COVID-19 impact| Radio industry sees 85% revenue decline Y-o-Y: Elara Capital

Association of Radio Operators for India (AROI) had written to the government urging for an economic survival package for FM radio.

While radio listenership has grown in times of COVID-19, revenue has been hit hard.

According to an Elara Capital research note, the radio industry has reported a revenue decline of 80-85 percent year-on-year to date, due to the pan-India lockdown.

Pressure persists on the corporate ad front and the segment may continue to underperform for radio in comparison to other media, the note said.

“The worst hit would be local advertisers which contribute 40 percent to radio ads; they will also take the longest to recover. This, in turn, will lead to curb on ads for a long time,” said Karan Taurani, Vice President, Elara Capital.

Recently, Association of Radio Operators for India (AROI) had written to the government urging for an economic survival package for FM radio.

The association has requested for one year waiver of license fee; payments on rentals and other charges to Prasar Bharti and Becil; one year free spectrum and waiver of spectrum fees; zero or five percent GST; restoration of government advertising to normal levels; full waiver of minimum guarantee i.e. 2.5 percent of one time entry fees till end of license period; and two year extension in terms of license period.

These waivers will cost the government around Rs 300 crore.

In the letter, the association pointed out that the radio industry is looking at a loss of Rs 600 crore till September this year due to drop in advertisements.

Many of the top advertising categories on radio have been hit hard due to coronavirus including auto, and real estate. Plus, government ad spend, which is another important category for radio, has dropped as much as 80 percent, say industry players.

The note pointed out that the government vertical at five to six percent contribution has bottomed and it is social awareness campaigns on COVID-19 safety measures that is supporting the segment.

The top five advertising categories – real estate, government, auto, pharma, consumer electricals and durables – contribute 40 percent of ad volume for the radio industry.

One respite for the radio industry is the resumption of economic activities in Tier II and III markets, which are declared green zones, the note said.

“This will provide some respite for regional radio firms having a higher market share than larger radio networks, which derive almost two thirds of their revenue from the top eight to 10 stations which are more focused on metro cities.”

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