Hi Donald, In radio business the key success factors are as below
- Engaging content
- Sourcing capability (advertsing) and ability to devise creative advertising solutions for marketers
- Reach (listenership across population segments and geographical distribution)
I think, ENIL is doing extremely very well on these three fronts
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Engaging content- from what I understand from my small research, ENIL has a very strong programming department which time and again have come up with extremely creative programming content. Some of these programming have created a unique space for itself (e.g. Mirchi Murga)
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Sourcing & Creative ad solutions: This is where parentage is helping them a lot (Times of India group). In addition since they are one of the oldest players, over the years they have come up with numerous ad campaign that are best suited for radio segment and creates high impact on the listeners (e.g. they designed an ad solution for very popular local bakery shop in Ahmedabad. In this,Popular RJs wish lucky listeners on their birthday and send them cake. The bakery company in turn sponsors the morning show and listeners have strong brand recall of bakery shop)
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Reach- Top 13 cities (Metro and Category A cities) constitute 70-75% of overall radio advertising market in India. ENIL is one of the only company to have presence in all the 13 Cities and is leading in listenership in most of them.
A combination of all these factors, puts ENIL far ahead of competition.
According to my data collection, following are the cities where ENIL’s rates are at discount to it’s nearest competitor
Hyderabad (-10%); Raipur (-33%); Mumbai (-31%); Jalandhar (-12%); Chennai (-23%); Varansi (-31%)
Pricing power is function of Reach both in terms of listernship across demographic segments and geographical spread. Thus, a company who is present in most of the major markets with listener ship base across social and demographic strata is likely to command premium over it’s competitors (even though with more number of stations) who is not well spread out or is not present in major markets. A clear distinction one can make is between ENIL and Big FM. Big FM has the largest network in terms of number of stations but it hardly commands price premium in any of it’s markets.
In terms of more granular risk, a key risk is company not able to renew/get hold in top 20 markets which constitutes more than 80% of advertising market. As of now that risk is low as ENIL already has presence in top 13 markets and has further increased it’s presence in Chandigarh, Cochin, Kozikode and Amritsar which are reasonably large markets ( I feel they are in top 20 but not sure of it).
However, post phase-III a key risk is to successfully pull off a strategy of launching second/third frequency without cannibalizing it’s existing frequency. If ENIL is not able to pull it off successfully, it can pull down the projected growth and may also impact margins.