CL King analyst Jim Boyle paraphrases Horace Greeley to note the continued disparity in performance of small and large market radio companies. April’s 1% decline in total radio revenues reported by the RAB was the best month so far this year, but Boyle notes that rather than sharing in that decline, small markets as a group have been up every month of 2008.
By his calculations, based on data from nearly 50 markets, the average small market (ranked #76 to #300) saw revenues increase 3% in April, compared to a year ago. Meanwhile, the top 25 markets were down 4% and mid markets (#25-75) were down 3% for the month. In his latest note to clients, Boyle repeats his analysis that market size is the best predictor for radio revenue performance, not regional or group differences. For 23 of the last 27 months, he notes, small to mid markets have outperformed the big markets in radio.
There are a few small markets specialists with public stock – Boyle mentions Saga, Cumulus and Regent – but their stock prices have been beaten up just like the big guys.
“Investors have ignored the better small market outperformance versus the radio industry’s cyclical and secular decline. This might change when the economy revives and investors eventually consider small market radio outperformance,” Boyle suggests.
RBR/TVBR observation: The stocks of small market radio companies may look like bargains, but we doubt that Wall Street is going to give them their due. It is hard to build investor enthusiasm for the little guys when the big guys are reporting dismal results quarter after quarter.