The radio monthly commercial time BMO Radio Airtime Monitor analysis found that commercial time decreased 3.0% in November, “yet another reflection of eroding ad cycle,” according to the report. In October and preliminarily in November, estimated pricing dropped 4% and 1% respectively. Historically during prior downcycles, lapses in value-based pricing for the radio industry occurred during the early and middle stages of the 2001 ad-cycle downturn: So reviving rates once eroded has, historically, been unachievable for radio, said the report.
BMO anticipates anticipate radio pureplays will trade off to near 7.5x projected EBITDA. Currently, radio pureplay peers trade at 9.6x projected EBITDA and 10.6x P/FCF in 2008. For radio stocks, BMO is recommending “avoiding the sector at current levels.”