Music Broadcast Limited (RADIOCITY) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Music Broadcast Limited Q3 FY '21 Earnings Conference Call. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Ms. Apurva Purohit from Music Broadcast Limited. Thank you, and over to you, ma'am.

Thank you. Good afternoon, everyone, for joining the MBL Earnings Conference Call for quarter and 9 months ended 31st December 2020. Along with me, I have Mr. Shailesh Gupta, Director, Jagran Prakashan Limited; Mr. R.K. Agarwal, Group CFO; Ms. Sangeetha Kabadi; and Mr. Jimmy Oza from our IR team; and the team from SGA. At the start, let me wish everyone a very Happy New Year, and I hope the year continues on the positive note it has begun. With the rolling out of vaccines everywhere, we are seeing the economy revive at a faster clip than expected earlier, and this seems to have augured well for all businesses to restart advertising spend. As a consequence, the Media and Entertainment industry is continuing to show a strong performance, and we are seeing a gradual improvement on Y-o-Y basis in different media. The radio industry, too, recorded a 1.6x growth in terms of volumes for this quarter compared to the last quarter. There was a healthy addition of new clients who advertised on the radio platform for the first time, reiterating our belief in radio as a strong medium with appeal across all markets and demographics. Continuing its past track record, Radio City outperformed the industry with a growth of 9% on Y-o-Y basis for the quarter. We also maintained our market leadership with a market share of 21% for the entire period of April to December. A big positive we saw during the quarter was a revival in ad spend by few large categories. Real estate, which contributes 13% to the industry, grew by 28%, whereas auto sector, which contributes 11%, grew by 18% on a Y-o-Y basis. Other categories like finance and food and soft drinks continue to be steady contributors with volume growth of 63% and 18%, respectively. As I mentioned earlier, the radio industry has witnessed new client additions at more than 2,200 clients in Q3, and Radio City continues to be a major beneficiary with a market share of 34% of this new client base. Our revenue for the period was INR 40.7 crores, which is a 35% improvement from the last quarter and in line with expectation. During the quarter, due to better operating leverage, we achieved breakeven at operating as well as net profit level. We reported operating profit of INR 4.2 crores and net profit of INR 0.1 crore in Q3 FY '21, and this will only improve in the coming quarters. Our cost savings initiatives have also played a major role in reporting profit for the quarter. We were able to reduce our operating cost by INR 40 crores for 9 months of the current financial year. Since a large proportion of this cost reduction is permanent in nature, this would enable us to improve our operating margin by nearly 300 basis points when revenues normalize. We continued our effort to improve collections and collected INR 33 crores during the quarter, of which INR 5 crores was from government. As you may be aware, recently, IPAB passed an order on royalty payment by FM broadcasters through PPL and non-PPL members. As per the new order, the royalty payments will be calculated on needle-hour basis as compared to the earlier method of a percentage of revenue. When we ran a simulation on our FY '20 operational numbers considering this new methodology, we found that the payment of royalty as per the new methodology and the old methodology are more or less the same. Thus, we do not foresee any major impact of the IPAB order on our royalty payments going forward. Our bonus issue of the nonconvertible fully redeemable preference shares, which we announced in the last Board meeting, has been received extremely well by all shareholders. As mentioned last time, it will require various regulatory approvals, which, I'm very happy to state, are progressing quite well. The stock exchanges have already accorded their approval to the scheme, and it is being currently reviewed by SEBI. With this, I open the floor for Q&A. Thank you.

[Operator Instructions] The first question is from the line of Jinesh Joshi from Prabhudas Lilladher.

I have 2 questions. First is on the ad volumes, which were up by 9% in this quarter, while our revenues were down by 42% implying that there was massive erosion in yield, now I understand that this could be because of promotional discounting. So my question is, by when do you expect this discounting to come off? And by what time frame will the yields stabilize?

As we had mentioned in one of our previous earnings call, around COVID, we had given promotional and bonus scheme to a fair amount of clients to encourage them to spend. Obviously, those schemes that we had offered lasted for 3 months, 6 months in some cases and none of us were very clear about when the impact of COVID, how long it will last and how long it will continue. So a part -- a large part of the discounting that you see is overflow of those schemes. Clearly, from quarter 3, when we saw festive show a certain uptick, we started reducing the schemes and, to a large extent, the schemes have started getting neutralized. However, we believe that, that overflow will still last till quarter 4 definitely, and it is only from the first quarter of next year that we expect the yields to go back to the '19/'20 yields.

