Radio Dials Back: Revs To Drop 3.1% In 2008

radio A new forecast from BIA Financial Network sees the slide in radio revenue continuing in 2008, dropping 3.1% compared to 2007, to just under $17.6 billion. That would make 2008 the second year of declining revenue after a 2.3% decrease in 2007, when radio ended the year at $18.1 billion. On the bright side, BIA also forecasts a return to revenue growth in 2009, thanks to a rebounding economy and new digital revenue streams.

The BIA report also noted that not every radio market is seeing a downturn, as small and mid-sized markets are actually enjoying revenue growth driven by local advertising, radio's traditional mainstay. In 2007, Wilkes-Barre, Pa. was up 8%, Des Moines, Iowa was up 6%, and Poughkeepsie, New York was up 5.4%. These findings echo similar observations by CL King and Associates, where veteran analyst Jim Boyle has long touted radio's continuing growth in small and mid-sized markets.

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More stations changed hands in small and mid-sized markets in 2007 than in larger markets, perhaps because of their perceived advantages. This was also due, in part, to Clear Channel Radio's decision to sell off many of its stations in smaller and mid-sized markets. In all, 316 stations in the top 200 markets moved, along with 500 stations in unranked markets.

However, the overall picture remained gloomy, as many of the industry's revenue powerhouses--top-ranked stations in big markets--see ad sales stagnate or decline. This appears to be the result of growing competition from audio alternatives like iPods, MP3 players, and online radio, as well as advertisers' general shift to the Internet, where interactive metrics promise greater transparency and accountability.

Of course, radio broadcasters are fighting for a piece of the online pie, but the contribution from online sales to overall revenue remains small. Recently Wachovia analyst Marci Ryvicker wrote in her roundup after the SNL/Kagan Radio/TV Summit: "We are at least five (if not 10) years away before new media/digital opportunities have any financial significance in the broadcast space."

One estimate puts all kinds of Internet radio revenues, including new Web-only companies and combining advertising and subscription models, at just $500 million in 2007. Even if this sum were attributed to the Radio Advertising Bureau's "non-spot" category, it's still just 2% of radio's overall revenues. (This figure is overly generous, as some online broadcasters are not measured by the RAB.)

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