The Resurgence of Radio in India
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A BRIGHT FUTURE?
Though private companies obtained licenses to set up 37
FM stations in 19 cities by December 2001, only a few channels became
operational. This was due to difficulties in setting up radio towers and the
lack of basic infrastructure facilities. As a result, in December 2001,
Prasar Bharati extended the deadline to April 30, 2002, and signed a
memorandum of understanding (MoU) for a period of 10 years.
This MoU allowed private FM operators in five cities to use AIR resources
against payment. In spite of these developments and the ‘bright future'predictions for radio broadcasting, there were some doubts regarding the
industry's future. Given the huge amount of money spent on acquiring
licenses and setting up stations, analysts pointed that it would take four
to five years for the companies just to break even.
Moreover, radio was not very popular in the media market and its revenues
accounted for a negligible percentage of total media revenues (Refer Exhibit
V For Projected Media Revenues). Thus, it seemed rather difficult for all
the players to sustain the competition for long without earning any profits.
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Added to this, the restrictions imposed by Prasar
Bharati on the programming content (exclusion of news and current
affairs programs, the core of broadcasting industry) of private players
were expected to severely limit the success of these players. With the
kind of programs the private players were allowed to provide, they could
target only a few selected sections of the audience.
This kind of programming was bound to restrict their growth. And with
more than 24 languages spoken in the country, the radio networks need to
develop multilingual programs to attract a nationwide audience.
Developing such programs would demand heavy investments. As all the
players were focusing only on the urban areas, severe competition
between the channels operating in the same city was expected to result
in the survival of only two or three dominant players. |
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To increase the audience base, private players would
have to spread to rural areas. But the paucity of hardware and advanced
infrastructure in rural India was a major hindrance to such expansion.
However, the greatest threat to Indian radio broadcasting seemed to be the
advent of satellite radio[7]. In light of this, the future of private channels
and AIR, with their huge infrastructure costs and limited reach, appeared to
be bleak.
The world's first satellite radio service, WorldSpace[8], had already started
operations in India and was gaining acceptance rapidly. However, to be able
to access satellite radio, listeners had to buy special satellite radio
sets, which were priced very high. Analysts felt that Indian consumers would
not be willing to pay huge amounts when small radio sets and transistors
were available at very cheap prices.
Thus, it remained to be seen whether the aggressive efforts of private FM
radio players to rejuvenate the Indian radio industry would succeed and help
radio regain its position as an integral part of the communication and
entertainment business in India.
QUESTIONS FOR DISCUSSION:
1. Discuss the growth and decline of radio broadcasting in India and
examine the reasons for the fall in the medium's popularity during the
1990s.
2. Analyze the changes in the Indian radio market with the entry of private
players into the FM sector. Critically evaluate the private players'efforts
(strategies) to leverage the potential of radio. Do you suggest the new
entrants might follow similar strategies to expand the market and ensure
success?
3. Discuss the future of radio broadcasting players in India, in of radio's
relatively small share in the communication and entertainment market,
government restrictions on private players, intense competition in the FM
broadcasting market, and threat from satellite radio companies.
EXHIBIT I - WORKING OF A RADIO
EXHIBIT II - HISTORY OF RADIO WORLDWIDE
EXHIBIT III - INDIAN RADIO MARKET (1975-1998)
EXHIBIT V - PROJECTED MEDIA REVENUES
[7] Satellite radio stations
broadcast their signals from their earth stations to the satellites positioned
in geo-stationary orbits above the earth, which covered the whole earth, while
remaining stationary with respect to the land below. This enabled the satellite
radio's signal to reach to all corners of the world as compared to the limited
area access of AM/FM stations. Thus, satellite radio companies operate
throughout the world from a single radio station. This resulted in huge cost
advantages.
[8] WorldSpace digital radio is aired worldwide with the help of three
satellite beams including AfriStar, AsiaStar and AmeriStar. WorldSpace India, a
wholly owned subsidiary of WorldSpace, manages the Indian operations of the
company.
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