Regulators

Q1-2016 TRAI report: Radio industry performance improves

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BENGALURU: The Telecom Regulatory Authority of India (TRAI) released combined advertisement (Ad) revenues of 239 private FM radio stations for the quarter ended 30 June, 2015 (Q1-2016) a few days ago. There were a total of 243 radio stations in the India as on that date. 

Trends across 16 consecutive quarters (four fiscal years) 

Please refer to Figures A and B below. The all India simple average revenue per radio station and the QoQ and YoY (year on year) change has been calculated using TRAI data – the overall ad revenue mentioned by TRAI divided by the number of radio stations, which have reported revenue numbers to TRAI.

As has been the trend over the period mentioned above, Q1 of a year is generally the leanest quarter in terms of ad revenue as per TRAI data. The second quarter - Q2 has the next lowest average ad revenues per station. Over the last two consecutive years FY-2014 and FY-2015, the highest ad revenue per radio station per year has been reported for the third quarter (Q3), while in FY-2012 and FY-2013, the highest ad revenue was reported in Q4, so there is a tie for the first and the second highest quarters in terms ad revenue per station between Q3 and Q4.

For the year ended 31 March, 2015 (FY-2015), this website had mentioned that the numbers reported by the radio industry for the year were the probably the best (Indiantelevision link, Radioandusic link) so far. Despite an 8.88 per cent QoQ (quarter on quarter) fall in average ad revenue per station in Q1-2016, the ad average revenue per station of Rs 1.65 crore is the best yet for the first quarter over a period of four years. In Q1-2015, YoY ad revenue grew 11.90 per cent. Hence historical trends indicate that FY-2016 could be an even better year in terms of average revenue per station and overall revenues.

Note (1): (a)100,00,000 = 100 lakh = 10 million = 1 crore

(b) The author has taken the liberty to introduce a measure – average revenue per radio station. This is a rough yardstick and may not necessarily be indicative of a station or a networks performance, because factors such as geography and market conditions within the area of operations are among many of the factors that will also determine performance.

(c) This report is skewed more towards general financial numbers in terms of revenue and results, and not operational performance.

The TRAI report for Q1-2016

As per the TRAI report for Q1-2016, the total advertisement revenues reported by 239 radio stations was Rs 393.9 crore or Rs 1.65 crore per station. In the immediate trailing quarter of Q1-2016, that is, for Q4-2015 (quarter ended 31 March, 2015), the combined advertisement revenues reported by 241 radio stations was Rs 435.89 crore or Rs 1.81 crore per station, hence the above mentioned QoQ drop of 8.88 per cent (Rs 0.16 crore) in ad revenue per station. For Q1-2015 (quarter ended 30 June, 2014 or Q1-2015), 241 radio stations reported combined ad revenues of Rs 354.97 crore or Rs 1.47 crore per station, or the above mentioned YoY growth of ad revenue per station of 11.90 per cent or Rs 0.18 crore per station in Q1-2016.

Please refer to Fig A. The slope of the simple linear trend line (the dotted black line with a red end in Fig A below) projects that the average ad revenue per station in Q2-2016 should be about Rs 1.78 crore, which would be significantly higher than the Rs 1.66 crore reported for Q2-2015. How much this figure is in line with the actual number depends upon the numbers reported by the radio companies and revealed by TRAI. But, if one were to go by the published Q2-2016 results of some of the players in this report, the combined revenues of these sample player has gone up in double digits Q2-2016 as compared to Q1-2016, and of course are higher than those reported for Q2-2015.

Further, Figure B below indicates that QoQ fall in ad revenue per station in Q1-2016 was the second steepest fall during a 13 quarter period starting Q1-2013 (Q1-2013 as compared to Q4-2012) until Q1-2016. The steepest QoQ fall in ad revenue per station was in Q1-2013 at 9.95 percent during the same period. The highest YoY rise in ad revenue per station was in 21.31 percent in Q2-2014. Q4 is another quarter that has seen QoQ dips in ad revenue per station in FY-2014 and FY-2015. YoY, ad revenue per station has always increased between Q1-2012 and Q1-2016.

Let us look at how a few radio networks performed:

Note (2):  (a) This report considers PAT posted by two radio companies (ENIL – Radio Mirchi, 32 radio stations; Jagran Prakashan – Radio City – 20 radio stations), along with operating results of DB Corp (My FM, 17 stations); B. A.G.Films (Radio Dhamaal, 10 stations); HT Media (Fever FM, four stations); and TV Today (Oye! FM, six stations), or a total of six radio networks that represent 89, or 36.63 per cent of the 243 private FM radio stations in Q1-2016.

(b) While Q3 for the current fiscal (Q3-2016) has already ended on 31 December,2015 and financial results will be declared by the players in a few weeks times, individual Q2-2016 (quarter ended 30 September, 2015) results have already been reported by them. The Q2-2016 numbers of individual players in this report have been obtained from their filings with regulatory bodies, the TRAI number for Q2-2016 has been extrapolated and could prove to be inaccurate.

