Bar on news and sports hindering private radio's growth in India, says Mirchi's Preeti Nihalani

The present restrictions on broadcasting news and sports on private radio stations is hindering the medium’s growth in India, said Preeti Nihalani, Chief Business and Revenue Officer, Entertainment Network India Ltd. (Mirchi).

In an interview with BestMediaInfo.com, she said, “News and sports are very large verticals in themselves. You can get a very large audience through news and sports. So it does hurt and impacts us. We've been fighting a battle with the government to allow news. However, private radio is still not completely allowed to broadcast news.”

In 2019, the government had allowed private FM channels to broadcast All India Radio news in English and Hindi in an unaltered format. However, most channels did not take up the offer.

“We cannot give any opinion about the news. Unless we can do that and also cover news openly, it doesn't make sense to just take up the news capsule and relay it. If these restrictions are lifted, it will open up a box of opportunities,” she said.

Though digitisation of radio opens up many opportunities in this aspect, Nihalani says Mirchi is still not considering diversifying into that space.

“So while we can technically do it through digital, it takes a lot of investment and the investment in digital platforms is upfront. If we already had journalists bringing out news on our main platform, then doing it on our digital platform would make sense. But now I will have to put up a full infrastructure in place. That doesn’t make business sense. It doesn’t make sense from a brand perspective as Mirchi is known to be a fun and entertainment brand. The brand has to be in sync. If we already had a news channel by way of the second or third frequency, then expansion to digital platforms would have made sense,” she added.

While the lack of a third-party measurement system has always plagued the industry, Nihalani says digitisation has not changed that. “As long as two-thirds of our revenue comes from radio, this issue will keep hurting us. There is no running away from the fact that we are not a measured industry. Despite digitisation, in our five years’ plan also, 50% of our revenues will keep coming from radio. Our radio revenue will keep increasing, but maybe at a little slower pace than the digital revenue. In the absence of any other available measurement, the Indian Readership Survey (IRS) is there. Although it has been a little inconsistent over the last few years, most agencies and clients go by it,” she said.

The radio industry has traditionally enjoyed the smallest share of the total adex pie. However, Nihalani says digitisation is changing that. Though Mirchi doesn’t have a dedicated platform yet, it gives a tough fight to its competitors only through its website and social media assets, raking in around Rs 32 crore. This is around 11-12% of their total revenue and is as much as some other music platforms and in some cases even better than them. Mirchi is now in the process of creating its own dedicated music platform.

Digital radio comes with its own challenges. Nihalani said monetisation is still very less. “A budget is kept aside for FM radio. However, if you look at the music OTTs, it's a big struggle for them to monetise it. The FM industry is much larger at about Rs 2500 crore, while the digital music OTTs as an industry, putting together syndication, subscription and ad revenue, would not be more than Rs. 400-450 crore,” she said.

Further, when it comes to music licences, the cost structures are non-supportive as of now. “That's another big struggle of the digital industry. The licence regime for music and the royalties for music labels are determined either with revenue share or needle per hour basis when it comes to radio. However, to play music on digital platforms, there is no central regime that runs it. It's about how much you negotiate with the label,” she explained.

Just like the rest of the media industry, 2020 was not a great year for radio. After a fall in advertising and a decline in revenue, Nihalani is optimistic that this year will be a ‘great growth year’ across the industry.

“The growth over last year is going to be very good. This year the lockdowns were state-specific, unlike last year’s strict national lockdown. From April to July, every month has been better than the last and around the first week of July, we saw a dramatic rise in volumes and revenue. However it's not as good as pre-Covid times,” she said.

Nihalani says the industry needs stability for at least one or two quarters to get to the pre-Covid levels. “The advertisers are worried about the third wave coming in. The restrictions are also not completely lifted. To get back to the pre-Covid levels, we will need the complete opening of the economy,” she said.

A major aspect of their fast-paced growth is their brand solutions business, which is contributing to a third of their revenue. In FY21, their solutions business grew 77% and formed 34% of their revenues. “It's three times the pace of the radio business. As we have our own social media and digital strengths, it gives brands far more confidence and then the investments also are skewed towards us in that sense,” she added.

Despite the pandemic year, Mirchi managed to strengthen its non-radio offering. In December 2020, they dropped ‘radio’ from their name changing its identity from ‘Radio Mirchi’ to just ‘Mirchi’.

“Primarily it came from the perspective that we are India's number one city-centric music and entertainment company. We are quite a bit other than radio, having offerings across music-movie entertainment, live events, social media, storytelling, podcasts, original content,” she said. 

This year they expanded their operations abroad to the Middle East and the United States. While it's too early to provide listenership figures, Nihalani said, “In terms of monetisation, we have surpassed our budgeted numbers in all of these markets. We had a very conservative plan since we were launching amidst the pandemic. So it's been a great launch. Over a period of time, we will take all our solutions business that we do in India, to all these markets.”

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