CL King analyst Jim Boyle figures the radio industry overall is actually doing better than the dismal monthly revenue numbers from RAB would indicate. His reasoning? Miller Kaplan has fewer small markets reporting today than a few years back – and small markets are outperforming the big ones.
“In past years the number of markets in the Radio Advertising Bureau sample, gathered by the accounting firm Miller Kaplan Arase (MKA), was 150 markets out of the roughly 300 rated markets. The sample is now only 100 markets, as many small markets no longer have enough radio groups willing to report their revenue confidentially to MKA. Hence, even on a weighted basis, those much better performing markets are not in the sample. That might mean that over 5% of the prior sample is now missing, by our calculations, which might deduct 30-40 basis points positive growth from ongoing Radio Ad Bureau industry revenue levels,” Boyle said in his analysis.
The important point is that small- mid-markets have outpaced big markets in 200 of the last 25 months. Boyle says small markets were up 5% in February, while big markets were down 3%. The RAB reported an overall 2% decline.
Now, you might think that investors would be drawn to small market groups, like Saga, Cumulus and Regent. But, no, Boyle notes that “investors have not been sufficiently impressed and continue not to care for the relatively better small market outperformance versus radio’s overall secular decline.”
RBR/TVBR observation: Boyle is a Wall Street analyst, so, of course, his clients are interested in what he can tell them about the radio companies that have public stock. There aren’t a lot of those focused on the small markets and, as noted, they’re just as out of favor with investors as the big market radio groups. But we know of plenty of private owners in the smaller markets who are doing just fine while the public guys are being beaten up on Wall Street. When you don’t have to deal with national business being placed on a commodity basis, radio is a pretty good business. Still.