The document analyzes India's private FM radio industry. It notes that while the industry has experienced rapid growth since being privatized in the late 1990s, it remains far smaller than international standards. The industry is highly competitive with many players engaging in price wars. Differentiation is limited due to regulatory restrictions on content. However, future drivers for growth include proposed Phase III licensing that could add over 600 new stations, foreign investment, and development of more localized advertising. Risks include threats from internet advertising and potential delays from issues around music royalty payments.
2. Executive Summary Executive Summary Radio industry globally is a well established and a mature medium of communication and used by advertisers affectively in brand building and sales promotion. The medium also provides entertainment and information to its consumers and hence acts as an important business medium of communication and entertainment. In India the private radio industry is experiencing rapid growth. Though the industry was privatized in late 1990s, the business model was not viable until the phase II of licensing came into force. The phase II fostered competition and brought in new players into the industry. The new and the old players largely belong to established business groups who in turn are part of larger media houses. These players also control a large chunk of radio business in the country. As part of the overall growth experienced in the Indian economy during last decade, the media and the advertising industry have experienced good growths. While the share of radio industry is far below the international standards, the industry is experiencing good growth. Because the model of the industry is advertisement driven, the radio industry largely mirrors the contours of the advertising industry. While there are several promising factors that support the growth of the Indian radio industry, there are quite a few factors that might actually delay or dampen the growth. The competition for listeners and advertisers that ushers in price war without any strong differentiating factor among players is not good for the long term health of the industry. The undifferentiated content issue should be addressed immediately and even though the players might be ready now, the regulator has to address the concern. The phase III licensing will surely enable the industry to move forward and resolve some long standing issues but it is still some time away and the new and existing players should adopt wait, watch and prepare policy until it is announced to make new moves. Executive Summary 2 12/17/2009
3. Agenda Executive Summary Executive Summary Executive Summary Agenda The Media and Advertising Industry in India Characteristics of The FM Radio Industry in India Analysis of the FM Radio Industry in India Future drivers and Risks
17. Indian Advertising spend as a percentage of GDP is 0.47% representing huge potential in the overall industryThe Media and Advertising Industry in India *KPMG (2009) "In the interval... But ready for the next act." FICCI-KPMG Media & Entertainment Industry Report. 4
18. Agenda Executive Summary Executive Summary Executive Summary Agenda The Media and Advertising Industry in India Characteristics of FM Radio Industry in India Analysis of the FM Radio Industry in India Future drivers and Risks
19.
20. Impacted by the global recession, growth in the last two quarters of 2008 was slow because of slowdown in the advertising industry
21. A cost effective medium for advertisers as it has more penetration and reach compared to the traditional print and television
22. Controlled by few business groups having sizable stake in different media properties
38. Slowdown in promoter’s primary business activity has resulted in diversification in radio business
39. 2004-2008 CAGR ~9% (realized) *CII-KPMG (2005) Indian entertainment industry, Focus 2010: Dreams to Reality. **KPMG (2009) "In the interval... But ready for the next act." FICCI-KPMG Media & Entertainment Industry Report.` 12/17/2009 Characteristics of FM Radio Industry in India 7
40. Agenda Executive Summary Executive Summary Executive Summary Agenda The Media and Advertising Industry in India Characteristics of The FM Radio Industry in India Analysis of the FM Radio Industry in India Future drivers and Risks
96. Lack of skilled and experienced professionals could derail global expansion plans
97. Significant efforts need to be invested in educating the advertisers about radio as a medium12/17/2009 14
Editor's Notes
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