Sure, madam. And in the last call, if I remember correctly, we had guided for a INR 40 crores to INR 45 crores kind of cost savings for FY '21, and in the initial remarks, you mentioned that we have already achieved INR 40 crores year-to-date. So are we expecting further savings in FY '21 from here on? And if yes, then which are the cost heads which might see a further reduction?

So you're right, there will be savings in quarter 4 also. So we anticipate that by the time the year ends, the total savings that we will have will be around INR 50 crores to INR 55 crores. Half of them will be permanent cost savings. So as I mentioned in my opening remarks, we anticipate that when revenues normalize, these permanent cost savings will add 3 percent points to our margin.

Sure, madam. I just have one last question. We also have some long-term deals which we had assigned earlier during the year. So can you just kind of quantify what proportion of revenue from these long-term deals is about to get recognized in Q4?

So our long-term deals have been around INR 70 crores to INR 75 crores in the year. What we're very happy about is that clients agreed and did sign these long-term deals. As of now, the conversion at the end of quarter 3 is broadly around 45%, 50%. And by the time the year ends, we think 15% more will get consumed.

Okay. So some spillover can happen in FY '22 as well?

Yes. We will be, obviously, trying to build further on these long-term deals. So I think the call, whether we close this and renegotiate for FY '22 or continue and give the impact to clients because several of the clients started their campaigns a little later, naturally, because, again, I want to remind you that nobody was very clear about when COVID will end, et cetera, et cetera. So many of the clients started not in quarter 2 but in quarter 3. So they will expect some spillover. But it will be a kind of a push and pull kind of negotiation because, obviously, we would like to sign the new deals at higher rates, whereas the advantage of continuing these deals is we already have INR 30 crores, INR 40 crores to begin the new year with.

[Operator Instructions] The next question is from the line of Jayesh Shah from Ohm Portfolio.

Nice to see the breakeven at the EBITDA and profit levels. My first question is that the yields are down in the seasonal quarter. So is that a sign of overall weakness because I thought in seasonal quarter, which is supposed to be the best quarter, perhaps the promotions may have ended, and they may continue in the off-season quarter.

Jayesh, very happy new year to you, too. I think the point that you're making is very valid, but that point really, Jayesh, is valid for a normal year. I think we must not forget that this has been an extraordinarily abnormal year and that abnormality continues. And even in the festive season, given that there was no consumption happening outside, we all know what a muted Diwali it was, what a muted Christmas it was, to encourage clients to spend, the low rates continued, not only for us but for everybody in the media industry. It is only in a normal year we see that. We see 2 things happening in festive season. We see new clients coming in. And because they do tactical campaigns, those rates are obviously higher. And there is more spending happening that time. This, obviously, was an abnormal year, and we must take cognizance of that.

Right. And how do you see directionally Jan, Feb panning out in this quarter? Do you see any significant improvement or it's a bit too early even now?

I think there will be a significant improvement clearly in quarter 4. The way I would like to say is that if quarter 3 being festive season, if quarter 4 matches the numbers of quarter 3, that itself is a growth. So that is what really what we are looking forward to.

Okay. And if I take a slightly broader view that you're much lower than your quarterly run rate, say, from FY '19. So would you look at a new normal now given the slow recovery or you still think that you can reach the FY '19 figures, say, in a year from now?

Jayesh, I would like to answer the question in this manner that if you look at the degrowth that have been happening quarter-on-quarter as compared to the last year, clearly, it's been falling. Quarter 1 was 75% degrowth. It fell down. And now I think this quarter is 42% degrowth. Quarter 4, more or less, we believe that we will be at the same numbers as Q4 of last year. So there will be no degrowth. It will match the Q4 numbers. And then from quarter 1 of next year, clearly, there is going to be a growth. Now does it meet -- reach '19/'20 numbers next year? I personally believe that if things improve, the best case scenario is that it will hit '19/'20 next year. The more realistic scenario is that it will hit '19/'20 in the year after.

Right. So in that case, would you still look at more cost-cutting next year?

