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Veronis Suhler Stevenson sees radio growth returning

Seems there is a defied traditional analysis, but forecasters at Veronis Suhler Stevenson (VSS) remain convinced that radio is going to return to its normal pattern of 6%+ growth. The question is when? VSS managing director P.B. Weymouth tells RBR that the long-range target is more important - - that radio revenues should grow at an annualized rate of 6.4% over the next five years.

"Obviously we've had a lot of outside circumstances that have impacted the business. A couple of years ago no one would have predicted the Internet blow-up. Following that, the war was something that caught everybody by surprise," Weymouth said of the difficulties in recent years in predicting where radio revenues will go.

But even with industry giant Clear Channel saying that Q3 is pacing flat (7/26/04 RBR Daily Epaper #144), Weymouth says 2004 could still prove to be better than some others believe. "You've got a strong political year. You've got some hungry, hungry advertisers who recognize that they've gotta move product, particularly the auto businesses have got to move cars off the lots. Their businesses are sort of going a little sideways. I think we still believe there's going to be a fair up tick in the third quarter related to the political situation and certainly related to automobile sales," he said. So Weymouth is sticking with the numbers forecast in the new issue of the "Veronis Suhler Stevenson Communications Industry Forecast & Report," although he concedes that the 2004 number is a high hurdle to clear.

While not often mentioned as a financial factor, the VSS analysts think that the public outcry over broadcast indecency has had a negative impact on radio revenues. "We have to work on putting that behind us," according to Weymouth, who says it's put radio under too much scrutiny. He also notes that the indecency debate really applies to only one segment of radio programming, while many other choices are offered to consumers by the industry.

But regardless of what people in radio do, big picture forces in the economy and world affairs have a major impact on ad spending and have taken their toll on radio revenues in recent years. "We believe it's been primarily forces beyond radio's control. There have been a number of macro issues that have affected all media and radio's been affected as well," Weymouth said. In addition, he wonders whether there might be political motivations behind the attacks on radio for indecency. "Howard Stern's been around for a long time, as have others. One event really sort of catalyzed it [Janet Jackson at the Super Bowl] and it wasn't even from the radio industry - - catalyzed a call to clean up the airwaves and radio is bearing the brunt of that," he added.

For the future, Weymouth sees radio benefiting from Clear Channel's "less is more" initiative to cut clutter and to a lesser degree from deployment of HD Radio to compete with satellite radio on a sound quality basis.