Talking about the affordability factor, Radio was economical when it came to both time and money. In India, where almost 40 per cent of the population is illiterate, Radio is more acceptable, especially in the rural areas, than the Newspaper. Radio could cut through the barriers of illiteracy. Another aspect which AIR was able to leverage on was Radio’s portability, which made it convenient to carry it anywhere. Radio being mobile, it could be with the people all the time and the message could be conveyed time and again.

TWIST IN THE STORY

Time to Watch Television!!

Advent of Television (TV) in the mid 1940s in some countries severely eroded the listener base of the Radio Industry. It began to lure away Radio listeners. Especially post Second World-War, TV industry grew at an incredible pace. Earlier on, TV shows were merely an adaptation of the existing Radio shows. But it did not take much time in building up a format and identity of its own in the field of entertainment and communication. And in the two decades that followed, TV was almost pervasive.

This marked the entry of another, and that too more effective and impressive, source of information entertainment and education.

People soon started realizing that they were less dependent on the blind medium (Refer Exhibit 1).

From mid-80s, the doors of the Indian markets went wide open for TV. The success of TV serials like Ramayana, Mahabharata, Hum Log and Buniyaad subsequently contributed further to Radio’s downfall.

TV entered the Indian markets in the mid-1980s, at the time which was tagged as the ‘Golden Era’ for Radio Industry as well as for us – AIR. TV’s launch into the Indian Bazaar had the following impact on us.

Reduced Listenership and Loyalty

AIR, now could not cope up with the changing consumer preference. With our mundane programs and almost no focus on the youth, we lacked an upstream image and were often not in sync with the changing lifestyles of the Indian audience. Lack of creative and lively programs made AIR loose its charm and thus proving unattractive to the big corporate houses to advertise on it. Bad sound quality, poor reception, week Radio Jockeys (RJs) and less interactive programs pushed the listeners further away from AIR and onto TV.

In addition to add to this, Radio, on the whole, started being considered as a boring, unimpressive and an unnecessary medium which was opted for only when TV was not present. Losing listenership lead to a big loss to AIR in terms of revenue when advertising agencies and advertisers decreased their ad spends on Radio.
In the so called ‘Golden Days’ of Radio, clients assigned as much as 15-20 per cent of their spend on Radio. But today it has come down to less than 1 per cent. Advertisers blamed lack of creativity in radio to this shift. They also felt that even with its extensive reach of over 98per cent, the penetration of Radio network has remained stagnant in the 1990s.

According to a recent study conducted by ORG-MARG Nielsen, India’s leading market research company, it is estimated that the future spend on the Radio advertising as a percent of the total Indian advertising is expected to increase to as much as 5 per cent in years to come (Refer Table 2).

Also the Radio ad spend is expected to grow by an estimated of 45% during 2002-2007 as compared to an estimated 15% growth of spend in India.

Santosh Desai, Executive Vice-President, McCann Erickson, feels that the advertising on Radio was becoming a less and less attractive (Refer Box 2). He feels advertising on TV is the way to get the message through to the maximum number.

Another reason which analysts have figured out for AIR being in the present (poor) state was the Government’s failure in reforming the broadcasting policies. They also feel that government’s restrictive policies contributed to Radio’s downfall to some extent. Hence, AIR today is branded as the ‘Age old, Countrywide Radio Network.’

More competition for Radio
Radio as an industry, and AIR, both faced another setback with the advent of Satellite Broadcasting Technology sometime mid-1970s. The technology enabled TV networks to show their programs all over the world. By the 80s, the satellite TV industry had established itself firmly, reaching out to millions of subscribers all over the world, and generating huge revenues throughout in advertising that went on AIR.

Another threat to the Indian Radio Broadcasting seemed to be the advent of Satellite Radio. In light of this, the future of AIR seemed to be. The world’s first Satellite Radio service, WorldSpace, had started its operations by the mid-90s, and has been gaining acceptance rapidly. However, to be able to access Satellite Radio, listeners had to buy special ‘Satellite Radio’ sets, which were priced very high. And analysts felt that the Indian consumers would not willing to pay huge amounts when small Radio sets and Transistors are available at very cheap prices thus reducing some of the impact of this new competition.

But, for Radio, the worst was still to be witnessed. In the early-90s came the Internet. This ‘network of networks’ was a major communication channel linking people across the globe through computers. In not much time, Internet became a craze across the world and was very popular with the younger generation. It became an information hub and an inexhaustible source of entertainment. With its tools like E-mail and Search Engines, it has very soon gained its place in the sun.

In light of these developments, analysts forecasted the end of Radio broadcasting. However, many of them contended that radio broadcasting had successfully withstood competition from TV and Satellite Broadcasting, and would remain as one of the major sources of mass communication across the world. This is indeed good news for us at AIR!
 

Entry of Private Radio Players – Radio’s Second Innings

One word that caused the maximum damage to AIR and that was ‘Privatization’. It all started when our country waved a green signal to the Private players in the Frequency Modulated Segment to air their services in certain time slots on AIR.

To add to it, in July 1999, the Government of India decided to allow private players to enter the FM Radio-broadcasting sector and they were granted the permission to launch a channel of their own. Government offered a 10-year license to private players in 40 cities across India.

