• by Erik Sass , February 17, 2009

If anyone is still cherishing hopes of a radio turnaround in 2009, Wachovia analyst Marci Ryvicker's latest note to investors should doom that idea. The outlook is overwhelmingly negative, as Ryvicker sees a 9% decline in revenues in 2008 followed by a further 13% decline in 2009.

"It's the same depressing story," Ryvicker noted. "Advertisers are cutting back significantly, given rising unemployment and the general state of the economy."

The revenue trends would be bad enough. The real problem, Ryvicker said, is the considerable burden of debt carried by many big radio broadcasters, often as a result of mergers and acquisitions over the last decade. Flatly asserting that "it's all about the debt," she warned that "quarterly conference calls will be focused on de-leveraging events"--that is, paying off debt by any possible means, including cost-cutting through layoffs and asset sales.

There may be a bright spot: Ryvicker noted that banks would rather not own radio stations, so they are more likely to agree to refinance.

Ryvicker's gloomy forecast follows a year of accelerating revenue declines. Although fourth-quarter figures are not yet available, the first three quarters of 2008 were already trending sharply downward, with a -5% decline in the first quarter, a 6% decline in the second and a 9% decline in the third.

The losses are the result of big declines in local advertising-traditionally the mainstay of radio revenues--as well as national. Both these trends are likely to accelerate as the economic downturn worsens.