Top 3 FM firms gear up for big bites
Big 92.7 FM, Radio Mirchi and South Asia FM are set to
control 55% of the market.
Advertising on Big 92.7 FM (Reliance Unicom), Radio
Mirchi (ENIL) and South Asia FM (Sun TV group) may
become costlier by up to 30 per cent.
The three leading FM radio companies are looking to
capture nearly 55 per cent of the FM radio market,
among themselves and through subsidiaries, after the
final bidding of the remaining 97 additional FM radio
stations concludes later this month.
According to sources, the three companies may end up
bagging one-third of the 97 vacant FM stations after
the bidding, thereby taking their overall market share
in excess of 55 per cent.
This will help them increase their reach to a
population of nearly 200 million across over 160
cities in the country. As a result, the advertisers,
who are looking to capitalise on their reach, may have
to spend at least 30 per cent more on the radio
ad-spots, an industry source said.
According to a media agency source, the effective
radio ad-spot rates on the three leading FM stations
in metros are Rs 8,000-12,000 per 10 seconds.
In smaller towns, the rates are Rs 2,000-3,000. But
with the effective reach of FM radio, advertisers
still find it a lucrative medium for advertising in
comparison with the costlier print and television
media options, the source said.
The three leading FM operators (Big FM, Radio Mirchi
and Sun TV group) are expected to bag one-third of the
97 vacant FM stations. When that happens, there will
be another round of increase in the ad-rates, said a
Delhi-based senior media planner.
Currently, the three players have about 50 per cent of
the 266 FM radio station licences, awarded in early
2006, leading to over 500 per cent higher ad-rates
than in 2005, when there were only 21 FM stations.
There was only Radio Mirchi before 2005.
According to the rules of FM radio bidding, no single
company can hold more than 15 per cent of the allotted
FM stations. Therefore, both Big FM and the Sun group,
with 45 stations each, can add only 10 more stations
while Radio Mirchi, with 32 stations, can add about 23
more stations in the bidding later this month.
Tarun Katial, COO of Big 92.7 FM, maintained that the
channel would add significant numbers in the
forthcoming bidding. We would continue to hold a
significant position in the radio industry even after
the bidding, Katial said.
These 97 stations remained vacant after the second
phase of private FM radio bidding, which was held in
early 2006.
The business of FM radio became lucrative after the
government shifted its radio policy from one being
based on licence fees to a revenue-sharing model in
2005. The first phase of FM radio bidding, in 2000-01,
was largely unsuccessful due to high licence fees.
Source: © 2008 Business Standard
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