Radio City hikes ad rate by 4-5% for old stations
Mumbai: With the introduction of new station acquired through Phase III, Radio city has hiked ad rate by 4% to 5% for its legacy station for the year 2018.
The inventory utilization for the legacy station is still around 60% to 70% whereas for the new station is 35% to 45% of the inventory.While the ad rate hike for old station is 4-5%, the price hike for new station is said to differ according to cities.
Music Broadcast Limited President, Jagran Prakashan Limited and Director Apurva Purohit told analysts during a conference call that each market is different so, there is no comparison. “Kanpur rate would be higher and Bikaner will have a very different rate, Bombay and Delhi will be at a different level. You really can’t compare in that sense, whether they are 30 or 40% of the legacy stations. What we look at is, when we enter a market is what is the rate in comparison to the stations that are already operating in that market, and we always enter at above the average of that market. So, if the market is operating as say 300 or 400, we enter at a slightly higher and then slightly move up to the highest.”
Purohit also mentioned that the revenue growth has continued due to the volume increase in the new Stations and robust value and volume growth in other stations given the improvement in the macroeconomic scenario.
Under the Phase III auction, Radio city had acquired new frequencies in 11 cities such as Kanpur, Ajmer, Kota, Bikaner, Udaipur, Patiala, Patna, Jamshedpur, Nasik, Kolhapur, and Madurai. The new frequencies which were launched in the 11 cities has received positive response and has achieved break even within 15 months.
Purohit said, “Our Phase III stations have performed better than our estimates and have delivered a healthy utilization levels. If you remember we had guided 2.5 years as a breakeven period for these stations, however, I am happy to inform that these stations have already achieved a break even within 15 months and will start contributing meaningfully towards the EBITDA in the quarters to come. “
The network has also witnessed increased focus of advertisements from sectors like BFSI, Auto and Real Estate whereas Government continued to be a major contributor to Radio City’s revenue. “This encouraging thrust from all the categories is only proving that with a positive shift in macro economic factors the operating leverage of our business model and the consistent competitive advantage our network has; will help us in sustaining these margins in the quarters to come,” she said.
Recently, the network has also acquired Friends 91.9 FM in Kolkata from Ananda Offset Pvt Ltd. (subject to MIB approval), offering them an entry into one of the Top 5 markets of the country. Friends FM is an established brand since last 10 years and Radio City has been their sales alliance partners for last 5 years. Purohit commented, “The station runs at an EBITDA margin of 20% which has a potential to go up further as the synergies post the acquisition play out. It will also expand our reach to 72% of the FM population which currently stands at 62% with 39 stations. “