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Prashant Panday, CEO, ENIL [that owns Radio Mirchi] talks to MediaWorldBuzz.com’s Pallavi Srivastava about the new radio policy which is to be implemented soon. Panday discusses the profitability issue, the third round of radio licensing, Mirchi’s expansion plan and industry’s disappointment with policymakers allowing only limited access to news broadcasters. Excerpts of the interview:
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MediaWorldBuzz: By when do you expect the Phase III radio policy to be announced and implemented?
Prashant: I have no idea! You should check with the Government on this. I have only
heard that the policy has been sent to various ministries and that the cabinet will have a look at it soon.
MediaWorldBuzz: What are the key policy changes this time that you think will drive the growth in industry?
Prashant: Frankly, we do not have definitive information, since its not been announced
yet. Based on statements appearing in the press, we believe that some of the good policy changes are 1) Allowing multiple frequencies in the same city to broadcasters. 2) Allowing full-scale networking between any number of stations in a broadcaster's network 3) Reducing the lock-in period for the shareholders from 5 years to 3 years 4) Allowing (though in a very small measure) news and current affairs. The one big part of Phase III is the auctions in around 300 towns for around 700 channels. This can be a big
achievement of the government, provided the industry bids. The incumbent industry has already requested the government to sort out some financial issues before the auctions are announced. We are waiting to hear the government's final decision on this.
MediaWorldBuzz: How will these changes impact the industry? How do you see the sector evolving post the policy announcement?
Prashant: These are good reforms. They must be implemented ASAP. But auctions to new stations should be done only after the present financial woes of the industry are settled. If they are, and if the auctions happen, then the radio industry will boom. Good quality entertainment and news will reach the interiors of the country. People who cannot watch TV for whatever reason, or want options to TV, will finally be able to get good quality audio entertainment. It will be very good for advertisers also - as they have very little options to reach the interiors today. Radio will be a key media for them to exploit.
MediaWorldBuzz: What kind of an impact is expected on the profitability front, post the new policy?
Prashant: This is the one point that very few understand. The government keeps mentioning the rapid growth of the radio industry. That only refers to the top-line (revenues). No one talks about the bottom-line (profits). The fact is that the profits are nowhere to be seen - for almost all operators (save ENIL - Radio Mirchi). Profitability will depend very largely on how broadcasters bid. If they bid irrationally, there is no saving them. Profits will also depend on government policy - making the license a minimum of 15 years is a good idea. Alternatively, the government should allow renewal of the license at the end of the current 10 years at no cost. After all, they continue to make 4% of gross revenues as annual license fees - even while broadcasters keep losing every single year.
MediaWorldBuzz: How excited is Radio Mirchi about the new license auction, specially in the light of new policy implementations?
Prashant: We are not likely to bid if the policy is not good for our shareholders. We are waiting to see the policy first.
MediaWorldBuzz: How many licenses will you be bidding for? What kind of cities are on your expansion radar?
Prashant: It's too early to comment on this. If all goes well, we would be happy to participate in the auction. However, as always, we will stay focused on markets of growth.
MediaWorldBuzz: Mirchi has chosen a cautious approach as far as expansion is concerned. Does that approach changes after the new policy?
Prashant: There is no joy in having the largest network if you make losses! We are driven by a commitment to generate returns for our shareholders. Our expansion policy will also depend on this objective. One should not forget that there are growth opportunities outside India too.
MediaWorldBuzz: How do you see the competition evolving post the new policy implementation?
Prashant: I doubt if any new players will enter the radio industry, given the profitability of the past. I believe that the best chances for taking advantage of the future policy lies with the incumbents. There will surely be some increase in competition, but honestly, we are looking forward to it. We need a lot more action in the marketplace.
MediaWorldBuzz: Any particular dissappointment with the new policy?
Prashant: Yes. News is a big disappointment from what we hear. Giving limited access to news is an anachronistic policy decision. We have shown responsibility in the last 9 years of being in the country. Why can’t the government give us full access?
MediaWorldBuzz: How satisfied are you with the new policy?
Prashant: We wish we could get full access to news content. We also wish that the current grievances of the broadcasters are sorted out by the government. They have given birth to this industry - they need to give it attention even now. Remember, this is the only country perhaps where radio has come this later. It is not difficult to understand why we are having so many problems. The government needs to be patient and understanding. As they have been in the past.
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