KPMG report suggests increasing foreign equity limit in DTH

 MUMBAI: At a function last evening CII-KPMG released a report titled Focus 2010-Dreams to Reality. The report focuses on film, television, radio and music.

As far as television is concerned the projection is for the industry to grow to Rs. 370 billion in 2010. This will be driven by new platforms for content delivery like DTH.


In this context the report has stated that there may be a case for increasing the amount of foreign equity allowed in DTH. As of now 20 per cent FDI is allowed in the overall 49 per cent limit in foreign equity.. The cable industry is unorganised and suffers from under reporting. Therefore a DTH platform will help plug the revenue leakage to the government.

The government should look at encouraging DTH by providing an income tax holiday and indirect tax benefits such as excise duty and sales tax exemptions on set top boxes.



The report notes that the current scenario for the liberalisation of FM Radio is not encouraging. No direct investment by foreign entities is allowed in this segment. Therefore the foreign investment policy for FM Radio is at variance with what is allowed in other media segments.

The report notes that FM Radio is suffering on account of the huge license fees. While the operational costs are Rs. 550-600 million the revenue earned is half that. The government needs to rationalise the license fees. The government should lift the restriction of the same player owning multiple stations in the same city.

India has around 180 million radio sets. Therefore the radio sector should not be satisfied with a growth rate in the low 20s. FM penetration is highest in the SEC A segment and lowest in the SEC D segment. 70 per cent of listeners in Mumbai and Delhi listen to FM Radio everyday.

The report expects FM Radio stations to focus on local and smaller advertisers. It will also make niche and differentiated programming a viable option. Big companies like Mid-day and The Times Group that run a radio station will start selling radio as a part of the multi media strategy. The report notes that a cost of Rs. 500- Rs. 900 per 10 seconds on the radio will allow local players to promote their products. At the moment the advertiser base is highly skewed with 11 per cent of advertisers contributing 60 per cent of radios revenues. Ideally the advertising should be broad based with a large bnumber of local advertisers.

Content differentiation is the need of the hour: One problem that FM Radio stations face is constant swapping of stations by listeners. That is because there is little content differentiation. Even programme loyalty does not exist. People tune in depending on the song. The me-too aproach towards content has a direct implication on the marketing of FM Radio channels the report notes. There is the danger of any message being caried getting lost in the clutter.

So there is a need to evolve programming towards differentiated content. For radio to grow channels that address specific listener groups need to emerge.

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