The Hindu Business Line : Adlabs expects good ad revenue from radio biz

The Managing Director of Adlabs Films, Mr Manmohan Shetty, assures that though there would be other players in the cities for which the company holds FM radio licenses, "there is always space for a third player and being new in the business, we would be aggressive at it". He also believes that in the coming years, revenues from advertising business through radio will increase to Rs 1,000 crore. He denies that the company might need funds from outside as the company recently mobilised $100 million through foreign currency convertible bonds (FCCB).

Excerpts from an interview with Mr Manmohan Shetty

Put your radio business in perspective and the licenses that you bagged. How do you want to flag it off and if you have any revenue lines or targets set for yourself?

We have received around 50 licenses, but we can operate only around 15 per cent of the total number of licenses. We should be able to start this operation in the next 9-12 months. Each station would cost around Rs 3-5 crore.The advertising revenues are increasing, which is around Rs 300 crore now, but it is expected to go up to about Rs 1,000 crore in the next two years. So, we should be playing all over the country and of course, the company is producing and funding films too, so our own movies and music will be working together with the FM radio business.

Which are the cities and areas that you will focus on for your radio forays?

We have got licenses for all the major cities, so we will be playing all over the country.

Which of those cities have already well entrenched radio players?

We have second line of entry into that business. Radio Mirchi and other players are in Mumbai, Delhi and other places where we will also be playing and we see space for a third player and that is where we will be. As it is a new business for us, we are aggressive and we intend to stay that.

Why did you pick radio as a medium? Is it sheer volumes that this medium has or do you hope to see a lot more in terms of ad revenue as well?

As an entertainment company, we want to be in FM radio business, which is one of the areas of the entertainment space. We are seeing advertising revenues growing, so this is the reason we wanted to be in FM radio and of course, the Government came out with the licenses at that particular time. So, we thought it is a right time for us to apply and be there in the business.

What is the plan for the structure of the radio business going forward?

In terms of funding, two months ago we raised $100 million through FCCB and that is still lying with the company. So, we would not need any extra funds from outside to invest in the capex. At the same time, we might have a subsidiary to look into the FM radio business, which is not yet decided by the management but is being considered. Currently, we are settling with the numbers of licenses that we are holding, because we need to surrender 12 of them back to the Government. We are looking into that area, whether Adlabs' main company itself should handle it or should it be made a subsidiary.