Long-term Focus Needed for Radio

Implications: Radio's problems are not short-term, and a longer horizon is needed to meet the challenges of declining revenues.

Analysis: Just a few points of clarification regarding this analysis:

1.  Radio revenues have declined since 2001. Political advertising in 2008 will help, but it will be another flat or negative year in 2008, especially if there is a full-blown recession as 80+% of radio revenues are locally driven.

2.  Satellite radio is not really a serious competitor to terrestrial radio  XM & Sirius combined have at best 15 million subscribers.  In 2007, radio reached over 225 million listeners.  XM & Sirius have yet to make a profit.  Radio remains a $20 billion industry.

3.  HD radio will not deliver any potential revenue streams until 2010 at the earliest, and they will be small.  The industry is not even using ads in this early introductory period because of a moratorium on ads for the first 18 months of existence.

4.  Radio must refocus its programming on localism so every station doesn't sound the same as it does all across the US,  work to ensure that wireless devices like mobile phones and PDAs are cable of receiving terrestrial radio, and continue to develop non-traditional revenues (NTR) through online, text messaging, community events, etc.

One report released last week suggested radio revenues would grow to around $28 billion by 2018, thanks in large part to NTR.