Lehman analyst drops radio forecast
Yet another Wall Street analyst has cut back his forecast for radio revenue growth this year and next - - and they're big drops. Lehman Brothers analyst Bill Meyers now expects growth of only 2.7% this year, not the 3.7% he had previously forecast. And for 2005 Meyers has cut his growth estimate to 2% from his previous 4.5%.
"Just three short months ago, we had forecasted radio industry growth of 5% in 2004. After all, the industry stood to benefit from: 1) robust consumer spending (implying a healthy advertising environment), 20 incremental political advertising dollars, and 3) easy comparisons versus 2003. That is, 2003 revenues were 'artificially low' given a pullback in advertising associated with the Iraq war. Even with all those revenue drivers, the radio industry managed to disappoint in 2004," Meyers told investors in his latest missive. "Specifically, the most recent data points suggest weakness in national advertising, softness in August, and a reversal of September's previously strong trends. Moreover, some industry participants have begun to suggest that political contributions could disappoint," he wrote. As a result, Meyers has cut his Q3 growth estimate from 2.2% to 0.4% and Q4 from 6% to 4%.
Given his now-gloomy outlook for the rest of 2004, the Lehman analyst isn't optimistic about 2005. "We are reducing our 2005 radio industry revenue growth forecast from +4.5% to +2%. Absent catalysts, we expect nominal revenues to grow slower in 2005 than in 2004. First, the industry will not benefit from political spending (as it did in 2004). Second, growth of consumer spending is expected to moderate in 2005. Third, inflation is expected to moderate in 2005. Under this scenario, the arguable presence of 'easy comps' is simply not enough to propel growth," Meyers said.
Are you reading this from a forwarded email?
