The Wall Street consensus is that the monthly RAB report will show radio revenues down 2% for November, but CL King analyst Jim Boyle now expects it to be worse than that – more like down 4-5%. He’s also worried that the Q4 guidance given by the public radio groups may prove to be “rosy.” The average guidance is for Q4 to be down 1.5%, but Boyle thinks the quarter is likely to be down 3%.
“The long-time weakness in the top 25 markets persists with a minus 7% average in November. Mid markets averaged a 4% decrease and smaller markets were off an average of 2%. For context, mid-sized markets had 600bps tougher comps and smaller markets 500bps tougher comps than big markets. So, if one adjusted for one-year comparisons, mid-sized and small-sized markets did dramatically better than big Radio markets over effectively a two-year monthly snap-shot from November 2005 to November 2006 and on to November 2007,” the analyst said in a note to investors.
Boyle has repeatedly posed the question, “When does radio revenue rebound?” This time in answering his own question he notes that the automotive sector has to start spending on advertising again for the ad marketplace to improve – and that a recent Kelsey Group survey indicated that auto ad spending will be flat at best and could be down. “Unfortunately, radio was identified by Kelsey Group as an auto ad spend share loser, like newspapers, magazines, TV and Direct Mail, while Internet and Outdoor will gain auto ad share,” Boyle noted.