The Resurgence of Radio in India



Themes: ---
Period : 1993-2002
Organization : ---
Pub Date : 2002
Countries : India
Industry : Media and Entertainment

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Case Code : BSTR032
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The Resurgence of Radio in India | Case Study

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Background Note Contd...

AIR also offered current affairs programs and talk shows on current issues covering politics, science, technology, education and social problems. It also conducted general knowledge competitions for students. Radio news broadcasts attracted hordes of listeners across the country. AIR popularized sports (particularly cricket) by broadcasting live commentaries of matches played in India and abroad. It conducted various music and drama competitions in order to discover and encourage talented artists. Due to its immense popularity, extensive reach, easy accessibility and cost effectiveness, radio became a primary communication and entertainment medium during the 1970s and 1980s attracting listeners as well as advertisers.

However, from the mid-1980s, television (TV) began to lure away radio listeners. The success of TV serials like Ramayan, Hum Log, Buniyaad and Mahabharat further contributed to radio's downfall. These serials attracted millions of audiences across the country, resulting in a shift of loyalties from radio to television. As TV audiences grew, advertisers began allocating larger sums for TV advertising. Tapan Pal (Pal), President and CEO of ZenithMedia, summed up the issue: "In the golden days of radio, clients such as Dunlop assigned as much as 15-20% of its spends on radio. The industry spend was in the vicinity of 7-8%.

Today, it is down to less than 1%." By the early 1990s, in most metros, radio existed mostly as a part of two-in-one systems (cassette recorders). Analysts felt that the government's restrictive policies also contributed to radio's downfall to some extent. They felt that even with an extensive reach of over 98%, the penetration of the radio network remained stagnant in the 1990s (Refer Exhibit III for the Indian radio market) because the government failed to reform its broadcasting policies.

Lack of good scripts and innovation in programming were also affected the quality of radio programs. Unlike a TV program or commercial that depended mainly on technology and special effects such as lighting, cinematography and camera angles, radio programs depended only on writing (script). Analysts also blamed the Indian advertising agencies for the decreasing ad spends on radio. They felt that the advertising agencies failed in exploiting the potential of radio to its fullest and simply treated it as a remainder medium. On the other hand, advertisers blamed the lack of creativity in radio programming as compared to TV.

The absence of a monitoring system (to record the level of response to programs) for radio programs that could provide agencies with information to approach clients (to recommend radio) also contributed to radio's downfall. In 1993, the government allowed private players in the FM sector by permitting them to take blocks (i.e. time slots to offer their programming content) on AIR, for FM transmissions. The purpose of this move was to earn revenues for AIR (by way of license fees) and provide more variety for listeners.

The major players in the private FM market during that period were Times FM (of the media giant Bennett Coleman & Co) and Radio Mid-Day (of the Midday Multimedia group). The programs offered by these private stations were much more listener-friendly and innovative than AIR's programs. As a result, the channels became very successful (in the mid-1990s) and attracted high advertising revenues. By 1997-98, the private FM business in India had grown to Rs 930 million.

The growing popularity of private FM channels resulted in decreasing revenues for AIR as these FM channels attracted most of the ad revenues. In June 1998, Prasar Bharati3 stopped the operations of private FM channels, reportedly in an attempt to improve AIR's revenues. But in July 1999, the government again decided to privatize FM broadcasts and came out with a ten-year license deal. The government refused to allow any foreign ownership in the sector. In 2000, the government called for bids for FM licenses.

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3] The Prasar Bharati Act, which came into existence in September 1990, was implemented in September 1997. The Act aimed at freeing AIR and the state-owned TV entity Doordarshan from the immediate control of the Government of India and provided for the establishment of the ‘Broadcasting Corporation of India’ (BCI), an autonomous body for regulating electronic media.