Radio Continues Downward Spiral; Online Only Hope

By the end of 2008, revenue growth in the radio industry is expected to have fallen 7%, the second year of negative growth for the medium, according to estimates in a report from from BIA Advisory Services.

BIA estimates that radio-station revenues will fall to $16.7 billion in 2008, the lowest in more than five years. This indicates the beginning of a downward spiral that could send revenues plummeting as low as $15 billion next year before possibly rebounding in the next decade if radio is able to exploit new media and capitalize on a multiplatform approach.

Revenue percentages will also fall another 10% in 2009, but may have a chance for positive growth by 2010, the report said.

“The already low forecasts for growth in radio coupled with a generally dismal economic climate have also placed a particular strain on the valuations radio stations need to maintain their financing or to be sold,” said Mark R. Fratrik, PhD, VP of BIA Advisory Services. “The waters are very rough right now but the general profitability of radio keeps us optimistic that the industry will weather the storm providing it strategically invests in its online presence, which will prove to be its rescue as ad budgets continue to shift to more measurable online media.”

Internet Looks Promising

According to BIA, Radio’s future will depend heavily on its ability to embrace new media, mobile technologies and local advertisers. In a recent BIA-led panel, the consensus was that online and traditional media are blending together, offering a tremendous opportunity to capitalize on a multiplatform approach to delivering content to mass and niche audiences, BIA said.

“Last year’s period of strategic acquisitions may have led to this year’s shutdown of any significant transactional activity,” Fratrik said. “There exists a wait-and-see perspective from sellers and buyers simply because of current station valuations and the hope that things won’t get worse.”

About the research: BIA’s fourth edition of Investing In Radio Market Report (IIR) has introduced information on shares for 10 markets that now have audience estimates from Arbitron’s Portable People Meter (PPM) and contains detailed information on HD multicast stations in each market.