See, already, when we are looking at how this year will end, we are talking about nearly a INR 50 crore cost saving, right? As I said, INR 25 crores of it we can assume as permanent, okay? Now let's look at the balance INR 25 crores. That is completely linked to revenues. So if -- it will match the revenue. So if the revenue goes up to the same numbers, those INR 25 crores will come back. If the revenues go in steps, that cost will grow in the same proportion.

And one last question is, are you seeing any select segments which are growing. However, for instance, you mentioned realty or something. Are any new segments opening up because of your initiative?

If I were to talk about categories, clearly, what we are very happy with is that some of the large categories have come back, right? So whether it's real estate or durables, et cetera, or auto, we are seeing a growth. Clearly, what we are expecting is finance to grow in quarter 4, e-commerce to grow in quarter 4. So all the big guys, in my mind, have come back and will continue to grow. Government is the only one which has been a sore spot, and I don't think government will ever come back to the levels that used to happen in the earlier years for anybody. So no new categories, but certainly new types of clients. We are very much seeing MSMEs advertise. We are very much seeing local brands in regional markets increase their spends. We are very much seeing the smaller entrepreneurs. And indeed, this is quarter or this -- till YTD, nearly INR 26 crores has -- for us has come from new initiatives.

The next question is from the line of Depesh Kashyap from Equirus Securities.

Can you please give a monthly breakup of revenues of third quarter, please, as you gave in the last quarter?

It is 14, 14.5 and 12.5.

Okay. Understood. And what is the outlook on, like, will you be able to sustain this 12.5? Is January generally looking good? Because I clearly see that after festive season, there has been a dip, right?

Yes. As I said, there has been a -- obviously -- festive season is, obviously, the highest season for any business. But we are hoping and expecting that quarter 4, more or less, will deliver the same numbers as quarter 3, and that itself is a huge upside.

Understood. And then on this new IPAB order on royalty costs, which has gone back to the charging on the production instead of revenue, it looks against the spirit of increasing the penetration of radio to smaller cities, right? Because those cities will have a higher fixed cost now. So firstly, is it acceptable to all the parties now? And is it the final order?

See, any order can be challenged, right? So obviously, we will be picking it up. As far as the radio industry is concerned, you are right, while it has not made any difference to players like us who are spread equally in big markets and small markets, it has impacted the smaller stations because as a fixed cost of revenue -- as a fixed cost, this cost is high. Clearly, what we are not very happy with is the fixed costs in smaller markets and the fact that there is a payment that has also been awarded for IPRS or the live recordings, underlying works, which we have had a very favorable order in Bombay High Court. ENIL has got a very favorable order in Delhi High Court. And we don't believe that when we play any song on radio, underlying works need to be paid for, and that is something that we will be challenging.

Okay. Understood. And on your Slide 5, I just wanted to understand why the Category D stations have a lower royalty costs as compared to Category B and C? Because I understand like they will have a lower revenue, right? So the percentage -- as a percent of revenue, the cost should be higher.

Correct. So basically, the D stations are Sanghi, Solapur, the smaller ones, which hardly earn any major revenue as category A and B. Hence, the percentage over there looks higher as compared to the top line revenue for those stations.

No, he's saying it is lower than categories...

In D, it is lower than B and C. That's what I was...

Because that rate is very tiny.

The difference is very tiny. And there are only 2 stations in D, in our case.

Okay. Okay. Okay. And lastly, Jimmy, can you please help me with the revenue and EBITDA split between the legacy and the Phase 3 stations and the utilization level, please?

So the Phase 3 stations contribute to 13% for the quarter, Depesh. And the inventory utilization at an overall level is at 60% for the quarter.

And EBITDA is at breakeven for Phase 3 stations.

Okay. So both the stations are in breakeven, right?

Yes.

Yes.

Okay. And lastly, what is the net cash position at the end of third quarter, please?

INR 235 crores.

Which has improved from the beginning of the year.

It was INR 220 crores at the start of the year. It has gone to INR 235 crores in -- after, even you remember, we had not paid royalty -- license fees in -- till quarter 2. We have already paid that payment also to the government. Thereafter, we are positive.

Right. And what is your internal assessment, like, when should the NCRPS should get approved by SEBI and other parties? By March, it should happen or it can get delayed?

