Kenya: Small Radio Stations Tune Into Profits in a Crowded Market

Victor Juma wrote on 3 May 2010 in the BUSINESS DAILY: The youth of Korogocho have their own radio station. Since 2006, Koch FM, has been broadcasting in the sprawling slum village, giving a voice to thousands of people. Of importance, the youth control the radio's editorial direction, including coverage of issues on human rights, governance, gender, health, environment and entrepreneurship. Koch FM was, locally, among the pioneer stations in the niche of small broadcasters, popularly known as community radio stations (CRS). The number of CRS is increasing fast and today there are over 15 players in the country, including universities. Operating a community radio is a delicate balancing act, one that can turn in profits or huge loses which could lead to the collapse of a station under the weight of unsustainable recurrent costs. Analysts say that the upsurge of the stations, most of which are based on the principle of empowering local communities through information, has been made easy by both the liberalisation of the broadcasting sector and the relatively cheaper cost of low power FM radio equipment. Experts estimate that for a basic low-power radio meant to broadcast within a short distance (up to 15 kilometres radius), one can shop for all the requisite components in the city at a cost of about one million, excluding studio equipment which can go for half million. About Sh10 million will be needed to buy equipment capable of sending signals up to a radius of 40 kilometres. Since 1996, more privately held FM stations have sprung up following the liberalisation of the air waves previously dominated by KBC, the public broadcaster. According to data from the sector regulator, the Communications Commission of Kenya (CCK), there are about 76 organisations broadcasting on 200 frequencies in different parts of the country. The biggest challenge for small radio operators is how to make enough money to cover recurrent expenditure and hopefully expand their profit margin. "We rely heavily on donations from charitable organisations," said Moses Ngugi, a presenter and a board member of Koch FM, adding that radio commercials are hard to come by, a fact he partially attributes to regulation. According to new broadcast regulations, the Communications Commission of Kenya (CCK), shall "allow community broadcasting licensees to advertise, on their stations, adverts that are relevant and specific to that community within the broadcast area." Ngugi, however, adds that the station gets some money from agencies keen on spreading social marketing messages such as the Kenya Anti-Corruption Commission and those involved in the fight against HIV/Aids. Analysts attribute the lack of high-revenue commercials to lack of a large audience base that would appeal to major commercial forces as small radio stations typically have limited listenership and are perceived as "poor radio for poor people." Most community radio firms are supported by donations from the communities that they serve and well-wishers. The lack of funds is a major threat to sustaining their operations. A tight budget means presenters work as volunteer most of the time. Mr Ngugi says Koch FM has lost good presenters who leave to earn a living elsewhere. "Presenters are volunteers but when funds are available, they are paid some allowances." Small stations often go off-air every time there is a power outage as the cost of acquiring and maintaining diesel-powered generators is high for most of them. Despite the challenges, analysts say small radio stations can be profitable. "Financial sustainability is possible, but the most important ingredient for this to happen is that the development of community radio stations has to be organic, arising from the community radio stations themselves," Tanja Bosch, who has studied the stations under the UNESCO Community Radio initiative, said. Analysts say although community broadcasters face commercial difficulties, there are several strategies that can help them not only stay afloat, but also make enough money to ensure their sustainability. "They should focus on getting volunteers for daily operations like news gathering and presenting. They need to attract direct contributions from the community and access free content. "These moves will subsidise their running costs," said David Makali, the director of the Media Institute. If mobilising donations is not enough, analysts say the stations should "go head to head with commercial radio stations" through slick music programming, for instance. Despite their relatively narrow listenership, the stations can leverage their community focus to net local advertising revenue. Radio spots can be purchased by individuals, small groups, or businesses. Memorials and message of condolences can also be sent. Major corporations are however unlikely to be drawn in, as most community stations tend to address the needs of groups at the bottom of the economic pyramid. But because they have less overheads, a steady stream of small commercials can go along way in boosting their accounts. Analysts say joint ventures are another revenue option. A small operator can enter into an agreement with established stations or other entities in which it sells blocks of space to the latter who can use the station to reach its target audience. The established firms can also provide initial capital but this brings the small operators closer to the realm of commercial stations where they are less suited to compete effectively. Like in the case of Koch FM, the community radios can capitalise on spreading social messages at a fee for various organisations, including NGOs, government agencies, and religious groups. Health campaigns against diseases like HIV/Aids and narcotics are particularly widespread, led by both local and international interest groups. Analysts add that once a small station acquires a significant audience, its operation can be sold off at a profit to interested buyers seeking to cultivate the existing audience base and take the station to a higher commercial level. While it is easy to set up a small radio station, experts say the following issues must be addressed to ensure a competitive operation: Programme production. "Audiences globally no longer accept programmes, which are not 'professionally' produced. The challenge for community radio is to professionalise programming without losing the values of access, participation, and empowerment. "What is key here is to research the air waves, and be able to provide a unique and locally relevant service," Dr Bosch said. "Some stations have also begun to depend on programmes produced internationally or by independent production houses. The key is to localise such programmes, which are produced for a more generalised audience." Makali agrees, saying that the content should be locally sourced and relevant and should constitute no less than 70 per cent of total programming. "Occasionally there would be a break-away to focus on national and international matters of interest. Audience research is vital for programme development as stations cannot be sustainable if their audiences do not feel a sense of ownership in them. Research can be done through community mapping and low cost participatory audience research projects. Volunteerism and community participation is also important. The station is likely to succeed if it communicates and addressees the issues affecting the community and this is done best by allowing input from the community members themselves, either through news gathering or presenting. However, one major problem is staff turnover. As most community station workers are volunteers, they often leave to take up paid jobs with larger commercial rivals. Most community station struggle to give allowances to their core staff. The coming years are likely to see more investment in community radio stations, helped by availability of more frequencies as a result of new regulations that came into effect late last year. The ongoing implementation of the Kenya Communications (broadcasting) regulations, 2009 is expected to recoup and avail for redistribution of idle frequencies that 'frequency squatters' have been holding on to. Fredrick Wangusi, the director of broadcasting at CCK, told Business Daily the regulator will in the next two months recall all previously issued licences and allocate them afresh. "This time round we are going to eliminate frequency speculators," he said. Data from CCK show that out of the over 300 radio stations licenced, only 200 are on air, indicating that at least 100 frequencies are unavailable for use at a time when the country is running out of frequencies, especially in urban areas. Hoarders of frequencies usually aim at reselling them to would be investors at an inflated price to profit. "We are conducting a study on the available and issued frequencies in the broadcast spectrum," he said adding that CCK will soon make public - on its website - information regarding the status of frequencies. The ongoing migration from analogue to digital broadcasting will also expand the frequencies available for television, radio, and other public and safety broadcasts. The process of acquiring a licence to run a radio station will also be transparent, Mr Wangusi said. Previously, an investor got a permit from the ministry in charge of communications after which he would proceed to CCK to obtain a frequency. At CCK, the frequencies were issued sometimes based on external influences, including political patronage. Business Daily has learnt that the regulator will in the course of the next two months issue new guidelines detailing licence application process for radio and the fee to be levied on them. It costs Sh130,000 to retain a radio licence for a year. While more frequencies will be available for small radio operators, CCK will be drawing the line between community and commercial radio. The law that is being implemented, says CCK, "shall monitor community broadcasters to ensure that the funds generated from operations of a community broadcasting station are re-invested in activities benefiting the community."