Niche players rise, others fall


A couple of Wall Street analysts who have been looking at Arbitron's Winter book agree that niche radio – ethnic/religious – is the place to be. "Over the past eight ratings books, only niche radio operators (Radio One, Entravision, SBS and Univision) have managed to grow their audience share. This is in spite of ongoing attempts by major general market operators to improve their station brands with new formats, injections of talent, and heavier promotion. We continue to believe that radio's audience declines will cap top-line growth over the next several years, and recommend that investors sell general market operators Citadel, Cox Radio, and Entercom.

We recommend that investors buy niche operators Entravision and Radio One," Bank of America analyst Jonathan Jacoby told clients. Although Radio One had been having problems in Los Angeles, Jacoby notes that reformatted KRBV-FM posted a 14% year-over-year share increase in the Winter book – "potentially signaling the start of a turnaround in LA."

Just a few days ago Bear Stearns analyst Victor Miller also noted that mainstream broadcasters were struggling in the Winter book, even as he noted concerns about Urban and Spanish stations' ratings in Philadelphia following the switch to PPM (5/30/07 RBR #105). In Miller's analysis of the Winter book, the big gainers were Entravision, with ratings up 14%, and Salem's music stations, up 6%. He sees a "trifurcated" market, with Spanish and niche formats (Urban and Religious) taking share from the mainstream English formats.

"Over a two-year period, ratings have been almost perfectly trifurcated, with urban Spanish-language operators posting the highest ratings results, followed by niche operators such as Radio One. Companies with the largest exposure to niche operators, such as CBS and Emmis, have posted the weakest results," Miller noted.