The disturbing news came Thursday during an analysts call in which spot radio ad sales giant Interep warned that ad pacings, which had been vibrant in July and August, slowed in September and the weakness has continued into the fourth quarter.
All major radio ad categories, with the exception of telecommunications, were down either slightly or more significantly in the fourth quarter, said Ralph Guild, chairman-CEO of Interep. Automotive, which had been a strong contributor to the national radio sector's growth throughout much of the year (behind only telecommunications and retail) has fallen off and retail pacings were flat into the fourth quarter.
Guild acknowledged the unusual situation, as it's generally national radio that outpaces local advertising in any recovery. He said it was a long time since local seemed to outperform national.
"I think Jimmy Carter was still president," said Guild, apparently referring to the late 1970s. "It is an extraordinary situation that we fully expect to turn around as the economy continues to improve."
Taken as a whole, the third-quarter revenues weren't bad.
Interep's commission revenue rose 3.7 percent to $23 million in the third quarter, and it was up 1.2 percent to $64.2 million year-to-date. Yet Citadel Broadcasting Corp.'s recent decision to terminate its agreement with Interep was going to have an impact, although Interep pledged to replace that revenue (7 percent of its total) in the new year.
Interep also recently announced it had sued Citadel, claiming that it didn't follow a contract and refused to make payments to Interep as required. Interep said Citadel had declined to pay claiming performance issues.
Guild disputed that Interep's performance was at issue.
"There is no evidence anywhere looking at the numbers objectively that there is a performance issue," he said. "And to go into greater detail would be doing so against our attorney's advice since we are in litigation. There is no hard evidence anywhere that this is a performance issue."
At the same time, Guild said analysts' predictions and first-quarter pacings led the company to think that there were better days ahead in 2004.