• by Erik Sass , June 23, 2008

Radio underperformed even the most pessimistic predictions on Wall Street in May, with an 8% drop in revenue compared to the same month last year, according to the Radio Advertising Bureau. Although radio watchers knew trouble was coming, the bigger-than-expected May drop lowers the chances of an early recovery for radio after a year of revenue declines.

The drop exceeded the expectations of Jim Boyle, who took a relatively pessimistic view with his prediction of a 5% to 6% decline, and it was double the 4% figure predicted on Wall Street.

As in previous months, however, Boyle was quick to note the "split personality" in radio, with radio stations in smaller markets posting relatively good returns, while stations in big markets are tanking. In May, small markets were down just 3%, while big markets fell 8%.

This poor showing follows April's decline of just 1%, dashing hopes that the radio industry's secular downturn might be shorter--and shallower--than predicted. The numbers are especially ominous because May is usually one of the biggest months for radio revenue.

Although June is seeing some improvement, it would have to increase substantially to offset May losses in second-quarter results; given the continuous decline over the last several quarters, such a turnaround seems unlikely.