Name: AP Parigi
You worked very hard to change the government regulations for the radio sector, tell us how did it all happen?
Title: Managing Director of ENIL
Career: Has been the CEO of Radio Mirchi and CEO of BPL Mobile Communications. He joined ENIL in June 2000 and is a member of the Board of Directors at Bennett Coleman and Company Ltd.
Education: MA(Sociology) from Delhi School of Economics and MBA from Faculty of Management Studies,Delhi
Interests: Reading, Travelling, Theater(stage), politics, music and movies
I worked tirelessly to lobby with the government and formed a radio broadcasters association to bring in the regulatory change of revenue share instead of a flat licence fee. During the many years several government officials either retired or moved on to another ministry and even the entire government changed in 2005. But patience and perseverance finally paid. The tables turned for us on 14 July 2005 when the revenue share formula with the government kicked in and the regulatory framework changed.
Even on this journey many a times I was dissuaded as many other media companies pulled out of radio business. But I stuck on. I wonder why don’t people have conviction and persevere till the goal is achieved. As a result of the regulatory change, today FM is available in about 90 towns on 248 FM frequencies. What are the problems that still plague the radio business today?
High royalty for music played is an issue that still needs to be sorted out. The music royalty rates are not calibrated to population or to the grade of cities such as class A, B, or C town and this makes it unviable to run a radio station in smaller towns. For instance, music royalty at ENIL was at around 8 percent of total operational cost but the same would be 20 to 45 percent for a smaller city where revenue is less compared to big city.
Hence setting up radio stations in small city is becoming increasingly difficult because along with the station setup cost, staff cost, marketing and admin, one time license fee that goes for 10 years; the music royalty takes up a sizeable chunk of your revenues. And music is the core programming feed for a radio station. What would be your answer to the critics who consider your decision to acquire Virgin Radio in UK was a mistake?
We were on the lookout for an international radio station for the last four to five years, so we didn’t fly in, meet a merchant baker, and strike a deal before flying out. And we also clearly laid out a set of criteria for our acquisition: 1) The radio station should have a scalable audience, which could happen only with a mainstream language station so Asian radio businesses were ruled out. 2) It should have a presence in London but a footprint in UK. Virgin Radio was available in London on the FM band and on AM band in all of UK. 3) It should have a sizable digital and convergence business model. Over 20% of Virgin Radio’s revenue comes from its digital play.
What also made the deal possible was a regulatory change in Jan 2007 that permitted 100% FDI for the radio sector in UK. But was it the right decision and timing?
I think we did something very logical. The company has all the portents of convergence. Absolute Radio is available on more than 50 to 60 digital platforms today. But the turn of the economy (post acquisition) was a rude shock. The heavens gave way. And after November 2008, Indian media too started suffering. At our OOH (Out of Home) business some of our key clients such as RBS (Royal Bank of Scotland), Barclays, Dubai Properties, EMAAR holding pulled back.
It has never happened in my 35 years of work life that clients pull out overnight. The whole base was under attack.
The good news is we are able to keep our head over the water as far as monthly revenues are concerned at Absolute Radio International. And we have taken corrective measures analyzing our core areas and discontinuing with non-core ones. Radio accrues 50% of revenues, the rest lies between OOH and events. Where would the skew lie for revenues in the future?
The skew will be higher for our radio business because we are now at the take off stage. We have 32 radio stations presently and phase three of licensing will begin soon to give us an opportunity to increase our footprint.Then why are you moving out at the take-off stage? You did that earlier when you quit BPL Mobile and the sector saw tremendous growth.
Why not? People might talk about succession planning, but I dare say with a lot of humility that there aren’t many who want to give away their chair to their colleagues. But I‘d like to see the current CEO, Prashant Pandey take over responsibilities in my tenure and not later. At best, I am a gardener who nurtures new talent. You have decided to move on to yet another assignment in the entertainment industry, how would you describe your past experiences?
I would say my earlier stint with BPL Mobile was my first innings, the period I spent with ENIL (Entertainment Network India Ltd.) was my second innings and now it shall be my third innings with Eros International Plc. as Group Chief Executive Officer of its India operations.
My first innings began at 45 when we all got into an emerging new India where the Indian shareholder and CEO for the first time saw so many numbers on the balance sheet. The talk of 10,000 crores as revenue was unheard of in India till then. I grew up on a diet and nurture in the licence Raj India where the company turnover was at best Rs.2000 to 3000 crores.
Even though I have I worked for large companies such as Batliboi engineering, ACC, their turnover was still in four digits. Then I joined BPL Mobile, wherein I belonged to the first wave of Indian CEOs who witnessed these huge numbers which you normally found at PSUs like BHEL, ONGC or an NTPC. Hence I consider the BPL assignment as my first innings. It lent me enormous global exposure since our partners were France Telecom and we were the first telecom company to raise finances abroad.
(This story appears in the 25 September, 2009 issue of Forbes India. You can buy our tablet version from Magzter.com. To visit our Archives, click here.)