Friday, 27 November 2009

[creative-radio] The Business of Radio in Nepal


---------------------------- Original Message ----------------------------
Subject: The Business of Radio in Nepal
From: "Pratyoush Onta" <>
Date: Fri, November 27, 2009 20:57

I would like to submit the following article to our group.
Pratyoush Onta
Kathmandu, Nepal

The Business of Radio in Nepal

by Pratyoush Onta

There is a hybrid business environment for radio in Nepal. While most of
the private-sector owned radios rely, for the most part, on the local and
nationally significant businesses for advertisement revenue, radios run by
NGOs, local government entities, educational institutions and cooperatives
receive donor funding in various forms. Apart from the advertisement
market, private-sector radios also rely on sponsored programmes and
occasionally receive donor money to produce specific thematic programmes.

Commercial FMs
Sustainability has been an issue in debate for commercial FMs since the
early days (ie late 1990s) of independent radio in Nepal. For instance we
can look at the case of FMs in the city of Pokhara. In early 2001, four
commercial FM radio stations came into operation within a two-month period
in Pokhara. In May 2001, many Pokhara residents, including some promoters
of FM radios told researchers that four stations could not survive in the
city. They thought two would or at most three.

Pokhara's economy, they thought, could not support four FM radios. The
city does not have a large industrial base. Its tourism industry was not
in great shape then or geared toward serving local clients. Remittances
from long-distance labourers constituted nearly a quarter of the city's
income but most of it was being invested in private real estate after the
families took care of their more immediate needs. The growth in the
service industry in the late 1990s, mainly in the form of higher-level
educational institutions, ten plus two schools and computer institutes,
had provided advertisements to Pokhara's newspapers.

But if this advertisement had to be shared between the newspapers and the
radio stations, those who talked to media researchers in 2001 feared that
there would be serious undercutting of advertisement rates. Undercutting
has happened but none of the four FMs have gone bankrupt. In fact, those
four FMs have been joined in the intervening years by several other local
FMs and two that relay programmes from their respective Kathmandu-based
stations. Does this mean that all four of the early FMs in Pokhara and the
new ones are making money?

Not at all. Industry insiders say that most of the commercial radios,
including those in Pokhara, are running in a loss. The growth in the
independent radio sector since 1997 coincided with the political and
economic crisis generated by the intensification of the Maoist insurgency.
Until about the year 2000, the insurgency had not significantly impacted
the national industries and tourism. However from then on, tourist
arrivals began to drop sharply, industries began to feel the hit due to
Maoist extortions and intermittent disruptions at the workplace, and
development projects slowed down under threats to workers. Due to this
downturn in the economy, commercial FM stations experienced undercutting
in their advertisement rates and long delays in payments from their

However apart from two or three stations that went out of air temporarily
or shut down for pure managerial reasons, no commercial FM has gone out of
business citing their continuing losses. How is this possible? Many of the
companies that have invested in the radio sector know that they will not
be earning profits in the short-run. Hence the fact that they are running
in a loss in the initial years of their existence would not be news to
them. But there is also something else at work here.

Industry insiders have, over the years, told researchers that the
promoters of some of the radios that are running in a loss can sustain
some monetary loss each year because their logic of operation exceeds the
simple accounting notion of the bottom line. Such loss is often seen to be
an investment in social prestige or other cultural capital obtained from
running an important local media institution. Such loss can also be
recovered in monetary terms from other business ventures in the portfolio
of those promoting the concerned radio stations.

We can conclude that sustainability in the commercial radio industry then
has a social logic beyond the accountant's income and expenditure balance
and calls for an investigation that looks into how radio is embedded
within a social economy that is larger than the market economy. And radio
is not an exception in this matter. Big money losing ventures in the world
of print media in Nepal including broadsheet dailies continue to be
published years after media analysts predicted their death.

