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Union Budget 2013: FM radio could be on the road to profitability

Ajita Shashidhar     February 28, 2013
From a presence in just 85 cities, FM radio stations are going to reach out to over 300 cities after phase III of radio licensing.

Finance Minister P. Chidambaram has announced auctions for 839 frequencies and has promised that every town with a population of more than 100,000 people would have at least three radio channels.

After the reduction of music copyright royalty (from 15-20 per cent of a radio company's revenue to just two per cent), the opening up of more frequencies definitely gives the radio industry reason to rejoice.

More frequencies would also imply the flexibility to have multiple licences, and therefore opportunities to have content differentiation and less me-too content.

Today, all radio stations are allowed to play only music, but with multiple licences one could have a radio channel that would only air news or only sports-related content. "This will at once give advertising revenues a spike. We will become more relevant to advertisers as well as consumers," points out Asheesh Chatterjee, CFO, Reliance Broadcast Network.

Radio advertising today, comprises just four per cent of the overall advertising pie, unlike most global markets where radio contributes a healthy 12-15 per cent.

After being in the red for years due to crippling regulations and oppressive royalty costs, radio companies may finally start making money.

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