Nobody is playing "Taps" after reading the RAB/Miller Kaplan report of a minus 8% revenue drop-off in March, but they aren’t exactly blasting out a resounding chorus of "Charge," either. The Street’s already low expectations for radio in March weren’t met, and the reactions aren’t pretty.
Over at Wachovia, Marci Ryvicker noted that "all radio companies are at risk of missing Q1" guidance. "Radio, which is already a secularly challenged industry, is being further aggravated by the weakness permeating throughout the economy." She pointed out that the -8% for March was on top of a -3% in March 2007. Ryvicker says its the worst month since November 2001. She pegged Q1 results at -5% overall, -6% local, -11% national and +16% non-spot.
Bear Steans’ Victor Miller said he talked to 15 companies in Las Vegas. "Several companies noted the challenging operating environment given the economic backdrop. Virtually all companies noted that auto advertising is very weak, especially domestic auto (and GM in particular). Auto and retail account for 30% of radio industry revenues, and appear to be weighing on industry growth." He’s lowering estimates for radio companies throughout the remainder of the year.
Lehman Brothers’ Anthony DiClemente said the results were worse than anticipated, particularly given the mild -2% drop in February. "These results imply that the radio industry has not seen a halo effect from strong scatter pricing from tighter television inventory and continues to lose advertising share to other media, possibly at a greater rate than expected." The firm is now estimating losses in each and every month throughout the year in the -4% to -6% range (with the exception of -3% in November), with a loss of =5% for the year.
RBR/TVBR observation: Bleak. We realize radio is not the first pick among the political class, but can you imagine how bad this would be if there weren’t the prospects of at least some crumbs during an election year? The place to be, as we reported yesterday, is in the small markets.