It won't get delayed because we are already -- I mean, SEBI has already sent us a list of questions that we have responded back to. But you should expect around April, beginning May is when everything will happen.

So SEBI is the last body that we need approval from, right?

No, it would be NCLT.

[Operator Instructions] The next question is from the line of Sanjesh Jain from ICICI Securities.

First question on the pricing side. Though the volume has recovered, it looks like the realizations have been under pressure. Now that we are expecting to come at least flattish Y-o-Y basis, will it be more driven by the pricing, reversal of the bonus and discounts we used to offer? Or will it be again driven by more of volume? How do you expect this next year breakeven to come in terms of mix?

See, we are already at a breakeven level with the current pricing and the current volume, right, in quarter 3. That trend will only become...

No, no, I did not mean in terms of EBITDA breakeven. So when I say breakeven, I'm asking, reaching to the pre-COVID levels in terms of revenue.

Yes. Okay. So it will be a gradual improvement. We believe that for the next 2 quarters, it is really going to be more and more of the volume fill because even now the volumes are not at a stage that we are comfortable with. Only at the beginning of the first quarter of next year or the second quarter of next year is when we expect that the price increases will start. And the mix of 2 towards the end of next year is when we believe we will start hitting the run rate of '19/'20.

Okay. So on a Y-o-Y basis, we said we will be flattish in the revenue in the Q4. Did that I hear right?

Yes.

So that means on a quarterly basis, in Q4, we will be where we were in FY '20, right?

Correct. That's quarter 4 to quarter 4.

So we are -- so this quarter -- I just wanted to understand. This quarter, we are 9% above revenue. We are 40% below in terms -- sorry, 9% above in terms of volume, 40% lower in terms of revenue. That means that there's a 30% kind of a realization compression. When we speak of a very flattish kind of revenue in Q4, I can understand there was some impact of COVID in Q4, but it was very small. So how do you expect to reach there?

So quarter 4, there was a base effect, right? One was the impact of COVID and let us not forget that 19/'20 was not a great year. Quarter 4 per se was not very robust. When we are saying we moved to flattish, more or less matched that, it takes into impact the base effect also. Then when we start moving into next year, quarter 1 of next year, the comparisons will be with the first 3 quarters of '19/'20, right? So if you compare with that, I would -- what I'm saying is that first quarter and second quarter, broadly, it will be either flattish or lower. It's only the H2 that we will start doing '19/'20 numbers.

Got it. Got it. Got it. So what is -- so the -- I wanted to understand 2 things here. What is the average minute per hour kind of advertisement we are doing today? And what is the threshold level up to which we will be comfortable? That's one. Number two, it's ironical to see that radio has been such a large pressure on the realization, whereas television, we are now understanding that they are normalizing even on the revenue front. There is some help from the volume. Obviously, the realizations are not pre-COVID level, but the pressure is not as steep as what we are seeing in the radio. Can you help us understand what is the difference here in terms of the realization pressure for us and the TV?

So the current volume utilization against the benchmark of 15 minutes is around 8 and 9 minutes, that too for this quarter.

Okay. So there is enough headroom you're telling in terms of minutes growth for us to drive the revenue?

Of course, of course, which is what I said. So we will continue to see the next 6 months getting filled only by volume improvement. It is -- the rate improvement will happen after that. Precisely for this reason that we are right now at 10 minutes instead of the 15 minutes.

Got it. And in terms of the realization difference between radio and television?

I think, a, television is a far bigger medium. It is a fact that smaller media get impacted more than the larger medium. Second thing is, FMCGs, which have been a big consumer on television, didn't get impacted to the extent that other industries did during the COVID period. We know that even during that time, the big FMCGs were continuing to show growth. The third thing is, when we look at overall television growing, it also takes into impact the tent poles that they have, whether it is cricket or IPL or any other sport that happens, those end up being the big revenue driver for television, which is why you're not seeing. So all these reasons put together, you will see lesser impact on television. And I think it's good news for all of us because if television has started recovering and growing like this, it's just a matter of time before all the other media play catch-up.

Got it. Got it. Just one follow-up question here. In terms of the mix, volume mix for us versus pre-COVID in terms of the national players, the local players who were doing earlier and the new local minutes which we have secured in terms of reaching out to a much larger advertisement population, if you can help us break that, that would be great.

