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Radio companies piggyback on digital services to survive COVID-19 impact

Coronavirus impact: Not only is their only source of revenue (advertising) at an all time low, the industry's high fixed costs in terms of licence fee, tower costs which they pay to the Government continues to remain, despite repeated requests for a year-long moratorium

twitter-logoAjita Shashidhar | July 8, 2020 | Updated 13:55 IST
Radio companies piggyback on digital services to survive COVID-19 impact
Coronavirus impact on FM radio industry

Like all media businesses, the FM radio industry has also been severely hit by the coronavirus pandemic, with almost negligible advertising revenues during the months of April and May. While June has seen a recovery, the ad inventory for most radio stations are still over 25 per cent lower than usual. "The industry was already struggling due to liquidity crisis prior to March 15, and now we are hit by a sledge hammer," says Harshad Jain,  CEO, Radio and Entertainment, HT Media (Fever 104 FM).

Not only is their only source of revenue (advertising) at an all time low, the industry's high fixed costs in terms of licence fee, tower costs which they pay to the Government continues to remain, despite repeated requests for a year-long moratorium. "Our fixed costs are usually 4 per cent of our revenue, it is now 30 per cent of our revenue, which is one-third of what we are currently generating. The Government has deferred it by a quarter, but we are saying we can't pay," points out Apurva Purohit, President, Jagran (which owns Radio City). In order to live to tell the tale, the entire radio industry has been forced to go on a huge cost-cutting drive - from stopping late night programming, reducing people costs to neutralising marketing budgets.

Also read: India trumps global internet subscription figures; 54% have digital access

The 58-station strong Big FM is currently operating from 29 studios. "A lot of our stations get fed from our hub stations. So, a station based in Ahmednagar, could service a lot of places in Maharashtra," explains Abraham Thomas, CEO, Big FM. Similarly, HT Media, says Jain, has adopted a part pay-part variable structure. "If a RJ was earlier doing six shows a week, we have asked him/her to do all the six shows in two days, and if the show sells then the RJ gets an incentive. The variable component will be large if the show takes off."

Radio listenership has increased by 26 per cent in the last few months, but like most other platforms, the increase in listenership hasn't resulted in revenues. So, radio companies have little option but to position themselves as digital first media platforms. With short form content consumption on the rise, radio companies are using the popularity of their RJs to do podcasts and videos on a war-footing. The narrative no longer is to sell ad inventory on radio, but to sell solutions which include not just a spot on radio, but also podcasts and videos.

"The Covid pandemic has badly hit the radio industry (as well as all other media industries). But at the same time, it has fast-forwarded the preference advertisers have for solutions rather than ad inventory. We have used the last three months to do extensive training of all our teams on designing and selling solutions to clients. Over the years, we have grown our digital footprint, which includes social media, YouTube and other videos, as well as our online audio/radio capabilities. We now use our digital strengths as a key element of developing solutions for our clients. I see all advertisers demanding solutions, rather than buying inventory, in the months after Covid," says Prashant Panday, CEO, Radio Mirchi.

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It's not that digital was not part of their strategy prior to COVID, but the pandemic has sharpened the digital focus. The narrative now is to create digital-first shows that would also be aired on radio. Fever FM launched a property called '100 Hours, 100 Stars - A Non Stop Tribute to Covid Warriors', which had performance and interviews with international as well as Indian music stars. The event was simulcast across various social handles of Fever FM, Radio Nasha, Radio One, and also on the FM channel. "Digital is imperative today, the days of vanilla radio is gone," says Jain, who expects digital to contribute 20-30 per cent to his overall revenue by end of the year.

Big FM has recently launched Big Radio Online (BRO), its web radio offering, with the promise to offer radio and digital synergies to its advertisers. "Radio plus digital is the new normal," says Thomas of Big FM, which is now offering to its clients brand advocacy deals which include on-air chats and discussions as well as digital videos and promos. One of the recent campaigns that the FM radio company did was with beauty brand, Vicco, in which it urged the youth to stop using social media filters and instead bring out their real beauty by using Vicco. Big FM RJs from across markets posted their 'no-filter' selfies and also urged their followers to do the same.

Will digital emerge as an alternate platform for the radio companies in the days come?

No, says Purohit of Jagran. She believes that radio stations will use digital for amplification of all their activities. "There is no advantage that digital gives over FM. You can access FM from your phone or your laptop, there is nothing extra that digital will offer consumers that radio doesn't. For example, digital video gives something extra to a person versus terrestrial TV, where one watches content on appointment. A digital platform offers a consumer the flexibility to watch content whenever he or she wants to do so," Purohit explains.

Also read: Coronavirus effect: US firms in India not to pay digital tax, says USISPF

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