The FCC’s own Senior Economist George Williams wrote "Review of the Radio Industry, 2007," one of the 10 studies just released as part of the ongoing media ownership review. Among the more provocative findings of his report is that while listenership declines, rates have approximately doubled. Williams cites Arbitron stats to detail a drop from 19.7M listerers per average quarter hour in 1998 to 18.4M in 2006, a 6.6% drop. Noting that the lower number of owners (he counts 5,133 in 1996 and only 3,121 in 2007, a 39% decline) deprives advertisers of bargaining chips over rates, he says "consolidation in the radio industry may allow radio companies to exercise market power in local markets and possibly nationally." He goes on, saying, "Overall, it appears that the cost of radio advertising has nearly doubled since the 1996 Act was passed." Looking at in-market competition, Williams gave average revenue shares of the top four radio clusters. In the top 50 zone, the #1 cluster averages a 34% piece of the revenue pie, with #2 getting 24% and #3 and #4 splitting the next 26% between them. The #1 firm is much more dominant in the 100 smallest markets, taking over half the pie with 54%, while #2 snags 30% and #3 and #4 share the next 13%. In 189 out of 299 Arbitron markets, the top firm earns at least 40% of the market’s radio revenue, and in 111, the top two split at least 80%.
RBR observation: If you’re wondering why the doubled rates don’t seem to be showing up on your bottom line, join the club. Radio revenue in 1995 was 11.47B. In 2006, it was 20.14B. That’s not close to double, before you even take into account that there is much more inventory to divide into the total collected so as to determine the average charge for a spot.