FM Radio: From Birth to Growth
Taking you back to 1937 when Edwin Armstrong invented the Frequency Modulated Radio. The first commercial Frequency Modulated (or FM, as everyone calls it) Radio broadcast was made on December, 1941 at Nashville. The advent of FM had certainly affected, for good, the listener base of Radio as a medium of education and entertainment in a positive sense.

In the year 1993 in India, the Government allowed the private players in the Frequency Modulated sector by permitting them to take blocks (time slots to offer their programming content) on AIR, for FM transmissions. The major players in the private FM market during that period were Times FM of Bennett Coleman & Co. and Mid-Day of the Mid-Day multimedia group. The purpose of this move was to earn revenues for us by the way of license fees, and provide more variety for listeners.

Programs offered by these private stations, however, were more listener-friendly and innovative than our programs. As a result, these channels became very successful in a short span of time (mid-90s) and thus attracted high advertising revenues.

By 1997-98, private FM business had grown to Rs. 930 million. The growing popularity of private FM channels resulted in erosion of revenues for AIR. Thus, in June 1998, Prasar Bharti stopped the operations of the private FM channels with the Prasar Bharti Act, in an attempt to help improve AIR’s revenues. But this move was not of much good to AIR. The Government, therefore, decided to privatize FM broadcasts (July 1999), and came up with the 10-year license deal. However, Government refused to allow any foreign ownership in the sector.

In 2000, Government then called for bids for FM license. The government issued license to broadcast in a city. Historically, bids were thrown open for a variety of frequencies in different cities. Consequently, the bidding went quite high. Some of the people who bid high were not even interested in the business, but they bid all the same so as to create some sort of an entry barrier in order to make the business unviable for their competitors. There were cities where the license had gone for as much as Rs. 6 to 8 crores a year.

Though the government’s invitation to private players resulted in an initial rush, many companies stayed away due to the high license fees demanded by Prasar Bharti, and also because of some strict conditions imposed by it. Licenses were required to invest a minimum of over three crores of rupees as capital and two crore as working capital for every station. The private players were given license to set up 37 stations that would operate across 19 cities in India. Some of the private channels are mentioned in Table 3.

 

The first private FM Radio station ‘RADIO CITY FM91’ by STAR and Music Broadcast Pvt. Ltd. (MBPL), began functioning in July, 2001 in Bangalore, Karnataka. MBPL’s Mumbai and Lucknow stations were next in line of their operations. Radio City very soon achieved success in these cities and, registered high listeners ratings Sumantra Dutta, COO, Radio Division, STAR, appreciated his organization for being the first in the market (Refer Box 3). By October 2001, 16 companies were issued license to operate private FM Radio stations increased by 56% while time spent on listening to Radio tripled from one hour of viewership to three. Home listening increased to 85%, with listening at the workplace also growing at a rapid pace. Seeing the growing listener base of FM Radio, many companies increased the share of Radio budget in their total advertising expenditure. Leading brands such as Kwality-Walls, Spice, Tanishq and Airtel advertised heavily.

By late 2001, private FM transmission reached 21% of Indian population and covered over 17% of the country’s area.

Another FM Radio channel which gained popularity at that time was ‘RADIO MID-DAY’. The target audience for this channel was, however, the car owners. The channel’s programs targeted the car owners, who had to spend hours in the traffic. The afternoon slots were focused on offering programs that appealed to housewives.
With the launch of these two and other private Radio players, overall FM listenership.

However, many people were doubtful about the survival of these private players. One of the reasons for this was, as according to Prasoon Joshi Creative Director, O&M “Given the huge amount of money spent on acquiring licenses and setting up stations, which it would take four to five years for the companies just to break-even. Also the quality of advertising in Radio Industry is pathetic. Today, in agencies spend, the bulk of the money goes into Television. Then come Outdoor Media, Print, and maybe Mailers. Radio comes the last.

This research by ORG-MARG indicates that Radio Mirchi has managed to go past Vividh Bharti in terms of ‘Top of the Mind’ recall in SEC A listeners. Radio Mirchi recorded the highest (37 per cent) ‘Top of the Mind’ recall, followed by other private FM Radio with 23 per cent and Vividh Bharti recorded a recall of 18 per cent.

Someone Please Help…

After talking to you about all this, I know you all may be having in mind a lot of suggestions and strategies on what shall we do. Well, over the years I have realized that our image is fading and that we need to revamp our program and our organization. It is time that we work on our program portfolio to make it more dynamic and try and aligning it with the business today.

Another thing that comes to my mind is that we should have more direct interactions with our audience to gauge the changing preferences and then build relationship with them through means such as contests, talk shows, message routing programs. We also need to infuse som fresh blood in our Radio Jockeys to install energy, exuberance and enthusiasm in AIR broadcasts

Further let us publicize our self as YOUTHS-ers and by sponsoring campus events, Carnivals, Valentines’ Day, etc. Its time that we talk the language of the youngsters. Keeping in line with the famous marketing adage ‘what is visible, sells’, we should increase our visibility.

Well friends, that was all from my side now it’s your turn to say and plan to do something to help AIR get back to ‘the king of all media…!’

Case study developed in March 2003 for in-class discussion by Ms. Falguni Mehta and Gaurav Khanna, under the guidance of Prof. Sushil Bahl, Faculty (Marketing) at NIRMA Institute of Management, Ahmedabad.