Radio, until sometime ago, was a public sector offspring, hampered by low technology, depressed utilization and poor content. However a gradual reforms process is setting new signals for the radio industry. The Government, on 6 July 1999, took the initial step in privatization of this sector and announced the Phase I Policy, permitting participation by the private sector by allowing companies to bid for 108 radio channels in 40 cities.
The first phase was, however, not successful because it was characterized by a high license fee, with a 15% annual escalation, which resulted in longer break-even periods. The Phase II policy, announced in 2006, has given the radio industry the much-needed impetus, resulting in network expansion across the country. Under the Policy, the Government announced bidding for an additional 338 radio channels in 91 cities/towns of A+, A, B, C, & D categories.
Earlier, companies had to pay a fixed license-fee, irrespective of the revenues generated, resulting in huge fixed costs; until 2005, all radio channels were loss making. However, the shift from the license-fee regime to the revenue sharing model, where Annual License Fee is 4% of gross revenues or 10% of reserve OTEF (One Time Entry Fee), whichever is higher, is expected to result in a more viable radio business and thus drive growth for the industry.
Currently, the sector generates annual revenues worth US$ 49.5 million and is growing at around 20 percent annually, according to the joint report by KPMG and an industry chamber. The radio advertising industry is projected to grow at a CAGR of 12.2 per cent over 2010-14, reaching US$ 342.7 million in 2014 from the stand of US$ 192.8 million in 2009, as per PwC.
The Ist Phase players included (but not restricted to):
In the IInd Phase many more players joined in, including (but not restricted to):
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