So in the pre-COVID times, the mix between national and local were 45% and 55% in the previous fiscal. Today, it stands at 35% and 65%.

And within the 65%, what could be the contribution of the new advertiser who were earlier not advertising with us?

So the new advertiser typically contributes to around 30% of the mix.

30% of the entire mix, 100% of the volume?

Yes. Yes.

[Operator Instructions] The next question is from the line of Apurva Mehta from AM Investments.

Just wanted to understand that you said that Q4 will be as good as Q4 last year. So last year, we had a turnover of close to INR 46 crores. So do you want to say that we should match that INR 46 crores because you were telling that we will be happy with the Q3 numbers?

Yes. So broadly, it will be the same number, right? So even now -- yes, so we've done -- so INR 2 crores, INR 3 crores here and there. Between INR 41 crores and INR 45 crores is not much difference, right? So we should be somewhere in between. So it will be...

Yes. And another thing which you were telling that out of the INR 50 crores, INR 55 crores, which the savings will be there, 50% will be permanent in nature.

Yes.

So assuming that if it is also INR 50 crores, then it is INR 25 crores of savings.

That's right.

That translates into 10% EBITDA. And you are just guiding us that 300 basis of EBITDA will be normalizing. When we will normalize, 3% will go up. So where is the [indiscernible] happening? Is it something which I didn't understand or there is something else?

So sir, here, what we are considering is the base number of FY '21. What we are looking at is not the FY '21 number, but I was comparing it with FY '20 numbers to look at because current year we should not look at as a normal year. And secondly, the numbers -- the revenues moving up, the variable portion of the cost will keep on coming in. So hence, we are guiding a 300-basis point improvement on a like-to-like basis with FY '20 numbers.

See, INR 25 crores savings on a normalized basis of INR 250 crores of revenue. See, FY '20, the revenue was INR 248 crores.

Correct.

Yes. And you are going to save INR 25 crores.

Correct.

So that will translate into a 10% of EBITDA improvement.

Sir, in this, when we look at INR 25 crores, we have also considered the abnormal items which we put in, in FY '20. So when ma'am said 300%, she is comparing like-to-like the normal items in FY '20 to if we reach that number in the savings.

So roughly, it would be around 33% of EBITDA if we do that math. Hello? Can you hear me?

Yes, sir. We can hear you.

Yes, yes. So this will be around -- that is normalized EBITDA of 30%, 33% will shift to 36%. That is the thing which you want to suggest?

See, the normalized -- yes, yes, yes.

Yes.

And the last question. We had -- in FY '19, we had a turnover of INR 325 crores. So when can we hit that number as per your understanding of this industry and all this?

I think we've already said that the growth is going to be reasonably gradual. And we believe that '19/'20 numbers we should expect to hit the year after next.

[Operator Instructions] The next question is from the line of Ayaz Motiwala from Nivalis Partners.

Apurva, just a quick question on the royalty agreements for this whole -- agreements with the content music owners. Is this a time-bound solution with a review in a few years or is this now into perpetuity?

The order has been passed for a year.

Okay. So it is up for review every year?

Yes.

Oh, I see. Okay. Interesting. And so what would be the [indiscernible] they would see revenue performance, and if you start doing well, they try and get a higher share? Or what's the logic of such a short duration of these agreements?

We are not clear why IPAB has passed the order only for a year. But as per the Copyright Act, it is supposed to give annual -- as per the new revised Copyright Act, it is supposed to give only an annual rate order. Having said that, I think we have been maintaining for a long time that whenever we do any projections and look ahead, we should always assume that the royalty payments will be around 2% to 3%, whether it is fixed, whether it is -- because the last time when the 2% calculation was done, it was done after 10 years of intense study of what is happening in India and what is happening globally. So the point that I want to make to you that whether it is a year-long order, whether it is a 5-year order, whether it is -- the 2% to 3% is something which we must always consider will be the benchmark. And this is the point that I not made just now, I've been making it for the last 2, 3 years whenever this question has come. And indeed, the IPAB order, while it has moved from revenue sharing to fix, it confirms yet again this point.

Sorry, I missed out that. I heard some ABR or something. So this is going to be not linked to revenue you said and it's going to be a fixed payment of what, fixed of what number? What's the base?

