Case Study on ENIL (Entertainment Network India Limited)

Radio Mirchi was operated by Entertainment Network India Limited (ENIL). The promoters of ENIL were Bennett, Coleman & Co. Limited (BCCL) and Times Infotainment Media Limited (TIML), a wholly-owned subsidiary of BCCL. BCCL, one of the largest media houses in India, had several leading publications to its credit.

These included The Times of India, the largest circulated English newspaper in the world and The Economic Times, the largest circulated business daily in India. BCCL also owned two regional language newspapers - Navbharat Times, a Hindi daily, and Maharashtra times, a Marathi daily. It also published magazines like Filmfare - a widely read film magazine, and Femina - a leading women's magazine. Its digital venture, Times Internet Ltd., managed Indiatimes.com - a portal which offered a wide range of information and entertainment. The group also had other interests in the media and entertainment sector like Planet M -a chain of music stores, Times Music - a portal selling Indian music online, Times Multimedia -a portal selling multimedia items like games, infotainment and reference titles, Times Now- an English news television channel and Zoom -an entertainment television channel.

Times Innovative Media Private Limited (TIMPL), a wholly-owned subsidiary of ENIL, was established on October 26, 2005. TIMPL was created to manage the affairs of 360 Degrees and Times OOH Media, which initially were directly under TIML. While 360 degrees was an event management company which organized events and provided brand promotion solutions to several corporate entities, Times OOH Media was one of the few organized companies in the Indian out-of-home advertising industry. It offered advertising space and solutions to its clients on billboards, bus shelters, handbills, banners, and railings. Radio Mirchi, which accounted for 73% of the company's revenues in FY 2005, was the most important constituent of ENIL.

The popular FM radio station started operations in October 2001. However, BCCL's association with FM radio started way back in 1993 when the GoI offered time slots on AIR-FM- the only FM radio channel in India at that time - for transmissions by private FM radio companies in the cities of Mumbai, Delhi, Kolkata, and Goa on payment of license fees (Refer Exhibit I for some interesting facts about radio in India)

In July 1999, the GoI decided to privatize the FM radio sector in keeping with Supreme Court directions and commitments laid down in the Ninth Five year plan. The GoI offered licenses for a 10-year period, charging a license fee with a 15% annual hike (Refer Exhibit II for policy guidelines for phase I of FM privatization)

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The losses, caused by the irrationally high license fees, gradually worsened the situation and in June 2003, Go 92.5 FM sent a conditional notice to the GoI threatening to close operations if it did not change its policies. Radio broadcasters, including Radio Mirchi, started pressurizing the GoI for a policy change and on July 24, 2003, the GoI constituted a committee, Radio Task Force, headed by Dr. Amit Mitra, General Secretary, FICCI to study the FM radio industry and make recommendations for change in the licensing regime.

The policy guidelines in the second phase of FM privatization were seen as a major step in making FM radio viable. Financial viability was expected to allow radio stations to shift to more varied programming and hence deliver more choice and options to the Indian listener. “Diverse program formats have not emerged because of a regulated environment and a huge payout to the government”, said Steve England (England), owner of S2blue.

Radio Mirchi was quite optimistic about the new policy changes in the FM industry. In the changed scenario, where license fees would be half the amount that was being paid earlier, Radio Mirchi expected to earn healthy profits. The company had also taken measures to reduce the ratio of its employee cost to total income from 99% in 2002 to 21% in 2005. Its administrative expenses (as a % of total income) for the same period were brought down from a high of 174% to 34%. In October 2005, it set off its accumulated losses against its share capital and securities premium account through a reduction in issued and paid up capital.

Questions:

-         What is the market dynamics and unique characteristics of the Indian FM radio industry.

-         What marketing strategies adopted by the company in the FM Radio Industry.