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Trinidad expertssaid too many radio stations may cause 'meltdown'
Watch out for a "meltdown"in the radio sub-sector of the communications industry as thewar over sharing an estimated $60 to $70 million in advertisingdollars heats up. That's the view of a few managers and CEOs ofthe more successful radio stations in Trinidad the face of a proliferationof FM stations over the past few years, and a bid by several moreapplicants for radio frequencies.
"Television has thesmallest share of the advertising pie," said one CEO. "Radiohas a slightly bigger share, with the print media cornering thelion's share. Because start-up costs have diminished considerablywith new technology, many investors believe you just 'wash yourfoot and jump in', as we Trinis say. But unless these new operatorsare either creative or lucky, they are doomed to failure."
Why the rush to open radiostations? "Beats me!" said Yaseen Rahaman, executivedirector of Radio 103FM, the oldest and most successful stationthat specialises in broadcasting Indian music.
"There is a finiteamount of advertising dollars out there," Rahaman said. "Itincreases annually, but by no more than about five per cent. Andthis year things are much slower for any number of reasons. Weare the leaders among the Indian stations. Besides basic advertisingrevenue, we are innovative in promoting both the station and ouradvertisers' products and services directly in communities acrossthe country. That's way we have been able to be ahead of the competition.
Some stations have alreadyfolded, and others are operating on the brink. I shan't be surprisedif some of them go under."
Rahaman said his station(he was made executive director about three years ago) understoodthe market and worked closely with advertisers in order to maintainits lead position. "We have instituted attractions like the'River Lime' and 'Corridor Competition'.
Rahaman reiterated thatamong Indian stations, 103FM remains the choice for local artisteswho are launching CDs or who are entering the entertainment world."And we maintain a 75 per cent local music content on weekends,with around 35 per cent during the week."
Bernard Pantin, CEO of DirecTV(a CCN subsidiary) and chairman of the Trinidad Chamber of Commerce'sMedia Advisory Committee, sees the proliferation of radio stationsas "a success story".
"Bear in mind thatbefore the NAR government opened up the media in the 1990s, we'dhad only two broadcast houses, Radio Trinidad and Radio Guardian.Once more radio stations came into being, not only was the marketopened for entrepreneurs, but they (the stations) offered thepopulation wider choices in music and even a voice in politicsand public affairs. But as happens in other kinds of business,some stations will survive and other will not."
Initially, he said, radiostations followed the formats laid down by the two original stations.
"Technology had advancedto the point where one could operate a station with a handfulof people and high-tech equipment.
So it's possible for somesmall stations to survive on very little revenues since theiroverheads are low."
Pantin said there was around$66 million (2001 numbers) in advertising available to radio stations.
"If, therefore, wehave 20 stations and the pie is divided equally, then each wouldget about $3 million in advertising. But it does not work outthat way. Some of the successful stations capture the lion's shareof the pie while others get next to nothing."
He added that a stationor group of stations needed to control at least eight per centof the listening audience in order to be economically viable."It's one reason why, for example, the Sabga Group has fourstations and CL Financial three.
NBN also has several stations,but being a State owned enterprise, it has become uncompetitivein many aspects of its operations. So where NBN may have lost,others will have gained."
Stand-alone stations, Pantinsaid, needed to be very innovative to survive in this kind ofmarket. "Which is why one must examine stations like 103FM,96.1FM and 95.5FM to see how they managed to hold on to comfortableshares of their various markets. They created niches for themselves,hence their success." He cited the change of format at 104FMand the lease of 94.1FM by the Gillette Group (to the Hindu CreditUnion) as two stations that were forced to act to save themselvesfrom closure.
Looking at the proliferationof radio stations-there are now 19, with another two supposedlycoming on stream soon-several key players in the industry saidthere was yet another reason why some people could be lookingfor licences in an already saturated market.
One radio executive whodid not want to be identified said that some operators may seetheir station as being of some strategic importance from the politicalstandpoint. But they all agreed that such strategies almost alwaysfail. "One has only to look at certain newspapers that roseon the scene to satisfy the political needs of one party or other,and see what happened to them. It will hardly be different inradio-or television."
Brandon Khan, general managerof the TBC network, said: "Radio is now very competitive,so it's not easy to run a profitable operation. Technology hasreduced the start-up costs, but radio is not simply about owninga frequency and playing music or running talk shows. One needsto have the kind of programming that will attract listeners. Andeven that does not guarantee you a reasonable share of the advertisingpie. There are stations that show good markets shares accordingto MFO surveys, but they do not necessarily attract sufficientadvertising to make them profitable."
He said the more establishedstations faced discounting of rates and advertising deals offeredby many smaller stations in their bid to grab a share of the pie.
"In the final analysis,though," he added, "advertisers realise they must puttheir money where it yields best returns. They need to know theirmessages reach those who can buy their products or services, andthat's where stations like ours are strong."