Community Radios
Radios dubbed as community radios have received the support of
international donors in setting up their stations and in producing various
types of development-oriented, rights-based, and educational programmes.
Once these stations come on air, they too have made an income by
broadcasting advertisements. Some of the community radio stations have
adopted a selective policy regarding the playing of advertisements. They
have chosen to not broadcast some advertisements that are broadcast over
commercial stations by claiming that they are exercising their social
responsibility in doing so. However their overall income stream does not
look all that different from those of commercial operators even as the
percentages of income these two different types of radios derive from
playing advertisements are not the same.

Some community radio stations have voluntary producers and other members
of the staff work in a semi-voluntary basis by taking a low pay. Other
stations have received free labour or contributions of cash and kind from
their listeners to set up buildings for their radio stations. Still others
have collected money from those described as 'friends of such-and-such
radio' to establish some kind of a corpus fund. However such efforts have
been executed in a half-hearted and haphazard manner. There is, as yet, no
systematic attempt to realise these ideas in a robust way and resources
obtained from such efforts, apart from the labour of voluntary radio
producers, have not contributed in a significant manner to keep these
stations going.

Many radio promoters who have set up community radios have talked about
various plans to make their ventures financially solvent without having to
rely on advertisement money and foreign donors. Many such individuals have
said that the central government is the key player in this issue.
According to them, the government can not only drastically reduce the
licence and renewal fees, but also give discounts in the phone and
electricity bills that community radios pay each month. These radio
activists have argued that the exorbitant fees along with the requirement
to pay royalties on their annual turnover are the biggest hurdle in the
path toward sustainability of community radios. This has also been the
view promoted by the Association of Community Radio Broadcasters Nepal

Other promoters feel that sustaining community radios would have been easy
had there been elected governments at the local level. As one such
promoter said in a discussion held at Martin Chautari (MC) in Kathmandu
almost two years ago, "Community radios could do programmes highlighting
the work going on in the village development committees (VDCs) in their
broadcast areas. They could even do programmes covering the various wards
of the VDCs in rotation and be paid NRs 25,000-30,000 per ward. However,
since there are no elected representatives, there is no incentive for the
wards to work with radios in this manner." Such individuals are also of
the view that if there were elected governments at the district
development committee (DDC) level, radios could ask for a small percentage
of the millions of rupees that each DDC mobilizes for development annually
for "awareness raising".

Some community radio activists feel that community radios in Nepal need to
learn from the experiences of other countries such as Switzerland and
Indonesia in being able to mobilize larger numbers of volunteers to run
their radios. However why those countries have been able to mobilize
volunteers in large numbers to run their radios and why this has not
happened in Nepal needs to be investigated. Some others have argued that
if community radios immerse themselves in cultivating social credibility
and in increasing participation of the members of the communities they
serve, sustainability of community radios should not be a problem in the
long run. But how this wisdom ought to be translated into a business model
has proved to be elusive.

Community radios have also benefited from the programming - and sometimes
financial - support of production houses that have produced programmes on
various themes with donor support. Among those houses doing this work (and
building their own networks of radios, both commercial and community
ones), the two based in Kathmandu, Antenna Foundation and Equal Access are
NGOs whereas another Kathmandu organisation, Communication Corner, is a
private limited company that also started operating its own FM station,
Ujyalo FM, from 2007. This kind of initiative has the potential to share
production resources of radio stations located in various parts of Nepal,
a subject that has been analysed in detail by my MC colleagues Devraj
Humagain, Komal Bhatta and Harsaman Maharjan in their book Radio Network
(in Nepali, 2008).

The sustainability of independent radios has become an even more pressing
issue since the Nepal government distributed licenses to more than 250
radio stations in the last three and half years. As the number of
independent radios in operation increases in the country, we need a public
debate on how to sustain them. Those with experience and knowledge out to
speak up.

Pratyoush Onta is a historian based at the research centre Martin Chautari
in Kathmandu. He has co-edited five books on the history of radio in Nepal
including Ten Years of Independent Radio: Development, Debates and the
Public Interest (in Nepali) published by MC in 2008.

This article was published in the Kathmandu newspaper Republica on 27
November 2009.

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