Industry POV

Demonetisation: FM radio firms seen taking a Rs40-50 crore hit - Ashish Bhasin


In the wake of demonetisation, FM radio revenues will likely decline as brands have suspended ad campaigns scheduled for November and December

FM brand Radio Mirchi, owned by Entertainment Network India Ltd (ENIL), has suspended seven on-ground events including concerts planned for December as the withdrawal of old Rs500 and Rs1,000 notes crimps spending.

Ticket sales for two events scheduled for November—Mirchi Live with Mika Singh and Daler Mehndi and the Mirchi Sufi Music Festival—crashed by more than 50% following demonetisation. ENIL is the radio broadcasting unit of Bennett Coleman & Co. Ltd.

Radio Mirchi is not the only one facing headwinds due to the cash crunch. Media buyers estimate FM radio companies are likely to lose about Rs40-50 crore in on-ground activities and advertising revenue as brands have suspended ad campaigns scheduled for November and December.

“Tangibly, advertising (revenue) may be down by about 10-15% of November’s usual numbers. But our concerts business has been hit, with ticket sales crashing after 8 November. Even some sponsors have walked out,” said ENIL chief executive Prashant Panday.

Tarun Katial, chief executive of Reliance Broadcast Network Ltd (RBNL), which operates 92.7 Big FM, agreed there was a knee-jerk reaction, with advertisers taking a step back. “Ever since the demonetisation policy was implemented, many of the advertisers including real estate, education, FMCG, retail and automobile have started cutting on their committed advertising and in some cases, the drop has been to the extent of 50% or more,” he said.

On 24 November, RBNL signed an agreement with Zee Media Corp. Ltd to sell a 49% stake in its radio broadcast business to the latter.

According to Harsha Joshi, executive vice-president of group trading at Dentsu Aegis Network, the sector is mainly dependent on retail advertisers and because of demonetisation, “the retail business has been affected the most. Marketers are finding it difficult to continue the advertising activities due to drop in sales. There is a hesitation in the ad industry right now,” she said.

However, industry executives expect the situation to improve in January.

“Whenever an economic reform such as this is implemented, it does take time for the ecosystem to get accustomed to the change and get back to normalcy. In four to six weeks, things should be back on track if adequate support is received from the government,” said Katial.

HT Media Ltd, which runs Fever 104 and Radio Nasha, did not comment on the issue. HT Media, the publisher of Mint, competes with other radio firms in several markets.