That’s not the weather outlook, which is pretty sunny for this NAB Radio Show week, but Bank of America analyst Jonathan Jacoby sees "no sunny days for radio." The data he has gathered indicates that August sales were worse than expected in large markets, so he’s expected the month industry-wide to come in down 1%, rather than his previous estimate of flat. CL King analyst Jim Boyle is even more pessimistic. He thinks August will be down 2%.
Jacoby says his data comes from most of the largest radio markets, accounting for around 30% of total radio revenues. "For these markets, total revenue growth (including Internet and other non-spot sales) was down approximately 3% year over year. Spot sales slipped approximately 4%, with slightly heavier declines coming from national spot sales. Non-spot sales (led by online ads) were up again, increasing by approximately 10% by our estimate – showing an increase from the 6% growth rate seen in July," Jacoby told clients. "Smaller radio markets have tended to grow faster than larger markets in recent years, and so a 2-3% decline among the larger markets likely indicates a somewhat more moderate decline for the industry as a whole. We are keeping September at 1%, and 2007 is at negative 0.4%," he concluded.
Boyle at CL King is seeing a continuation of the trend he’s tracked for months of small markets generally doing better than large ones. But he notes in his latest report that the long-time weakness in the top 25 markets seems to be spreading to mid-markets as well. Yes, the small- and mid-markets he tracks beat the big ones for the 17th time in 19 months, but the gap has almost disappeared, primarily because of weakening in the medium markets. "The last four months have seen the average mid-sized market in our sample go from up 2%, to up 0.5% for two months and then down 2% in August," Boyle noted. He continues to forecast that radio revenues will be down 1% for 2007.
RBR/TVBR observation: It’s not all gloom and doom. We expect to see lots of happy, prosperous small market owners in Charlotte. Those markets where the rare agency buy is pretty inconsequential have held up well as their brethren in markets where CPM-type buys occur every day have suffered. The answer, of course, is to escape from negotiations based strictly on ratings and cost-per-point and sell based on the results that your station delivers to happy advertisers. Easier said than done – and each layer of people between the station sales staff and the ultimate decision maker for the advertiser just makes it that much harder. That’s why mom and pop radio is still fun and rewarding, if increasingly rare.