Despite the impact of the worst recession since the Great Depression, radio operators on the Dickstein Shapiro panel at the NAB Radio Show in Philadelphia expressed confidence that radio is still a good business. The most optimistic is Entercom CEO David Field, who insisted that there is the potential for radio revenues to rise double-digits in 2010.
“We are shell-shocked,” Field said, but he pointed to evidence that the economy is improving and noted that radio is heading toward low comps. Here’s how the math works for his optimistic outlook. Radio revenues have fallen 40% since 2007, so the industry is rebuilding from a much lower base. With those low comps, Field insists that radio has the potential to be up in the mid-teens for 2010.
That is much, much more aggressive than the expectations of Wall Street analysts and ad industry forecasters, where the predictions generally range from down 5% to up 2% for radio revenues in 2010.
No other broadcaster on the panel moved to embrace Field’s double-digit growth forecast, but they did emphasize the viability of the radio business. CBS Radio CEO Dan Mason noted that even in the worst recession in memory, radio stations were still able to produce cash flow of 30% or more. And he noted that some of the CBS Radio clusters are currently positive for revenue growth over last year.
Of course, the troubles of the auto industry have had a big impact on broadcasters. Mason said CBS Radio last week focused its sales staffs on the automotive sectors and the results beat expectations. “The money is there. We just have to work harder to get it,” he said.
“This is and always has been an operator’s business,” said Joe Schwartz, President and CEO of Cherry Creek Radio. Both he and NRG Media President and CEO Mary Quass indicated that their smaller market groups had been impacted somewhat less than the big market groups. “We suck less than some other parts of the country,” Quass said of her Midwestern group. But Schwartz said that while the small markets may not have fallen as far as the big markets, he said a reversal may be coming with the big markets moving ahead of the small ones in revenue recovery.
The issue of financial restructurings, which had dominated the panel of lenders and investment firms, was also a major topic for the operators. Cumulus Media CEO Lew Dickey explained what had happened since most major groups put their capital structures together in the 2005-2007 timeframe. Radio industry revenues have gone from $21 billion to $15 billion and industry cash flow has dropped from $7 billion to $2.5-3 billion. “Here lies the conundrum,” Dickey said, noting that lenders have more questions than answers as they try to deal with the situation.
“They don’t want Chapter 22, which is Chapter 11 twice,” Dickey quipped. So, while lenders try to get a handle on what lies ahead there have been a lot of amendments and extensions. One they are able to identify the bottom, he said, the broadcasters and lenders will be able to reorganize around the “new normal.”
RBR/TVBR observation: OK, is David Field onto something or off his rocker? We encourage you to post your opinion on RBR.com.