FM radios can double revenues in 5 years: CRISIL
Updated: Oct 27, 2015 03:04:55pm
New Delhi, Oct 27 (KNN) Global analytical company CRISIL said FM radio industry has the potential to nearly double revenues in the next five years to an estimated Rs 3,900 crore from Rs 2,000 crore in 2015. Ad volume would get a fillip as Phase III regulation will help radio cover a proposed 294 cities - from 86 at present and reach 85 per cent of India's population.
For broadcasters, Phase III offers greater flexibility because it allows ownership of multiple frequencies (channel/radio station) in one city and sharing of network infrastructure, and also has a longer licence period. This will support profitability. Of the 135 frequencies on the block in the first batch, 97 were provisionally won, it said.
This is significantly more than what the government had earned in Phase I and Phase II.
CRISIL estimated an internal rate of return (IRR) of 11-14 per cent and a payback period 7-9 years for the big radio companies in metros. In the large ad markets the top radio companies are already operating at peak utilisation and, an addition of one or two increment frequencies, would keep their ad inventory utilisation as high as 60-65 per cent in the first year.
The ad rate in Tier II cities such as Kanpur and Lucknow are as low as Rs 250-660 per 10 second slot compared with Rs 1,150-1,900 in Delhi or Mumbai. Tier II cities will have to attract more local advertisers who do not buy in bulk.
However, investments have been relatively lower with bid per frequency for Kanpur and Lucknow at Rs 8-14 crore vis-à-vis Mumbai and Delhi at Rs 120-170 crore, making them attractive but with lower profitability. Further, players that bundled portfolio of national and local frequencies as other advertising options such as print to advertisers would fare better, added CRISIL. (KNN Bureau)
For broadcasters, Phase III offers greater flexibility because it allows ownership of multiple frequencies (channel/radio station) in one city and sharing of network infrastructure, and also has a longer licence period. This will support profitability. Of the 135 frequencies on the block in the first batch, 97 were provisionally won, it said.
This is significantly more than what the government had earned in Phase I and Phase II.
CRISIL estimated an internal rate of return (IRR) of 11-14 per cent and a payback period 7-9 years for the big radio companies in metros. In the large ad markets the top radio companies are already operating at peak utilisation and, an addition of one or two increment frequencies, would keep their ad inventory utilisation as high as 60-65 per cent in the first year.
The ad rate in Tier II cities such as Kanpur and Lucknow are as low as Rs 250-660 per 10 second slot compared with Rs 1,150-1,900 in Delhi or Mumbai. Tier II cities will have to attract more local advertisers who do not buy in bulk.
However, investments have been relatively lower with bid per frequency for Kanpur and Lucknow at Rs 8-14 crore vis-à-vis Mumbai and Delhi at Rs 120-170 crore, making them attractive but with lower profitability. Further, players that bundled portfolio of national and local frequencies as other advertising options such as print to advertisers would fare better, added CRISIL. (KNN Bureau)
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