• by Erik Sass , December 4, 2007

Radio revenues fell 5% in the third quarter of 2007 to $5.5 billion, the Radio Advertising Bureau announced Monday. In percentage terms, this decline is the worst quarterly slump in years. After many quarters of flat revenue or small declines of 1%, the ominous third-quarter results may mark the beginning of accelerating declines like those affecting newspaper publishers.

As in previous quarters, the loss is due entirely to decreases in local revenue--which fell 5% to $3.7 billion in the third quarter--and national, down 8% to $1.1 billion. These more than offset 9% growth in network radio, which ended at $293 million, and 7% growth in non-spot, ending at $395 million. Local advertising has traditionally been the "bread and butter" of the radio business.

Although the two industries are very different, radio revenue trends in recent years resemble those of the newspaper business earlier this decade, as it entered a period of long-term decline.

Newspaper revenues were essentially flat for several years before they began to slip--growing 1.9% in 2003, 3.9% in 2004 and 1.5% in 2005. These were followed by a 1.68% drop in 2006. The decline began mid-year in 2006, with a flat first quarter followed by accelerating losses of 0.31%, 2.6% and 3.7% in the following three. 2007 is looking even worse, with revenue in the first three quarters 9% to $30.5 billion.

Radio revenues seem to be following a similar long-term pattern. Revenues were essentially flat over the last several years--up 2% in 2004, down 1% in 2005, then up 1% in 2006. But the first three quarters of 2007 may have contained the turning point: Revenues grew 1% in the first quarter and remained flat with 0% growth in the second, before falling 5% in the third.