The Resurgence of Radio in India

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Case Details:

Case Code : BSTR032
Case Length : 13 Pages
Period : 1993 - 2002
Organization : ---
Pub Date : 2006
Teaching Note : Available
Countries : India
Industry : Media, Entertainment, and Gaming

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"Nobody asks for radio and nobody gives a damn."

- Prasoon Joshi, Creative Director of leading advertising agency, O&M, in September 2001.

"Radio won't die; even today, the reach of radio is more than that of television. In rural India, every individual has a transistor. And you can listen to the radio even when you are tilling the soil. You can't do that with TV."

- Vinod Sharma, founding member and Ex-President, RAPA,¹ September 10, 2001.

The Re-Entry of Private Players

In July 1999, the Government of India decided to allow private players to enter the FM radio-broadcasting sector. It planned to offer ten-year licenses to private players in 40 cities across India.

These private broadcasters would be permitted to offer only music, education and entertainment-based programs, not news or current affairs programs.

Hailing the government's decision as a historic one, analysts said this would change the future of Indian radio broadcasting.

They added that with this development, private companies would have better control of their respective radio stations, unlike in the mid-1990s, when the private players were allowed to offer only programming content to the FM stations owned by the government operated All India Radio (AIR).

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Following the announcement, many companies bid for licenses to operate in various cities. The first private FM radio station Radio City began functioning in July 2001 in Bangalore, Karnataka. By October 2001, sixteen companies were issued licenses to operate private FM radio stations.

Some of these were Entertainment Network, India FM Radio, Vertex Broadcasting, Radio Today, Sun TV, Music Broadcast, Millennium Broadcast, Hitz FM Radio India, Udaya TV, Radio Mid-Day West India, Mid-day Broadcasting South, and Mid-Day Radio North. However, many industry observers were skeptical about the survival of all these private players. They said that radio broadcasts were not popular and that industry ad revenues had been very low throughout the 1990s. Advertising revenues were as low as Rs 740 million in the financial year 2000-01, amounting to less than 1% of the total advertising expenditure. According to Prasoon Joshi, "The quality of radio advertising here is pathetic. Today, when an agency plans spends, the bulk of the money goes to television. Then come outdoor media, print, and maybe mailers. Radio comes last."

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1] RAPA (Radio and TV Advertising Practitioners Association of India Ltd) is a Mumbai-based body that addresses issues related to the fields of radio and television advertising in India. Every year RAPA gives away awards to directors, scriptwriters, artists, technicians, adfilm producers, radio/TV programs, music directors and advertising agencies.