Friday, April 17, 2009

FM radio stations cut on broadcast hours to battle recession - via Alokesh Gupta


(14 April 2009 9:35 pm)

MUMBAI: Private FM radio operators are shutting down their late hour
broadcasts in smaller cities as the heat is on to shave off costs in a
downturn economy.
Radio Mirchi, the top FM radio broadcaster in terms of revenue, has pulled
the curtains down from 1-6 am in 20 smaller stations. The axing has taken
place in most of the stations located in B, C and D towns that include
Kolhapur, Nashik, and Aurangabad in Maharashtra and Mangalore in Karnataka.
Says Radio Mirchi CEO Prashant Pandey, "Both electricity and royalty costs
are exorbitantly high. We would save anything between Rs 15-20 million. In
terms of our cost-base, this would be around one per cent of our annual
expenses. Though it looks small, in radio business there are relatively few
controllable costs."

Radio Mirchi is not alone to swallow this harsh medicine. Big 92.7, which
has 44 stations across India, adopted this cost-saving initiative and
stopped its night broadcast operations in all its non-metro stations from
12-6 am.
Says Big 92.7 FM CEO Tarun Katial, "Big 92.7 FM started this exercise six
months back. Shutting operations at night is a good cost measure to reduce
wastage in business. We might as well put our resources in best use for
building value for our listeners and advertisers rather than putting them in
use at dead hours."
Some radio broadcasters have incubated this strategy of staying mum in the
'dark' hours right from the start.
Says Radio One CEO Vineet Singh Hukmani, "We have always been silent between
1-5 am since there is low listenership at this time zone. We took this
decision far before the recession happened. However, from Diwali up to New
Year, we convert to a 24x7 radio station because during a festive season, we
can have listeners hooked on to us 24 x7."
So how much can one save? Says Hukmani, "When you are running a radio
station, there are two large costs associated with it - music royalty and
power and transmission. If you are not operating for four hours a day, you
can save around 15-16 per cent of your operational costs."
BAG Films' Radio Dhamaal, which runs 10 FM radio stations across India, has
also never operated at night since its inception.
"We are closed from 12-6 am. Since these radio stations are located in small
towns, we don't have that kind of a listener base in the night as one finds
in metros. Shutting operations makes sense to us. By not operating at night,
we save around 3-4 per cent of our operational costs," says BAG Films and
Media Ltd. managing director Anurradha Prasad.
Not all radio operators, however, are willing to walk down this road.
Red FM, which has operations in the three metros of Delhi, Mumbai and
Kolkata, finds the market dynamics totally different. Says Red FM COO
Abraham Thomas, "The market dynamics of each city needs to be considered
separately and it's up to each station to determine the cost benefit
analysis before taking such a measure. Currently, the costs in smaller
cities are not hugely behind the bigger cities while the revenues are
disproportionally lower. All costs must get rationalised for the viability
of the stations in the smaller cities. Shutting operations at night could be
a trend in smaller markets where the listenership is lean during these
Radio City doesn't find the need to rework on its 24-hour broadcast
strategy. "We are up and running round-the-clock across our 33 radio
stations," avers Radio City EVP and national sales head Ashit Kukian.
Agrees Fever FM station head (Delhi and Mumbai) Neeraj Chaturvedi, "We have
radio stations in Mumbai, Delhi, Kolkata and Bangalore. As we are a
youth-centric radio station, we have a good listener base in the night. We
are live till 4 am. From 4-6 am, we play back to back music."



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