RADIO CITY Key takeaways �� ::Kotak Sec Consumer Congerence,

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


RADIO CITY
Key takeaways
�� Advertising revenues. The total FM radio advertising market in India is ~Rs10 bn, with
~Rs8 bn with private FM radio operators and rest with AIR FM radio, the national
broadcaster. The share of FM Radio pie will likely increase to 7-8% of the advertising pie
from 3-4% currently if FM radio Phase-III goes as planned. The top-10 markets currently
constitute ~50% of the advertising pie; the top-30 markets will yet constitute ~60% of
the advertising pie even after Phase-III licensing.
�� Advertising revenues. Advertising growth in the top-4 cities is largely being driven by
increase in ER (effective rates) since inventory utilization is ~100%. In smaller towns,
stations still have considerable inventory left and thus, the focus currently is on increasing
the inventory utilization and rate hikes will follow.
�� Royalty costs. The issue of royalty cost has more or less been settled. The royalty to PPL
has been decided at 2% of the revenue of the FM radio station by the copyright board.
The royalty payable to IPRS has been declared null and void in a case filed by Radio City.
IPL and IPRS have the option of challenging the said rulings but any significant change in
the status quo is quite unlikely.
�� Phase-III FM radio licensing. The process for Phase-II FM radio licensing will likely begin by
end-CY2011. The government will also like to finish the process by end-FY2012E given
the fiscal deficit situation. The two key benefits of Phase-III would be current affairs and
news (will bring more listeners and allow FM radio to emerge as a serious medium) and
networking (cost rationalization, though hard to achieve).