Yes. So the IPAB order, as I said in my opening remarks, is -- has fixed royalties as a fixed fee model. So depending on the type of station Category A, Category A-plus, B, D, et cetera, and the timing during the day, there has been a fixed fee that has been decided, right, which is different from the earlier order, which was a revenue share order. However, if you run the simulation, which is what we did, we took our '19/'20 revenue numbers and the music that we played and we applied the fixed fee model to it, the percentage is coming to be the same, which is around 2.5%.

Right, right. Yes, applying it to different day parts...

Exactly, exactly. So applying the fixed fee order to the different day part is coming yet again to 2.5%, which is what we've been paying for the last so many years.

Sure. Okay. This is well explained. And yes, it kind of hangs a little bit like a toll for 1 more -- 1 year is a little short duration for anyone to think through. But yes, we take it as that. My second question to you, Apurva, and the team is, if you could throw some more light on 2 parts of the digital initiative. One is essentially digital radio and second is your partnerships that you've engaged with yourself, including payers like Spotify.

Okay. As you know, we have been indeed the pioneers in running radio stations ourselves. So we currently -- depending on the strategy, we changed the mix of the radio station. So currently, we run around 17 radio stations on the web. Apart from that, we also do a lot of content on social media because that's another place where the brand gets marketed and we get new listeners to our terrestrial radio stations. From a revenue perspective, the web part, the digital part of our radio stations breaks even, so the kind of costs we put in, other revenues we get out of those stations. Apart from that, because we create so much content, we also look for opportunities to market that content. And one of the things that we did was we tied up with Spotify, which we had talked about in our earlier earnings call, and we've done approximately a INR 2 crore content deal where we share our original content with them.

Okay. Just the last sort of to the answer that you shared on the digital radio, the -- you called, web stations, the 17 stations that you have, is this -- I mean how is the geography on this? Because once you're on the web, then anyone can listen to any station from anywhere in the world, right?

Yes. So it's -- indeed, our web radio stations are accessible to anybody across the world. And the last figures -- I don't have the latest figures with me, but the last figures seem to suggest around 30% of our listeners are international and 70% are India.

Right. So are the 17 stations identical and play the exact content as the terrestrial channels?

No, no. Not at all. Indeed, that's one of the, I would say, possible future opportunities for us. Because as of now, we cannot -- because of royalty reasons, we cannot play the same radio stations on the web. So we have different, different genres. We have a lot of languages that we are not currently operating in, like Bhojpuri, et cetera. We have got independent music, electronica, metal, hip-hop, devotional and so on and so forth.

Right. And you source this content the same way essentially? The content revenue license share would be the same?

I didn't -- can you repeat your question?

Yes. I'm saying for the rules for digital -- rules for digital IPR payments, are they the same as they are for terrestrial radio? Or are the terms of trade different?

No, no, which is the reason we are not able to play our normal terrestrial radio stations on digital because the digital royalties are extraordinarily high. In fact, a single player people, the digital web radio stations pay close to INR 50 crores per year.

That was the sense on the subscription services we've got one on this [ kind ]. Yes.

Yes. That's right. That's right.

And lastly, this could open up as a very interesting medium. What -- are you putting a lot of efforts on this? Or it's just playing along the digital radio initiatives?

Currently, the effort is all directed towards trying to give original and differentiated content and not really duplicating a terrestrial station, both from a strategic point of view and from a cost point of view. Yes, you are right. If one day the royalty payments become equal and -- more than us putting the effort, the government is trying to sort of streamline digital, as we are all aware. Once there is an equal playing field at that stage, of course, it will take us 24 hours to shift our terrestrial radio stations onto the web.

Okay. There was another part. I'm really sorry I'm going on. But just a quick question on this. Is there a room to experiment with such differentiated content with your initiatives to drive a small subscription business and test that out because you have -- it is obviously, from anywhere in the world, you have unique sort of content that you are creating, and these are identifiable customers -- sorry, or listeners versus a generic sort of terrestrial play-out in a car or something of that sort. So are you are you thinking aloud on that, that here is the place where you can try and experiment with building, a, for now a small subscription model but over time, it can become something very serious, if assuming, obviously, your listeners like what you are playing out?

