A year ago Entercom CEO David Field was the lone voice at the Radio Show in Philadelphia saying that radio revenues could be up double digits in 2010 while the smart money then was on a flat year. With the rebound now underway, what’s his early take on 2011?
In a financial panel Wednesday afternoon at the 2010 Radio Show in Washington, DC, Field reviewed his comments from a year ago. He noted that his forecast was that radio had “the potential to be up in the mid-teens if the economy cooperated.” National radio sales are up in the mid-teens, he noted, and ad sales for radio Internet sites are through the roof – it’s only local that is dragging behind.
Having heard forecasters on an earlier panel say radio revenues are expected to finish 2010 up 6-7%, but that 2011 will likely see that percentage cut in half, Field pointed to a more bullish possibility for 2011. “The comps now in local are as easy as they were a year ago,” he noted, and he insisted that the case can be made for another double-digit gain by national in 2011, so he is more optimistic than the forecasts from Mike Andres of BIA Capital Strategies, Justin Nielsen of SNL Kagan and Lee Westerfield of BMO Capital Markets, who were pretty much in agreement on that 6-7% growth in 2010 and 3-3.5% in 2011.
According to Cherry Creek Radio CEO Joe Schwartz the improvement in business held down the number of radio companies forced into bankruptcy or receivership this year. Cumulus Media CEO Lew Dickey told the Radio Show crowd that lenders had been rewarded for their patience as the value of radio properties improves.
You could say, though, that the choppy recovery has kept Dickey from becoming a station buyer with the Cumulus Media Investors (CMI) partnership he established in April with Crestview Partners to buy large market radio stations. He said the bid/ask gap remains large, so he has not yet been able to announce a deal, although he insisted that CMI is the “liquidity buyer in the market” once owners are willing to sell at the market price.
NRG Media CEO Mary Quaas said the bid/ask spread also remains wide in the smaller markets where her company operates. “Nobody wants to sell at the bottom,” she noted. But Quaas said the economics will eventually force some owners to sell.
Is there still room for an entrepreneur to get into radio? Sure, insisted Schwartz. For someone who wants to buy a single station and become a mover and shaker in their small market it is possible to find equity money from friends, family and others and persuade a local banker to get onboard, provided that the seller will hold some paper. But that’s for a single market deal. He doubts there’s capital available to start a new group until the radio business gets a lot better.