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Tag: Arjun Rao

  • NDTV, Astro snap up Red FM ops

    MUMBAI/ NEW DELHI: After nurturing it since the birth of private radio broadcasting in the country in 2001, Aroon Purie’s Living Media Group, owners of India Today magazine and TV Today Network, has exited a radio venture lock, stock and every song in the library.
    A clutch of investors, including infotech company Value Labs, Malaysian broadcaster Astro and premier Indian news organization NDTV, have joined hands to buy out the operations of Radio Today, the radio division of Living Media Group, for an undisclosed amount.
    The government clearance to the deal, ahead of the start of financial bidding process for second round of FM radio later this month, came in yesterday. The actual agreement was formalised on Monday morning.
    In the loose structure that is there at present, the Hyderabad-based Value Labs is the majority shareholder, while both NDTV and Astro hold minority stakes. Astro, being a foreign company, cannot hold more than 20 per cent stake in a FM radio venture as per government norms.
    Though the companies involved were mum on the valuation of the radio company, sources close to the deal-making told Indiantelevision.com that the Radio Today — which runs stations under the brand name Red FM in Mumbai, Delhi and Kolkata — deal was “more reasonable” than the BBC-Radio Mid-Day agreement.
    “Even the buyers were a little surprised by the final price agreed for Radio Today,” a source said, hinting that the valuation agreed upon of Radio Today was lesser than that of Radio Midday
    According to market indicators, Radio Mid-day was valued at between Rs 1.6 to Rs 1.8 billion. The company operates one FM station in Mumbai, compared to Radio Today’s presence in three cities.
    In a statement issued in the afternoon today by the buyers, it was stated, “Associate companies of Value Labs and Astro, through their existing Indian joint ventures, have come together with NDTV News (subsidiary of NDTV) to acquire Radio Today (Mumbai) Broadcasting Limited, Radio Today (Delhi) Broadcasting Limited and Radio Today (Calcutta) Broadcasting Limited from the Living Media Group.”
    The statement quoted Value Labs founder promoter and CEO Arjun Rao as saying, “We’re very excited with the opportunity to expand into the radio sector in India and hope to build upon our global experience in the multimedia space. The possibilities that exist in relation to creating an interactive eco-system across radio, television, Internet and mobile (phones) is something we’re looking forward to.”
    Value Labs is a Hyderabad based global IT service provider, with extensive experience in telecom and multimedia application development.
    NDTV Ltd director Narayan Rao added that they expect a lot of “cross media synergies by entering the (radio) space.”
    NDTV and Astro relationship is not new. Last year, the Indian news broadcaster entered into a joint venture deal with Astro All Asia Network. Under the agreement, NDTV will hold up to 20 per cent in the joint venture with Astro Broadcast Corp LTD, a wholly owned company of Astro All Asia Network, to set up and broadcast 24-hour channels in South East Asia.
    And, Astro’s interest in the Indian market is nothing new either. Astro CEO Ralph Marshall has been quoted by the Hong Kong-based Media Partners Asia publication Media Routes in 2004 as saying that the company would expand regionally with pay TV investments in Indonesia and radio ventures in India, Indonesia, Bangladesh, Thailand and Vietnam.
    In the mid-1990s, Astro/Measat had a pact with Doordarshan for a DTH service that never got off the block. At present, the Astro group provides marketing and back up support to two FM radio stations in Kolkata.

