• by Joe Mandese  @mp_joemandese, August 4, 2005

In another troubling sign for the languishing radio advertising marketplace, a top Wall Street firm reduced its third quarter revenue forecast for a top radio broadcaster. Merrill Lynch analysts Thursday lowered projections for Cox Radio's third quarter ad sales to $115 million, a $2 million cut from its previous forecast, due to "muted" demand from the automotive category.

Radio industry analyst Laraine Mancini also cautioned that comparisons are like to get tougher following automotive ad "blitzes" leading up to September.

Describing strong May sales as "another head fake," Mancini noted that Cox's ad sales slackened in June and July. While Cox led the radio industry with a 5.4 percent boost in ad sales during the second quarter, she noted it nonetheless represented a "sequential decline" from the first quarter. "We felt like a recovery in May now appears to be another head fake."

The news comes as the overall radio industry. Total radio ad sales were flat in June and during the second quarter, and rose only 1 percent through the first half, according to estimates released recently by the Radio Advertising Bureau.

During a second quarter earnings briefing with analysts on Wednesday, Cox Radio Bob Neil sought to deflect the company's results by stirring more controversy around Arbitron's portable people meters. Neil, a vocal critic of the promising new passive TV and radio audience measurement system, detailed flaws in the PPM's technology and in Arbitron's test in Houston, noting that Arbitron has had to install telephone lines in cell phone-only households in the sample, a step he said would make the PPM system too expensive for radio broadcasters to roll the system out.

Arbitron, meanwhile, announced it has been awarded three new patents for the PPM, covering enhancements to the amount of information that can be embedded into its inaudible codes, as well as improvements to the PPM's ability to detect the inaudible codes.

The system's ability to accurately detect such codes has been a major source of contention. Cox Radio's Neil claimed, for example, that women who put the pager-like devices in their purses create problems for signal detection.