Yes. So subscription-based content is something that I personally am very passionate about, and I strongly believe that for the entire media and entertainment industry, the faster we are able to garner half our revenues from subscription, the better it will be for the industry. So certainly, that is our desire. As of now, in the current scheme of things, the kind of radio stations that we are running, subscription is not something that we are actively sourcing right now because right now we want to build the reach of these stations and only then try to [indiscernible] to subscription base. However, what we are very keen to do is to do some alliances with other players who are bigger in the digital firmament and see whether a joint content Radio City plus a digital platform, can that generate subscription revenues. And those are the conversations that we are pursuing currently.

The next question is from the line of Sundeep Allamraju from L&T Mutual Fund.

This is basically to check on the status of RBNL acquisition. Any incremental updates, ma'am?

No updates, sir. It is at status quo.

Anything from -- you heard from the regulator, et cetera, nothing? Hello?

No, no, sir. No updates. Status quo.

The next question is from the line of V.P. Rajesh from Banyan Capital.

I just had a request for the Board members from Jagran side that if you can please restart the con call for Jagran also, that will be very helpful because it doesn't -- we don't get an opportunity to understand what's going on in the business. That's all.

Sure.

The next question is from the line of Vijay Kumar Subramaniam from TrustLine PMS.

You might have seen that digital marketing will eventually gain ground and it can go up to 50% by 2025, where you are supposed to come down from 3% to 2% in terms of the wallet share by the advertisers. Now I'm just thinking, you are in the business of promoting, branding, marketing. Does it make sense for you when you go to the client, tell them that you have a both digital strategy plus radio and then try something different? Because there seems to be a huge drop coming your way in terms of 3% to 2%. Even the pie grows big, still you will be able to at best reach the current level or go down. Do you have any thoughts on that?

I'm not sure where this market share drop figure you have got from. We believe that the market share of radio will remain constant. And as the media and entertainment pie grows, radio will grow at the same rate as the larger pie. Because as all of us know, media money chases consumer time spent. And we have not seen any drop in consumer time spent on terrestrial radio. That's the first point. The second point is that as far as packaging, digital and radio are concerned, I think increasingly not only digital plus radio but digital plus print plus events and a 360 solution is something that the clients will want and something that we are happy to supply. As you know, Jagran is there in all media. And package solutions, 360 solutions is something that we are actively offering our clients. Similarly, as far as radio itself is concerned, yes, terrestrial radio plus our web radio solutions plus also the huge numbers that we have on social media, we are #1 on Facebook, for example, those numbers and the constant -- for example, the videos we put out there, our RJs put out, even that we package as media solutions to our clients.

Okay. You might have seen Radio Mirchi rebranding as Mirchi. So anything on that line? Do you also have? Your thought about it? Or you will come in a different way?

Yes. We have always believed that we, as the leaders in the radio industry, have to be the flag-bearers of this medium, and we have amount of belief and faith, as do our listeners, in the audio medium. And we believe that this medium is going to remain a steady and strong part of the media and advertising pie. Therefore, for us, radio is extremely integral to our business strategy, radio is extremely integral to our brand story, and radio is extremely integral to the engagement that we believe the loyalty that our listeners have with us. And therefore, it's always going to be Radio City.

The next question is from the line of Tushar Sarda from Athena Investments.

I joined the call a bit late, so I don't know if this is a repetition. But I wanted to know the breakup between your government revenues and private sector revenues. And I heard you say that the government has not come back. So is that what is impacting the revenue going back to pre-COVID levels?

Indeed, government has not come back for the last 2 years. So it's not necessarily only COVID. But even in '19/'20, one of the biggest impacts of lower revenues was government spends going down. As we speak, currently, the government spends are down to half their contribution. So they used to spend approximately 16% on the radio industry, now they're down to nearly 8%. And I think this is a fact across all media.

Okay. So 16% of your revenues were coming from government, is that...

Government, which is down to 8%, yes.

Okay. Okay. And you don't see any hope of that coming back?

Yes.

Okay. So what is the degrowth in the private sector revenue? And would that come back? Because if one sees the results of consumer companies, they are very strong. So they should be spending more now, right?

Absolutely. In fact, we have seen that quarter-on-quarter, the degrowth, I would say, in the private sector was around 70%, 75%. That's down to 30%. And as I said, by quarter 4, it's going to be practically 0. So clearly, the strong performance of so many of the industries will have a follow-through effect in the following quarters on media and entertainment.

