Radio: Who will survive?


That is the ominous headline on the radio section of the latest broadcast/outdoor sector research report from Wachovia analyst Marci Ryvicker. She sees 2009 radio revenues falling 13%, but adds that “even this number may be too optimistic.” Ryvicker has also reduced her estimates for the television and outdoor stocks she covers as well, so 2009 looks to be a tough year all around.

“Radio has, in our view, hit bottom given the various penny stocks, significant debt levels, lack of M&A, nonexistent credit and significant revenue and EBITDA declines. Unfortunately, however, we see no catalyst that will favorably boost the stocks until an economic and/or credit market recovery ensues. By that time, there may be a smaller number of public radio groups given the real potential for delisting and bankruptcies,” Ryvicker told clients.

She expects the best performers from the public radio stocks in 2009 to be Emmis and Saga, although she’s lowered her revenue estimates for them as well.

“EMMS has a February fiscal year-end, which includes January and February of 2010. We hope that at that point, we will be in the midst of an economic recovery; therefore EMMS should benefit from 2 months of moderating revenue declines. Unlike its peers, EMMS also has a rather large international radio division, which comprises 20% of consolidated radio revenue (per our estimates). We anticipate that this segment will continue to trend better than EMMS’ domestic segment just as it has done over the
past several years,” Ryvicker wrote.

“SGA has outperformed the industry for the past several years due to its small-market focus, and we anticipate that this trend will continue throughout the economic downturn,” she said.

Ryvicker’s revenue estimates for radio are dismal in 2009. She now sees double-digit percentage declines for seven of the nine radio stocks she covers. In order of decline, she sees CBS Radio down 13.9%, Citadel down 12.7%, Entercom down 11.7%, Radio One down 11.5%, Entravision Radio down 11.3%, Cumulus and Cox Radio each down 10.6%, Saga down 7.9% and Emmis down 7.5%.

For the entire radio industry, she forecasts that local will fall 13% in 2009, national 17%, network 10% and NTR 4%. That adds up to a radio industry revenue decline of 13% – a downward adjustment from her previous projection of an 8% decline. She is looking for TV to be down 12% and outdoor 8%.