“Infrastructure Cost Is Discouraging But FM Phase III To Help Radio”

Abraham Thomas

Abraham Thomas, Chief Operating Officer, Red FM, the man behind making RED FM the largest amongst all FM stations marks his only achievement in his photograph with Big B! His most prized asset is his key team members who have stayed with him through the entire journey at Red, refusing jaw dropping offers from competition!

Entertainment is serious business for Abe both on-air and off-air. To his friends he is also widely renowned for his unbeatable knowledge of the best watering holes and eating joints in any city/country that he has visited!

In a candid conversation with, he speaks on TRAI regulation, music royalties and radio advertising.

Q) How do you see TRAI recommendations for private FM relating to news on FM and FDI?

TRAI’s recommendations on news will let stations generate differentiated content. Radio’s strength lies in its immediacy and letting private radio stations carry news will help in information dissemination.

TRAI’s recommendation on FDI will open up new sources of funding for the stations. However, the industry’s ability to attract funding is a factor of the profitability of stations in smaller markets. For this the resolution of the music royalty issue plus rationalization of non-controllable costs is important.

Q) How much is music royalty cost and costs of renting Prasar Bharti infrastructure restricting the growth of the radio FM industry?

Music royalty constitutes a major chunk of a radio station’s operational costs. At present, the royalty paid by stations is indifferent to the revenue potential of the market they are operating in. If AROI and the music industry can come to an agreement it will ensure the spread of radio in smaller markets and an exponential growth rate for the industry. Similarly, rationalization of non controllable operational costs like the renting of infrastructure will mean that the stations achieve their break even sooner. We are hopeful that the introduction of Phase III round will mean some more government reforms benefiting the industry.

Q) What kind of radio stations do you see growing in the future?

With the implementation of TRAI recommendations on multiple frequencies within a city, players will be able to experiment with their formats and offer differentiated content to specific niches. The option of having multiple stations would let broadcasters hedge the risk involved in operating a niche station. This in turn would mean more choice for the listeners, expansion of the universe of listeners, better reach for the medium and advertising growth, thus helping the radio industry evolve.

Q) What would you say are the major challenges and issues for the industry today?

The industry needs to find ways of controlling costs to achieve profitability. The ratio of local to national advertisers needs to be more equitable, and for this to happen the industry has to successfully communicate the advantages of radio over other media to advertisers in local markets

Q) Re-branding SFM to Red FM made you the largest FM radio network India. This came as a big strategic move in private radio industry except providing a nation wide reach under one brand name what else do you forecast?

Red FM is the country’s most awarded radio station that has managed to differentiate itself from others through its unique attitude and take on things. It has stood out with its strong listener connect and contemporary entertainment style, making it the most popular FM brand in the Mumbai, Delhi and Kolkata. Red FM also enjoys strong brand equity within the advertising fraternity. This move unifies our FM radio offering across the country under a single strong brand. Red FM being the more popular and recognized radio brand, we undertook the re-branding of all the 38 existing SFM stations operating across the country under the Red FM banner. For the advertisers, he gets to reach out to a nation wide listener base.

Q) Now advertisers have got a nation wide platform to advertise, how much increase will be experienced in rates?

This move will consolidate our sales and marketing efforts. We will be able to provide advertisers with a single solution to their advertising requirements. Sales teams will now have a network of 41 stations (besides the 7 Suryan stations) to sell and will be able to provide more lucrative deals to advertisers.

Q) How important is local advertising for the radio in India?

Local advertising of course plays an important role in a station achieving its profitability. In India, ratio of local to national advertisers is around 1:3 at present. Globally this ratio is 3:1. Radio, being a local and mass medium, is ideal for a local advertiser. However, private radio stations have made their foray into newer markets only three-four years back. It will take sometime for local advertisers to get a feel of the medium and realize its benefits. In time, there will be 1:1 split between local and national advertisers.

Q) Advertising expenditure on radio is 3-4 % in India whereas in western countries it is much higher. Do you think there is enough scope for the advertising on radio in India?

Radio Industry in India is still in its nascent stage. Internationally, the industry has a share of around 8% of the advertising pie. But this has happened over a long period of time, in developed markets like US and UK private radio stations have been around for more than 60 years. The latest PWC report projects that by 2013 Radio Industry will garner a 5.2% share of the advertising pie in India. In the coming few years, we should see growth of the industry share in line with international trends.

Q) What kind of changes shall be incorporated in programming and presentation format of the stations renamed as Red FM?

The change is comprehensive and will incorporate the Red FM DNA into the SFM stations’ programming and presentation formats. Radio is a local medium and hence local tastes, needs and issues will be kept in mind while adapting the on air attitude.

Q) Red FM has always been exceptionally innovative with content and format. What role does content innovation play in keeping ahead of the competition?

Given the present government regulations, format radio never really took off in India and in the process stations chose to appeal to the lowest common denominator. In such circumstances, content innovation is the key to establishing a differentiated position in the minds of the listeners. On air attitude, RJ talk, sparklers, station identifiers, jingles etc. all of these go on to create an identity for the station and set it apart from the rest. For instance, if a listener in Mumbai today hears the name Kamla or Pappudia he automatically associates it with us.

Q) Red FM ruled Mumbai for a long time but now lost the top position to Mirchi. Although the difference indicated on the RAM meter is very slight, do you see this shuffling of top 2-3 players as an emerging trend?

We started off as a challenger brand and through our differentiated programming, our attitude, music and our award winning Touch Point marketing strategy established ourselves as Mumbai’s No.1 station, a position which we had held on to for over two years. While campaigns, promotions and contests may influence listening habits in the short run, I don’t see this shuffling as an emerging trend.

Q) For listeners it is really hard to differentiate between the radio channels as all play almost the similar content. What are the brand building measures for Red FM?

I don’t quite agree that all stations play the same content. Red FM has held on to the promise of only playing the latest superhits throughout the day, some other stations include music from the older era in their playlist, while others cater to an audience that prefers English music. So stations are differentiated when it comes to the kind of music they play. Music is also not the only differentiator between stations. The RJs, shows, sparklers and other programming content all contribute in differentiating the brand.

All of our brand building campaigns, be it Bajaate Raho Awards or Bajaao for a Cause or Vote for Boat or other on-ground activities, are designed to reach out to the audience on their own turf, giving them a chance to experience the ‘Bajaate Raho!’ attitude first hand.

Q) Where do you see Red FM in coming years?

I see Red FM growing from strength to strength, evolving into an embedded brand- a brand that is a community- engaging and provoking citizens across the country.


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