(c) Revenues for the sample stations mean Total Income from Operations and generally include ad revenue and other operating revenues.

(d) Phase III and other radio stations acquisitions: ENIL has received permission from the Ministry of Information & Broadcasting (MIB) to acquire four stations from TV Today Network Limited (Oye! FM), viz., those at Amritsar, Patiala, Shimla and Jodhpur – which the company says have been/will be re-branded and re-launched shortly as Mirchi, adding to its North India network strength. With another seven stations acquired in phase III auctions, the core Mirchi brand will now be available in 43 cities. There are/will be a total of 39 FM radio stations that Jagran Prakashan Limited currently has. This includes the existing 20 radio stations plus 11 stations acquired in phase III auctions and eight radio stations under the brand Radio Mantra. Radio Mantra was earlier operated by Shri Puran Multimedia, Jagran’s promoter group. Besides, the group also runs a web radio network with 21 web radio streams under Planetradiocity.com. During the Phase III auctions, DB Corp (My FM) acquired 14 frequencies, through which MY FM will extend its presence to seven states and 30 cities with 31 stations. HT Media acquired 10 radio frequencies during phase III auctions, taking its total radio stations to 14. However these changes are not considered here, for this report pertains to the period before the new stations were acquired.

Entertainment Network India Limited (ENIL) that operates brand Radio Mirchi is the only separately listed radio company in India and one of the most profitable ones by far. Other stations/radio brands of consequence, whose results are within the public domain have been considered in this report.

Please refer to Figure C below. The curved black line with a red extrapolated end (curve D in Figure C below) indicates the all India average ad revenue per station as per TRAI data. Three radio networks had average revenue per station that has consistently been higher than the all India average. Revenue per station was the highest in the case of Fever FM (Curve A in the Figure C below) at Rs 6.13 crore in Q1-2016 and 7.34 crore in Q2-2016, followed by Radio Mirchi (Curve B in Fig C below) with Rs 3.17 crore in Q1-2016 and Rs 3.63 crore in Q2-2016. Radio City (Curve C in Fig C below) also reported average revenue per station of Rs 2.37 crore in Q1-2016 (43.64 per cent more than the all India average ad revenue per station of Rs 1.65 crore) and Rs 2.78 crore in Q2-2016.

The other three – Dhamaal (Curve G in Fig C below), My FM (curve E in Fig C below) and Oye! FM (curve F in Fig C below) reported lower average revenue per station than the industry average ad revenue per station.

In Q1-2016, the combined revenues of the six players fell 15.86 per cent (fell Rs 37.51 crore) QoQ to Rs 199.01 crore from Rs 236.51 crore, a drop that was significantly higher than the 8.88 per cent QoQ fall in the average ad revenue per station based on TRAI numbers. Also, YoY, the combined revenue reported by these stations increased by 7.15 per cent from Rs 185.73 crore, much lower than the 11.90 per cent YoY growth in ad revenue per station as per TRAI numbers. These combined QoQ numbers have been significantly pulled down by the 18.38 per cent QoQ drop (Rs 22.87 crore drop) in Radio Mirchi’s revenues in Q1-2016. Combined YoY increase has not been as sharp as compared to the industry average, because all the players reported lower revenue growth rates in Q1-2016 as compared to Q1-2015 than the growth rate of the all India average ad revenue per station.

The lowest QoQ fall in percentage terms in Q1-2016 was by Fever, which saw revenues drop 5.03 per cent (drop of Rs 1.30 crore), while the highest drop was 36.85 per cent (drop of Rs 1.44 crore) in the case of Oye! FM.

The highest YoY percentage growth in Q1-2016 among the six players in this report in revenues was by Radio City at 10.19 per cent (Rs 4.38 crore), while Oye! FM reported a YoY decline of 26.74 per cent (Rs 0.9 crore) in revenues in Q1-2016.

For Q2-2016, the six networks reported 15.55 per cent QoQ growth in combined revenues to Rs 229.95 crore from Rs 199.01 crore. YoY, combined revenue of the six networks in percentage terms in Q2-2016 increased 10.27 per cent (increased by Rs 21.42 crore). Dhamaal saw the highest YoY revenue growth in Q2-2016 at 25.93 per cent (0.46 crore), while Mirchi saw the highest YoY growth in Q2-2016 in absolute rupees at Rs 12.13 crore (11.65 per cent). Oye! FM saw a YoY decline in revenues of 38 per cent (declined 1.60 crore) in Q2-2016.

Fig D below indicates the operating results of four of the six networks considered in this report and Profit after tax (PAT) for the other two. While Mirchi has reported the highest profit after tax, far surpassing the operating results or EBIDTA reported by the other five, it is Fever FM that is likely to be the most profitable one, considering that during the period under consideration, it had only four radio stations in its network.

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