When Mumbai residents tune into one of their local FM radio stations, it is understood that the jockey is not going to use his air time to tax them with discussions about the global economic downturn, terrorism or any other weighty matter of the day. Instead, his challenge to listeners is to find the answers to riddles like, "I have eyes, but cannot see; a tongue, but I don't speak. What am I?" (A shoe, in case you were wondering.)

For many private FM station owners, such light-hearted programming is no laughing matter. Even if they wanted to air current affairs programming, regulations prohibit them from doing so. Broadcasting news, weather bulletins and live sports are all also off limits to these stations. In addition, they can forget about owning multiple licenses in a single city, and one license can only cover a single type of programming -- say, contemporary rather than classical music. None of those regulations, however, apply to state-owned and operated All India Radio (AIR), which was established in 1936 and is one of the biggest radio networks in the world with more than 230 broadcasting centers across the country.

FM radio businesses were granted their first licenses in 2001, but ongoing regulatory restrictions are not their only source of concern: The current economic downturn has also taken its toll. Radio in India -- like TV, print and online media -- has had to work harder than ever to hang on to advertising revenues as corporate clients slash marketing budgets in the wake of the global recession. According to the latest annual analysis of India's entertainment and media sector from PricewaterhouseCoopers (PwC), radio's advertising revenues (public and private) in 2008 reached US$170 million, which was higher than the previous year but lower than industry analysts' expectations.

The good news is that relatively speaking, India's private FM players will emerge from the current downturn relatively unscathed. "Radio is one of the best options available to advertisers in times of slowdown, given its cost effectiveness, high reach and the ability to get completely local when communicating with potential consumers," says Tarun Katial, chief operating officer of BIG 92.7 FM, part of the Anil Dhirubhai Ambani Group (ADAG) that has 45 stations across India.

PwC predicts that India's radio ad revenues will more than double to US$390 million between now and 2013, increasing at an 18% compounded annual growth rate (CAGR). In contrast, it expects the overall entertainment and media sector in India to deliver a 10.7% CAGR on average over the next five years, compared with a global average of 2.7% over the same period.

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