Calling it a critical "swing" month, CL King analyst Jim Boyle thinks May radio revenues were only flat with last year. Once again, smaller markets were the place to be, with the mid to small markets outperforming the big guys.
"Historically, the month of May has been Radio's largest revenue month of the year at roughly 9.9% of the total year's revenue. Additionally, by the end of May the industry has put five months behind it and usually assumes the holiday Q4 should be solid, as well as having the forward bookings of June and July, when most of the big summer/holiday campaigns are rolled out in-house. Thus, there has historically been a 'swing' month aspect to May," Boyle noted. But from the data he's collected from markets nationwide, he expects the RAB revenue report coming out in the next couple of weeks to show May 2007 flat with a year ago. "From our comprehensive data from different-sized markets, the sluggishness was once again primarily caused by larger markets being down 1%, while the mid-sized markets were up an estimated 2% average," he said. The analysts also notes that the small-mid markets have outperformed the big markets for 14 of the last 16 months.
Thus, Boyle expects Q2 radio revenues to be flat. So, he is predicting that 2007 will be the 7th year in a row of slow or no growth. "It seems the radio industry is in for another discouraging year. The last year of unqualified revenue growth was in 2000. Small- to mid-markets are still significantly outpacing big markets, so those relatively brighter spots exist. Nevertheless, in our view, it is just relatively bright, not actually and dramatically bright enough or sufficiently high enough top-line growth for investors to 'de-couple' the small-mid radio stocks from the widely out-of-favor radio sector for potentially several quarters," Boyle said in his latest note to clients.