For more than 4 decades, the government blocked the entry or private players from the radio business. But in the early 1990s, radio got a new lease of life with private players tuning in. Post the second phase of licensing in 2006, about 260 licenses were given out to 30 companies. Currently there are 270 stations operational in 70 cities across the country. The industry that is growing at 25% annually, still has to contend with several bottlenecks.

CNBC-TV18’s Shereen Bhan met Apurva Purohit, CEO at Radio City to find out how the Budget can clear the bottlenecks that the radio industry is facing.

To share up ad revenues, private radio players want the government to allow the broadcast of news and current affairs, raise the FDI cap from the current 20% to at least 26% and to put in a mechanism for payment of music royalties to a single body rather than dealing with different parties. With the government announcing the third phase of expansion of the private FM radio, India may soon have over a thousand new radio stations.

Apurva Purohit, CEO at Radio City said, “I would like the government to increase FDI to allow multiple frequencies, to allow tradability as part of the Phase-III policy of FM radio”.

Once the government opened up airwaves, Radio City was one of the pioneers, launched 5 years ago in Bangalore, at an investment of Rs 200 crore; it’s now headed by Apurva Purohit, CEO of Music Broadcasts. She is trying to transform Radio City from a conventional radio player to one of India’s leading radio networks that’s grown from 4 to 20 cities in the last 1 year and its ranked number 2 in Delhi and Mumbai.

Purohit said, “It’s scaling up for something that we were ready. We have a very good team which put in the entire stations in place. Some of the challenges we faced certainly were looking for the right talent because we require a very specific kind of Radio Jockey (RJ) or producer profile; someone who is a little more urban, a little more older and at the same time resonates very strongly with the particular city the station belongs to”.

They are targeting the over-25 market in urban India, training the RJs in house, Radio City, creates City specific content. But Apurva believes that the Government needs to do more by the way of increasing the FDI cap and rationalizing music payment royalties according to the gradation of cities to ensure fair play.

Purohit said, “The current cap is at 20% and we believe that and we believe that’s slightly unfair because the minimum cap everyone has is 26%. So we are asking it to go up to 26%. Apart from that, license fee was a very progressive step the government took when they moved away from the one-time fee structure to the 4% of revenue sharing. So we are very happy with that. However we would be happy if the government could further look at it and grade it differently for smaller cities. Some of the smaller cities are reeling under the high costs that we are paying on music because in music there is no gradation and for every city, we end-up paying same kind of money. That’s really something which will in the long-term, harm the industry a lot, if we don’t rationalise the music payments”.

Radio City along with EMI recently launched RC Live, the first ever reality show on radio; a month long national hunt to find India’s next big Hindi band. Apurva hopes that with the coming of Phase III licenses, both TRAI and the Ministry address the issues of operating multiple frequencies in a city of allowing news and current affairs on radio and of growing beyond 90 cities.

Purohit said, “More than the Budget, the implications for the radio industry are in this Phase III and all of us are hoping that the Government will be as progressive as they have been in Phase II; they have seen the growth that this industry brought froth from putting in Rs 1180 crore into the Government’s coffers via the licence fee and other fees that we have paid the Government; to growing the industry - from penetration of around 40% to a penetration of around 53%, growing it from 20 cities to 90 cities. So there has been huge geographical expansion and rich build-up that has happened”.