Barclays turns positive on radio


Analysts Anthony DiClemente and George Hawkey are hardly bulls long-term on radio, which they see suffering secular pressures along with newspapers, yellow pages and local TV. But for 2010 the Barclays Capital analysts have changed their negative revenue prediction to a positive one.

“Having endured an enormous slump in 2009, radio should have a local-TV-like rebound in 2010,” the two wrote in a broad update of their advertising outlook for 2010. (For local TV they’re now predicting up 5%, excluding political, rather than flat.) “We believe that the difference for radio – as opposed to local TV – is that radio sits lower on the media value chain, driven by increasing structural challenges (iPod listenership, satellite radio, and free/low cost Internet radio options), which in turn lead to further listenership declines. Media ‘Darwinism’ is impacting radio as well, as local advertisers shift budgets towards other less secularly challenged local advertising (such as outdoor or cinema) or to national budgets,” DiClemente and Hawkey wrote.

The bottom line, though, is that they now expect radio revenues to grow 2.2% in 2010, as opposed to their previous forecast of a 4.0% decline. That includes roughly $350 million of online ad revenues associated with radio stations, up 8% over 2009. But for 2011 the Barclays analysts are forecasting that radio revenues will be down 0.8%, the same as their previous forecast.

“We expect radio to continue to lose advertising market share, estimated at 8.7% of total media advertising for 2010 and 8.5% for 2011 vs. 10.3% in 2005 and 11.2% in 2000,” DiClemente and Hawkey said in their analysis.

Magazines, newspapers and yellow pages are still projected to suffer ad revenue declines in 2010, so Barclays sees total US advertising, including political and Olympics, to be up 3.5% this year, as opposed to the previous forecast of down 0.3%. Excluding political and Olympics, the firm’s forecast is for US advertising to be up 1.8% in 2010, rather than down 1.4% as previously forecast.