being a one-size-fits-all approach or cookie-cutter kind of programming. We can regionalise/ localise the message, which can be played in 15 different markets in 15 different dialects with 15 different issues that they may want to take up. That’s the power of radio.

On an industry level, we are expecting a double-digit growth from the elections.

How has the DAVP rates been over the last five years? The TV broadcast and print sectors are struggling to get the correct rates from the government as yet.

A revision happened a few months ago. But it could have been much better. We too have been speaking to the government on this.

Are we moving towards consolidation and M&As in the radio sector?

We have already seen a couple of them in the recent past. Economy of scale is going to come into play and larger networks are able to surviveand give double-digit growth because of the large networks. Some of the not-so-good performing markets get compensated by the healthy markets. Eventually, if the policies are not very conducive then smaller players, who are not regional-focused and have 1-2 stations, will find it very difficult to get business from the more national and corporate advertisers.

Hence, I do see a lot of mergers and acquisitions in the future.

The ban on news and sports on private radio is one of the longest standing and most painful points of the radio industry. Is the discussion still on with the government on that?

It is extremely important that the radio is allowed to have news and current affairs as a part of its content. Independent news should be allowed on radio too. A lot of radio stations do have the news gathering ability, since they already have a print or a TV channel. I find the restriction quite regressive, which is going to hamper the growth of the medium.

We are on a better note of discussion and we do hope to see some changes.

TRAI had suggested that a measurement system on the lines of BARC be set up for radio. Where does the industry stand on that?

A committee was set up and MRUC is a part of it. We are discussing, but we need to also balance it out with the cost factor. We are very clear that we do not need a diary method to remove any manual intervention.

I can’t put a timeline on it, but it is the eventuality, even if some players are not a part of it for whatever reason. If the industry has to grow, the players have to come together for this.

Digital radio hasn't taken off the way it was expected to. What do you think is holding it back?

The businesses are struggling with the copyright issue, wherein music from the terrestrial radio cannot be played on the online medium. Due to this, a lot of players haven’t gone on to digital yet. We have an app, with a lot of content, but we are not able to put music there, because there is a lot of royalty on it. It doesn’t make sense to have devotional music on the app, while your terrestrial radio is about some other kind of music. It has to be in sync. This is the first hurdle that we need to resolve.

Nisha Narayanan Red FM radio