• by Erik Sass  @eriksass1, November 6, 2007

Radio ad revenues fell an alarming 7% in September compared to the same month in 2006--a far steeper decline than the 1% dip forecast by industry analysts. The weak performance is especially ominous as September 2006 provided an easy comparison benchmark for the industry to beat.

The bad news was spread evenly across the radio business, with large and mid-sized markets both suffering declines in both local and national ad revenues. The top 25 markets fell 4% in September, as mid-sized markets fell 6%. While small-market stations did somewhat better, the pace of revenue growth there has slowed almost to a standstill.

The 7% drop is sending analysts scrambling to readjust their current forecasts for the third and fourth quarters of 2007. In a note to investors, Jim Boyle, a senior analyst with CL King and Associates, predicted a 3% drop in radio revenues during the third quarter. He also warned that fourth-quarter comparisons "are substantially harder" than the third quarter's. Add a cooling economy into the mix, and things don't look pretty for radio in the last part of 2007--a prediction that will likely be echoed by radio companies' fourth-quarter guidance, due out this week.