Radio City Navigates Headwinds with Strategic Realignment in Q2 FY26

Music Broadcast Limited, operating under the popular 'Radio City' brand, recently announced its financial results for the second quarter and half-year ended September 30, 2025. The period reflects a challenging advertising landscape, yet the company has proactively initiated significant strategic realignments aimed at enhancing operational efficiency and strengthening long-term resilience. While Q2 FY26 saw a moderation in financial performance, management expressed confidence in a return to stronger growth and improved profitability in the quarters ahead.

For Q2 FY26, the company reported a revenue of Rs. 37.8 crores, marking a 31% year-on-year decline from Rs. 54.8 crores in Q2 FY25. The half-year revenue stood at Rs. 87.2 crores. Operating EBITDA for the quarter was Rs. 1.4 crores, an 86% drop from Rs. 9.5 crores in the prior year, with the operating EBITDA margin at 3.6%. The adjusted profit after tax (PAT), accounting for interest on Non-Convertible Redeemable Preference Shares (NCRPS), was a negative Rs. 4.6 crores for the quarter and negative Rs. 4.4 crores for the half-year. This performance was primarily attributed to subdued demand, as advertisers deferred campaigns in anticipation of GST benefits. However, a gradual improvement in advertising activity was noted post-September.

Strategic Initiatives for Future Growth

In response to the evolving market dynamics, Music Broadcast Limited has undertaken several strategic initiatives designed to optimize costs and streamline operations. These measures are expected to yield an immediate cost reduction of Rs. 6 crores to Rs. 7 crores per quarter, starting from Q3 FY26, without compromising operational efficiency or audience experience.

Key initiatives include a 10-15% rationalization in manpower and a shift to a more asset-light network model, with 13 live stations and 26 virtual stations. The company has also rationalized its digital initiatives, discontinuing RC Studio, synergizing RC Swapper with radiocityindia.in, and reworking Muzartdisco into a zero-cash investment model. Furthermore, programming has been optimized, adopting a hub-and-spoke model for content delivery and adjusting broadcast timings to 16-18 hours a day.

Market Position and Revenue Diversification

Despite the challenging environment, Radio City maintained its strong market position, achieving an 18% market share. The company continued to be a preferred platform for advertisers, capturing the highest total client base at 42% across the radio sector. Notably, 34% of all new advertisers entering the radio space chose Radio City, underscoring the brand's strength and effective data-driven marketing initiatives.

A significant focus has been placed on diversifying the revenue mix. Approximately 34% of the company's total income was contributed by alternate revenue streams, including branded properties, proactive pitches, digital ventures, sponsorships, and special events. Digital revenue specifically accounted for 7% of overall ad sales revenue in Q2 FY26. This strategic diversification aims to build a more balanced portfolio, enhance financial resilience, and unlock new opportunities for sustainable growth.

Outlook and Management Confidence

Management expressed a positive outlook, anticipating improved profitability in the upcoming quarters driven by the implemented cost savings and a gradually improving advertising environment. The company's cash reserves stood at Rs. 362 crores as of September 30, 2025, providing a strong financial foundation. While Tier 1 markets remained subdued, growth was observed in Tier 2 and Tier 3 markets, albeit with lower yields, contributing to pressure on overall ad rates.

The company is also actively engaged in discussions regarding the proposed revision of ad rates by DAVP, which could significantly impact government business revenues. Music Broadcast Limited remains committed to prudent resource allocation and streamlined operations, positioning itself as an agile and future-ready organization to deliver sustained value for all stakeholders.