Local institutions can invest in Radio ind: ENIL

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Local institutions can invest in Radio ind: ENIL

“The revenue sharing model is the best thing that the government of India could have done for the FM radio industry,” A.P. Parigi, CEO, Entertainment Network India Ltd, said.

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Entertainment Network India Ltd , ENIL, which is planning to spread to 22 cities, welcomes the revenue share model of Phase II Policy of FM radio privatization.

A.P. Parigi, CEO, said, "The revenue sharing model is the best thing that the government of India could have done for the FM sector."

According to him, FDI cap of 20% on the radio industry is more than sufficient to attract and sustain the interest because with the revenue share model now in place more domestic financial institutions will be eager to enter this industry than what the case was when there was a fixed license fee regime.

Moneycontrol's exclusive interview with A.P. Parigi, CEO, Entertainment Network India Ltd

Q. Now that you are present in all the four metros and an exclusive presence in 10 cities, what are your future outlook and plans?

We are looking at being present in 22 more cities. We had 7 stations and we rolled out 3. These stations cover the length and breadth of the country. The rolling out of stations will happen by next year and the reason being that common infrastructure has to be provided by the government in these 22 towns. It will happen before September 2007.

Our future plan is to consolidate our leadership position in the competitive landscape that is emerging and to achieve this we are putting into place the required strategy to ensure that we maintain our leadership position not only in the existing market but also in the new 22 towns that we are rolling out in.

Q How do you see the revenue-sharing model announced during Phase II FM radio licensing policy benefiting ENIL?

Revenue sharing is not to be seen on a standalone basis. Revenue- sharing needs to be seen in the context of a non-revenue sharing fixed license fee regime of the government. When you look at fixed license fee regime, it can be safely said that a revenues share model is far superior. Revenue share helps anybody who is or who will enter the FM industry. It benefits ENIL like it benefits any other company. Phase II FM radio policy talks about 4% revenue share, but in effect, it turns to be little over 5.2% if you gross it up.

Q. Don't you think that the new revenue-sharing model will lead to too much crowding in this space?

When you have a rational licensing policy like revenue share, it does two things. It allows the existing people to grow even faster than what they had envisaged and it also encourages new participants to come into the FM sector.  In terms of competitive landscape, since it is a nascent industry in India, it helps in building a category called FM Radio.  The revenue-sharing model is the best thing that the government of India could have done for the FM sector.

Q. What is ENIL's share in the radio advertising pie and what exactly is the all-India size of this market?

Any where between 52-54% is ENIL's share of the FM radio industry. The all India size of the Radio market as on March 2006 was Rs 370 crore, and that included AIR. Out of the Rs 370 crore, our share was nearly 33%.

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