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BIAfn Asks: Where Is The Radio Industry Going?
 Dr. Mark Fratrik, VP of BIA Financial Network, has written a new report that looks at the first three quarters of 2006 and asks the question, “Where is the radio industry going?” He got some interesting, if conflicting answers.
Fratrik writes that “so far, 2006 has been an enigma. On one hand, monthly revenue reports are extremely disappointing and quarterly earnings reports are anemic. The largest two markets are expected to post a year-to-year decline while many smaller markets are posting an excellent year.
“Conversely, the number of radio stations sold and the total value of those sales are noticeably above last year’s pace, with the values of many of the largest deals experiencing strong multiples.”
Fratrik also finds “a healthy amount of willingness and capital to provide debt financing for new acquisitions.” So, “as a whole, the short run revenue prospects for the industry will continue at the same tepid growth rate that has been the norm for the past few years. The presence of the Internet, new media, and the continued fractionalization of advertising are trends that will continue for some time to come.”
He adds, that “although no one expected the double digit growth of the late 1990s and early 2000 to continue, the last three years of radio station revenue growth have not even kept up with either the overall economy’s growth or the consumer price index.”
Yet, “even while competitive forces from Ipods, Internet streaming, satellite radio and concern about ad clutter and creative malaise continues to decrease the appeal of local radio stations as an advertising medium, the radio industry is still reaching over 90% of the American public. That’s an exceptional percentage. So, to recapture its position in the ever-changing media landscape, the industry must demonstrate a renewed vitality and a commitment to accountability.
Radio needs to invest in what made it successful in the past (local news, weather, entertainment and community service) while adopting new distribution channels to get that programming to additional audiences. Without those actions, the radio industry will wallow in the low single digits.”
The complete report can be accessed by going to: www.bia.com/radio_report_2006.html
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