There is still a lot of room for investment and growth in the radio broadcasting sector, despite an increasing shift to digital and other broadcasting mediums in recent years that has left the industry in flux, says Kagiso Media.

Speaking during the Independent Communications Authority of South Africa’s (Icasa’s) public hearings for the review of the regulatory framework for community broadcasting services last week, the broadcaster explained that radio broadcasting had grown significantly from 34 radio stations prior to 1994 to about 300 currently.

Radio remained an important medium in South Africa, reaching over 98% of the population; however, its future was bleak on the back of stagnant revenue growth.

Kagiso Media said that radio broadcasting faced single-digit revenue growth, increasing at a compound yearly growth rate of just 3.9% over the five-year period from 2017 to 2021.

A report by PwC states that radio revenue will reach about R5.4-billion in 2021.

“Advertising revenue is likely to continue to form the largest element of total revenue, surpassing the R5-billion mark in 2020, pointing to the fact that radio remains a preferred medium of advertising campaigns,” PwC notes.

The South African radio market totalled R4.4-billion in 2016, up 2.4% on the previous year, the ‘Entertainment and media outlook’ report outlines.

However, proposed bans on alcohol and unhealthy foods advertising would impact on radio’s revenue, said Kagiso Media.

“We are facing a lot of hurdles. The reality is that radio broadcasting in South Africa is currently operating in very challenging economic times. We face changes in consumer behaviour, as they have more options [available in terms of] how they consume content, and disruption from online media, as well as imminent legislation, which [will] reduce advertising spend.”

However, despite its “gloomy” picture and an underperforming economy severely affecting advertising, its lifeblood, the industry shows much room for investment and growth.

If all three tiers – public, commercial and community broadcasting – are sustainable and thriving, then the entire industry will thrive; however, it needs some form of sustainable revenue mechanisms, which is advertising-driven.

According to the PwC report, opportunities for further advertising growth could lie in the rise of smartphone use, access to affordable data and data-driven campaigns.

“As the number of mobile phones increases, more consumers can access radio content as and when they like, widening the potential for advertising investment as listenership grows across community, public broadcaster and commercial stations,” it says.

Kagiso Media cited statistics that showed about 73% of people accessed audio broadcasting services using the radio, 37% used a mobile phone, 11% a television and 3% a computer, while 25% listened to the radio from their cars.

The increase in smartphone ownership will drive radio listening, becoming a source of growth for audio broadcasting services, particularly when the industry transitions from analogue broadcasting to a digital platform.

Icasa is currently reviewing the regulatory framework for community broadcasting services for both television and radio in South Africa, with the hearings forming part of its examination of the concerns raised by stakeholders in the final report on the review of the broadcasting regulatory framework’s transition to a digitally converged environment, as well as the challenges community broadcasters experience and the need for urgent review of the framework on community broadcasting.