• by Paul Gough , March 18, 2004

An encouraging note on the future of local TV and radio advertising was sounded Thursday by a major Wall Street investment bank, which noted signs of a pickup in both mediums.

Bear Stearns & Co. analyst Victor Miller wrote in a report that, based on early data, local television seems to be "picking up steam, and radio does not tend to lag behind." A rebound in national ads on spot TV is occurring, particularly in the last part of the first quarter and in the second quarter, which begins April 1. Automotive, which had been pacing in the mid-single digits in the first quarter, is now estimated in the high-single digits for the second quarter. Fast food, down in the teens, is expected to be up in the high-single digits for the second quarter. And telecom, up in the teens in the first quarter, will be in the "strong double digits," according to sources quoted by Bear Stearns.

Several TV companies have recently raised their guidance for first-quarter revenues to high-single digits, and even at least one in the low- to mid-teens. That will have importance for radio companies, since it also seems to bode well for radio.

"In a normal radio market, national tends to lead out of recession, as savvy national advertisers anticipate a turn in the economy," Miller wrote. "Also, when national advertising in radio is healthy, it tends to suggest that national advertising in general is healthy. Once national advertisers' products start selling in local stores/franchises/dealerships, it tends to then stimulate more consistent local radio advertising." About 80 percent of radio's revenues are local.

While up until today--the year anniversary of the war in Iraq-- radio's comparisons are pretty tough; they get easier since the radio industry took it on the chin before, during, and after the out-and-out hostilities. A lot of ad orders were canceled after the war began.

Bear Stearns predicts a first-quarter increase of about 2.5 percent, with an increase of between 6 percent and 8 percent in March.