Okay. And can I ask one more question?

Of course, please.

Yes. You seem to have lost market share to Fever and Big FM in some of the larger markets like Bombay and Bangalore. So what is it that these channels are doing, which is growing in more listeners and you're losing the market share? If you can throw some light on that, that would be helpful.

I don't know which market share you're talking about because as far as revenue market share...

It is from your presentation. I think you've given some graph.

Yes. You're talking about listenership then because revenue market share, we are clearly ahead. In fact, from the beginning of the year to now, we have gained 2% market share point in revenue terms. And in volume terms...

Listenership is important, right, because that is what will ultimately determine the revenue share in the long run?

Well, that's not strictly true in the case of radio, and I'll just take a moment to explain why. Whether it is Fever or whoever, the -- 3 years ago, they had shown a listenership market share increase. But it's been 3 years now and that has not translated into a revenue market share increase. So I'm just correcting that first assumption. It's 3 years. So it's fairly long term in that sense. The reason why listenership share doesn't necessarily convert to revenue market share is for 2 things. One is, it depends on the footprint that you have. For example, a player like Fever or a regional player is only available in 7 markets or 3 markets, whereas clients are looking for a national presence. And there are very few players currently who are able to provide a national presence and national strength. So a large part of the revenues go to the national players as compared to the niche players. That's reason number one. The other reason is that currently, the listenership data is available only in 2, 3 markets, and that really is not used as a benchmark to decide what's happening in 40, 50 markets, where clients end up either doing their own surveys or relying on larger surveys.

Okay. I think that is very helpful. Just a follow-up, what is the breakup of your revenue in terms of national players and regional players?

So national players is 35% and local players are 65%.

Okay. So that 65% can get impacted, right, because of this regional competition or that doesn't get impacted?

In that sense, what really happens in the regional players is they look at city-by-city and then look at the strength. For example, in most of our markets, Gujarat and North, we are -- we have the highest volume share. And in that sense, what the local players do is they test out different radio stations and see the impact on their sales, on their footfalls, et cetera, and then take a call. So those players are very city specific. And we believe that we have a leadership position in most of the cities we are present in, which is where it automatically translates into higher volume share for us.

Okay. Okay. And what is it that Fever and Big FM are doing that they are drawing more listeners? I mean is it something on which you can throw some light?

I'm not particularly sure of what Fever is doing. Sometimes it surprises us also. But Big FM has done a differentiated strategy which is really -- they've gone for more -- if you know, their music is completely retro. So morning to night, they play only older music. And therefore, they end up attracting the older TG. So when you -- right now we have shown you overall numbers, but if you separate it out amongst younger than 45 and older than 45, older than 45 is where they have their strength and then, therefore, they attract that type of advertiser, whereas we attract an advertiser who is cutting across different target groups that he wants to reach out to.

As there are no further questions, I now hand the conference over to Ms. Apurva Purohit for closing comments.

What I would like to do here is invite our group CFO, Mr. R.K. Agarwal to give the closing remarks. Thank you. Mr. Agarwal?

Hello?

Yes, we can hear you.

Okay. Ladies and gentlemen, in the end, I would like to highlight 3 points, which you all know. Number one is, any fixed cost-based model, business model, suffers maximum when we -- when there is a disruption -- a COVID-like disruption. And this is the model where you will see hockey stick like growth when the things improve. So don't worry about radio as well, the way you don't worry about TV. The moment the economy is normalizing, you'll see hockey stick-like growth. So there is no point in discussing about quarter-on-quarter growth or short- to medium-term growth, I would say, short-term growth in profits or in the top line. That is number one point. Number two point is in media entertainment industry, it is the leader which gains maximum the moment economy comes out of the disruption, and it stays well settled even during the disruption, which you have seen Radio City doing. Number third, Radio City has always done better than the overall industry, and it will continue to do better. So in '19 -- whether we achieve the top line numbers in 2020, '21/'22 or maybe '22/'23, but be rest assured, the moment economy is normalizing, we'll be the biggest gainer. And we will get faster to '19/'20 numbers than any other competitor will. That is all. Thank you very much for sparing your time and attending the call of Radio City.

On behalf of Music Broadcast Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.