• by Paul Gough , September 21, 2003

After an on-again, off-again recovery in 2003 marked by a few bad months and advertisers' reluctance to commit well ahead of time, the radio industry is looking for a good finish to the year and an even better 2004.

Pacings and most categories are on the rise for national radio in the third quarter, according to national radio ad sales rep Interep. Pacings in the top five radio markets are up 8% in the third quarter compared to the same period a year ago, with high-single digits and low double-digit increases in the top 50 markets and a 3% increase in the markets above the top 50. Pacings are up between 7% and 8% in all the markets, Interep said.

The data, released last week by Interep, shows several categories have increased spending in national radio, including insurance (up 50%); travel/tourism (up 35%) retail, movies and computers/software (up 30%); and medical/health services and broadcast/cable TV (up 15%). Banks/finance and restaurants were flat, and the consumer products category was down 10% in the third quarter, Interep said.

Automotive, which has been a strong presence in many media, tailed off a bit in the third quarter although Interep CEO Ralph Guild said he expected it to return in the fourth quarter. Interep's estimates for the fourth quarter for national radio including strong demand by medical/health (up 70%), insurance (up 50%) and broadcast/cable TV (up 30%). Other categories will be up 10%, including retail and telecom. Banks/finance will be flat and travel/tourism, restaurants and consumer products will be down in the fourth quarter.

Guild said the last quarter is generally the strongest for national radio, and it isn't expected to be any different this year. Interep estimates that national radio will be up about 8% for the full year.

Guild said he thought his company's full-year prediction for 2003 might be a little conservative. And Guild was bullish on next year.

"All in all, we see a very good 2004," he said.

John Sykes, chairman and chief executive officer of Viacom's Infinity Broadcasting, said that he felt that national revenue has been healthy for the past three quarters and that stations are beginning to turn around their fortunes. Infinity has 185 stations coast to coast.

The Radio Advertising Bureau, which releases month-by-month revenue forecasts, surprised some analysts by saying that radio's revenue rose 3% in July 2003 compared to the same period a year ago. The driving force was national radio, which rose 12% in July and registered a 16% jump in June. But that's cold comfort to many local stations, which predominantly generate revenues from local advertising sales. And that category has been flat since May.

Other radio executives said the industry's health was a little more complicated, with stations in some areas of the country - particularly the Southeast - were doing pretty well while in other areas the recovery was taking a lot longer.

Terry S. Jacobs, chairman and chief executive officer of Regent Communications, acknowledged that radio's recovery after the recent downturn had progressed slower than most people suggested. Regent owns 76 stations. He also felt that advertisers were, to some degree, being affected by the national economic conditions even if those weren't necessarily being borne out locally. He said that many advertisers had been holding off on making buys until the last minute for economic reasons.

Other radio executives spoke to the same issue, although a few said that it seemed that advertisers have been able to plan ahead in recent weeks.

"There's a little bit longer lead time in terms of how customers place their media," said Les Hollander, director of sales at Clear Channel, which owns 1,207 stations nationwide. He said that three or four months ago, advertisers were making buys as close to air as six hours. Now, Hollander said, it's more like two to six weeks.

A radio buyer, Matthew G. Fineberg of Zenith Media Services, said many radio advertisers had been booking at the last minute, concerned about economic conditions. But on a brighter side, he said that he had been hearing from more clients considering advertising in radio.

Bruce Beasley of Beasley Broadcasting in Naples, Fla., said the stations his company owned in North Carolina were impacted measurably by their large military populations shipped out to fight the war in Iraq. These markets were taking much longer to recover, he said.

And even the national picture wasn't clear, Beasley noted. Although consumer spending and some other economic indicators were looking good, he said he was concerned that the employment picture remained cloudy.

"Until we can get all of these things moving in the same direction, we're going to have a spotty recovery," Beasley noted.