Signal Failure: Radio Revs Fall 8% In March
The March numbers are just more bad news following a 6% decline in total revenues in January and a 2% decline in February. Although results for the quarter aren't yet available, a drop of 5% or more seems plausible in light of the percent figures.
Jim Boyle, an analyst with CL King, said the March results were especially ominous as radio was "up against easy comparisons" from last year, adding that second-quarter results "might very well be as discouraging as Q1's." The deepening decline prompted another analyst, Wachovia's Mari Ryvicker, to yet again lower her 2008 revenue forecast, revising it downward from a 1% decline to 2%.
Ryvicker noted that March's drop was the biggest since November 2001, when radio and other media suffered from general economic instability after 9/11. Boyle said radio's success in small markets is due to several factors, including more direct relationships with local advertisers and the absence of the kind of big station price wars that have undermined revenues in larger markets.
However, the news isn't all bad: Smaller markets are actually thriving as big and mid-sized markets take a dive, in what Boyle terms radio's "split personality." Small-market revenues grew 6%, benefiting predominantly small-market operators, like Cumulus, Saga, and Regent.
Additionally, the RAB highlighted double-digit growth in radio's "non-spot" category, up 18%, thanks largely to the growth in Internet radio advertising. But the non-spot category remains a small part of total radio revenues, contributing 8% of the total in 2007, at $1.68 billion. Internet advertising, in turn, was probably less than a third of that. According to Bridge Ratings, Internet radio's total revenues were about $500 million in 2007, including not just advertising but subscription services.