Cumulus CEO: Radio In Death Spiral

radioEveryone in the radio business knows the medium is headed for tougher times, but one of the starkest predictions comes from Cumulus Media President and CEO Lew Dickey Jr. He says that "half the companies in business today will be gone within 36 months."

Dickey says attrition will come as a result of the most challenging business environment radio has faced in over two decades.

Dickey, who expressed his thoughts to the Atlanta Business Chronicle, based his prediction on two negative trends that are now coinciding. First, many big radio owners have debts so large they were viewed as risky even when times were good. Second, the ad revenues needed to service those debts have been declining at a faster rate over the last two years--even before the economic downturn was in full swing.

In 2007, total radio ad revenues fell 2% compared to 2006, to $21.3 billion. Since then, the losses have accelerated. In the first three quarters of 2008, total ad revenues fell 7% compared to 2007, compounding the previous year's losses. Now that the full extent of the economic meltdown has become apparent, any hopes of a turnaround in negative revenue trends are looking like pipe dreams.



Some companies, like Cumulus, are relatively well-positioned to weather the financial storm, with a line of credit amounting to a half-billion dollars. In fact, Dickey told the trade paper that Cumulus plans to expand through acquisitions, despite the credit crunch. But even the best-positioned radio groups will still suffer big losses over the next year, and perhaps post '09.

Recently, Jim Boyle, a veteran radio analyst with CL King and Associates, issued this grim forecast: "If the recession lasts for all of 2009 and the weakness persists in many of the major radio ad categories, such as auto, to a point where spending severely plunges, then it may be 2010 or beyond before radio revives."

1 comment about "Cumulus CEO: Radio In Death Spiral ".
Check to receive email when comments are posted.
  1. Richard Clifford from RSM McGladrey, Inc., November 26, 2008 at 8:41 a.m.

    That's what has become of consolidation and the growth of big radio groups like Entercom and Clear Channel Worldwide. These 2 radio groups are, in my opinion, to be the first to collapse. Empires don't last!

Next story loading loading..