MUMBAI: Radio faces an existential threat according to the Ficci EY Report.
The report’s analysis of smartphones sold in India in 2024 indicated that four of the top ten popular models did not have FM receivers
In addition, in many cars the physical radio station buttons are being replaced by touch-screen based buttons
These factors can result in radio not being available to listeners when they are outside the home, a key area where radio is consumed
FCT revenue will remain soft, and at risk
The report expects segment revenues to recover to INR30 billion by 2027, driven by (a) non-FCT revenues and (b) marginal FCT growth led by urbanisation and increased uptake of cars in non-metro markets
However, FCT growth – already at its peak in terms of volumes – could taper-off unless ad rates are increased and reach issues are corrected
It will be critical for the radio segment to ensure that smart phones continue to carry FM receivers, and the industry needs to work towards ensuring handset, OEM and operating system companies provide for FM receivers
Radio companies will increase their focus on nonmetros, where the presence of less expensive smartphone which have FM receivers is relatively higher, and feature phones still exist in large numbers
Non-FCT revenues will grow
The importance of non-FCT revenues will continue to grow – the report expects them to contribute around 29% of total revenues by 2027, growing at a CAGR of 20%, from the 20% of revenues they contributed in 2024
More and more radio stations will utilise their on-ground sales assets to drive multi-media sales for other media like TV, print and OOH
Proposed FM radio auctions will help bridge gaps
The government is rolling out 730 new FM channels across 234 cities as part of the Phase III FM Radio Policy. This expansion supports the “vocal for local” initiative and focuses on enhancing local content, particularly in smaller tier-II and III cities
Given the current state of the private FM segment, the report expects most companies to participate only in order to fill in gaps in their station bouquets, and expect that some stations may not find buyers since existing stations (which are larger) are still not profitable
The proposed 4% license fee for new stations could help the auctions, but there is a need to understand the overall state of the FM radio segment, and build proactive regulation to assist its survival
The brand solutions company will emerge
As ad inventory levels max out, radio companies are increasingly turning to become brand solutions providers, particularly to advertisers who are not served by large ad agencies viz., mid-size firms and larger SMEs who currently focus more on digital or regional media
Their core asset of feet-on-the-street sales teams will upgrade to concept and solution sales specialists, creating higher-quality brand and performance marketing campaigns
The launch of digital radio can have implications
The government has been considering the launch of digital terrestrial audio and video in certain cities, which does not consume data
In the event this initiative comes to light, it could increase the number of frequencies available to radio stations, and lead to more variety in content
However, new receivers would be needed in phones and cars, which could take some years to gain scale, and issues in moving from analogue to digital radio would need to be carefully addressed
The report believes that digital radio could help more than double radio segment revenues within four years of its launch
FM radio stations could be accessed via OTT
Given the push for paid subscribers, streaming platforms will need to differentiate their products
The report expects that FM radio stations, whose music curation capabilities and stationality are second to none, will provide their linear feeds (or curated versions of the
feeds) on paid streaming platforms, creating a win-win situation for both radio broadcasters and audio OTT platforms
