Radio Chiefs Hints At Year-End Rebound

The radio industry might get an early Christmas present this year, with a miserable November being washed away by a positive December and a rosier outlook for the early part of 2004.

That's important for radio, which saw a burgeoning recovery evaporate in the first part of 2003 following the war in Iraq and has had its ups and downs ever since. Three companies with significant holdings in radio - Clear Channel Communications, Infinity Radio and Cumulus - told investors at a conference Monday that pacings were going well. They told the Credit Suisse First Boston crowd a story with a bad November and a markedly better December, as well as January and February pacings that seem to be up in the low single digits, although all stressed that it was still early.

"November we think was the trough," said Lewis Dickey Jr., chairman and chief executive officer of Cumulus, which owns 287 stations nationwide. Dickey said January and February pacings were on comparisons in 2003 that were themselves up 4 percent over 2002. Fourth quarter 2003's strength came in spite of a poor November and a fourth quarter 2002 where Cumulus did $1.8 million in political advertising and much less than that in 2003.



Clear Channel, whose 1,200 stations makes it the largest owner in the country, said that its pacings were also progressing well, though it didn't provide specifics.

"We already see it in our pacings that next year the local business will rebound very well," said Clear Channel Chairman and Chief Executive Officer Lowry Mays.

Viacom's Mel Karmazin, who moved up the ranks as a radio guy and whose company owns Infinity Broadcasting as well as a stake in Westwood One, was similarly bullish on radio in 2004.

"We're seeing December, January and February ahead of last year" at Infinity, he said, though he cautioned that it's still early. Infinity's January pacings stood at about 30 percent of where Viacom wants them to be, which he said was about typical for this time of year. February is at about 20 percent of the projected level, with more than a month and a half before the month begins.

Karmazin expressed annoyance over radio's anemic growth in 2003, saying he didn't understand with high ratings how it could be happening. Karmazin didn't see a reason why pricing couldn't be higher, either.

"The industry has done a piss-poor job of selling advertising," Karmazin told a luncheon crowd at CSFB's Monday session. He said that he had told his executives that media buyers make about 40 percent of what a top sales person does, and that maybe Viacom should try to get more media buyers to go over to the sell side.

"They've been doing a better job negotiating than sales people," said Karmazin.

Referencing projections at the UBS Warburg conference that ad growth should be up between 5 percent and 7 percent in 2004, Karmazin vowed: "Radio should be up more than that."

Yet at the same time, executives from Clear Channel and Cumulus said that radio advertising was growing locally but not nationally. A downward trend in national radio advertising noticed earlier this fall seems to be continuing.

Randall Mays, chief financial officer of Clear Channel, said Monday afternoon that local advertising was the driving force compared to national going into 2004.

"National's been lagging," said Cumulus' Dickey.

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