    Also Read

    Radio Today likely to sign deal with Measat

    Government announces 1st list of FM Radio probables 

    Govt clears revenue share in FM radio; FDI of 20% okayed

    BBC Worldwide to invest Rs 318 million in Radio Mid Day; stake not finalised 

  • Indian FM Radio: Playing a new song

    MUMBAI: Despite a slow and bad start thanks to enthusiasm-dampening high licence fees during the first round of bidding in 2000, the private FM radio segment is finally waking up from its slumber..
    Two deals have taken place in quick succession on the eve of the bidding for the second phase of FM radio expansion. One – Radio Mid Day – has found a suitor in BBC Worldwide which is investing Rs 318.50 million. The other has exited – Aroon Purie’s Radio Today has sold to a consortium of three companies comprising Malaysian broadcaster Astro, NDTV and Hyderabad-based infotech company Value Labs.
    The common thread in both? The participation of foreign companies, which have been allowed to hold up to a 20 per cent stake. “They are keen to take part in the FM story as it unfolds in India,” says an analyst. 
    Today, the market size with a little under Rs 3 billion in advertising spends isn’t large enough. Even the companies aren’t profitable. But the future holds promise as stations can successfully tap into young audiences and garner local advertising. The economy is on an upswing, a consumerist India is emerging which is seeking new avenues of entertainment. 
    “Radio is a totally underdeveloped market in India,” says the analyst. “Today you see kids hooking onto radio on their mobile phones when they are travelling in buses or trains. Or other folks switching on their car radios when they are traveling to work. FM Radio set prices have also fallen, making them more affordable in India which for a large part is price sensitive. Radio also has more penetration than TV in the form of AM listeners who can be upgraded to FM Radio.” .
    Investors are obviously buying into the “India-is-the-market of the future” story. . Otherwise, how do you justify an investment of Rs 318.50 million for a stake which can’t climb beyond 20 per cent for a radio business with a turnover of around Rs 45 million last fiscal?
    “Business is on the upward curve. The industry is growing at 30-40 per cent. The de-regulation will help aid profitability,” says an analyst.
    Replying to Indiantelevision.com, BBC Worldwide director of emerging markets for the EMEIA (Europe, Middle East, India, Africa) regions Monisha Shah says: “The joint venture seeks to expand the business from operating the current licence in Mumbai, to multiple licenses across India following the Phase 2 bids. BBC Worldwide’s investment will represent up to a 20 per cent stake of this expanded portfolio, which includes but is not limited to the Mumbai licence.”
    Value Labs founder promoter and CEO Arjun Rao talks of building an interactive ecosystem across radio, TV, Internet and mobile. “We have provided interactive solutions to media for the last 6-7 years. As a logical next step, we decided to take ownersip in a leading radio network. We feel reasonably safe about our future plans,” he explained to Indiantelevision.com.
    Value Labs, in any case, had a long relationship with Astro. The company, Rao says, has provided interactive solutions to Astro’s telecom and media business. Along with NDTV, they hope to turn around Radio Today which operates FM stations in Mumbai, Delhi and Kolkata under the Red FM brand.
    The task can be challenging. Radio Today, according to industry estimates, had a turnover of Rs 120 million. This is way behind revenues of Radio Mirchi (from the Times of India Group) with around Rs 750 million and Radio City with Rs 600 million in 2004-05.
    Private FM radio operators will, however, now have a less rough path to tread. The government has de-regulated the sector and done away with the licence fee structure which was steep.
    So why did Purie decide to bid goodbye to radio business? Possibly, he was upset by the fact that news and current affairs was still not being allowed on private FM. Besides, the second phase would attract too many players and capital would be required to support the expansion which Purie wasn’t willing to pump in. He would rather focus on launching more TV channels.
    “It is the time when you can get high valuations. There aren’t too many large FM operators to choose from,” says an analyst.
    How will the government’s decision to release 338 new FM radio licences across 91 major cities impact the industry?
    For the existing radio broadcasters, expanding their footprints will be a crucial part of their business strategies.
    There are two reasons for this. First, the industry has yet to mature and the quicker one moves in, the easier it is to scale up. Second, competition is set to intensify as new entrants emerge to share the spoils.
    No wonder, the existing FM operators are pitching for a wider net that would allow them to streamline operations and sell to clients. A larger footprint will also lead to economies of scale in every way: be it in the area of acquiring broadcasting equipment or in amortising content costs between various city stations. And of course there will be the concomitant larger listenership, leading to deals with national advertisers, along with deals with local advertisers. In essence this will mean a bigger advertising pie. More moolah.
    The existing radio operators have evinced interest in applying for FM licences in the second phase.Radio Mirchi, for instance, has earmarked Rs 1.2 billion for phase II of its radio expansion as its total One-Time-Entry Fee Payment (OTEFP).
    All this will require capital. While Radio Mid Day and Radio Today have found capital infusion from equity dilutions, Radio Mirchi is raising funds through an initial public offering (IPO).
    Entering new territories will have its own business dynamics. Radio Mirchi admits there may be a reduction in effective advertisement rates as existing competitors expand their operations and enter into newer markets. Competition will force players to try and undercut each other on ad rates.
    Being the sole player in a market could prove to be an advantage. Though it currently faces stiff competition from existing operators in the metropolitan cities of Mumbai, Delhi, Chennai and Kolkata, Radio Mirchi is the lone player in Indore, Ahmedabad and Pune. Radio City, which operates in four cities, faces no challenge in Bangalore and Lucknow. Similarly, Sun Group is the single player in Coimbatore and Tirunelvelli, facing competition only in Chennai. 
    The two FM broadcasters, which were involved in selling stakes, did not find themselves in this special position. Red FM has operations in Mumbai, Delhi and Kolkata, while Mid Day’s Go 92.5 FM services only Mumbai. But it is in Mumbai where the competition is the maximum and the India Today group apparently is ambitious about expanding further in the TV and print space rather than in radio which it probably sees as a smaller space.
    So what will a wider footprint achieve for the players who are expanding? As mentioned earlier, it will help radio stations leverage their platforms to capture additional income by enhancing their audience base. It will also help them target a greater number of potential advertisers in new markets.
    But there is a handicap: under the Phase II policy, no private operator will be allowed to hold more than 15 per cent of all FM radio channels licensed in India. 
    The foreign inward movement has just begun. Private Indian FM broadcasters will also explore relationships with content providers overseas, either directly or through strategic partnerships. Pressure to generate more revenues will force this as FM operators have to invest continuously in programming and brand building.
    The Indian FM Radio sector is clearly in for action in the coming months. For some it will be music to their ears, for others static.