July another Downer


Bank of America analyst Jonathan Jacoby says it looks like radio revenues in big markets were down around 2% in July, but he’s holding with his down 1% estimate overall, since the smaller markets have been outperforming their larger brethren. We note that Jacoby is predicting only one more up month this year, September, and that by only 1%. So far this year, RAB has reported three up months and three down ones. Jacoby is predicting that July will come in down 1%, August flat, September up 1%, October and November each down 1% and December flat, bringing the full year 2007 in flat will 2006. The BofA analyst has a "buy" recommendation on only on stock in the radio sector: Radio One. "We remain neutral on the group, but feel that Radio One is simply oversold.  Yes, Radio One has a covenant issue, coupled with weak fundamental performance.  But there is no reason to believe the covenants won’t be able to be renegotiated over the next few months. Simply put – the leverage concerns don’t justify the sell-off," Jacoby said in his note to clients.

RBR observation: The downers as Wall Street views it will continue until many in the public ranks operate their facilities instead of portfolio management. RBR stated our view on the necessary moves radio needs to improve and worth repeating. Saga’s Ed Christian said on radio it just got lazy. Well add greedy, lack of innovation, being cheap to this long list. Radio leaders are NOT addressing the real issues of the medium dealing with Content, Technology, and New Revenue Development and if they were there are not enough local creative people in charge to accomplish this task. Wall Street should hold the CEO’s feet and all body parts to the fire. They make the mega bucks with perks while their stock is in the crapper. RBR can not think of one business were mega salaries is rewarded for bad performance except a pink slip. Wall Street – Time to stop beating up on the total radio medium as it is time to take the real downers to task — the CEO’s — and hold them accountable.