Summary
1. Radio revenues in 2007 have been slowly declining and took a big drop in Nov. 2. Even with the advent of HD radios, the revenues from advertising on radios are down. 3. Consumer adoption of Radio has been slow. 4. Deals like the one that Ford announced are good for the future of radio.
Analysis
2007 was not a good year for radio. With the exception of maybe 1 or 2 companies, radio companies did not do well on Wall Street. Guess why? Radio just does not seem to have the impact that one envisioned. They have not been able to capture the younger demographic levels, have not been able to compete with satellite radio, have fewer offerings and just do not have the presence that they need.
With the advent of HD radio, they have a slim chance to compete against satellite radio, their formidable rival. Deals like what Ford announced to put HD radios in their cars will go a long way for radio, albeit in a slow and steady way. If nothing else, this might give the long awaited momentum for radio to catch up with satellite radio.
Once HD radios get into cars, there is a good chance that consumers start thinking more about radios which will enable radios to become popular enough that cell phone companies, mp3 players, etc may start thinking about putting radio on their devices. Their have been campaigns to do all this but have not really taken off.
The radio companies have been caught between trying to satisfy their listeners and simultaneously their investors that do not seem to have worked out well. This has led to the companies reducing expenses often at the expense of programming which has then led to a decline of advertising. It is a vicious circle.
Bottom line, radio has had a bad year and needs desperately a major push to get into mainstream media. Radio industry revenues will grow only if radio has something substantial to offer. HD radio is a good beginning and the Ford deal maybe just the catalyst for the radio industry. No-one should expect radio revenues to increase exponentially but then so did some of its early brethren like paper media and the internet advertising. All what the radio industry needs to do is to keep their focus on providing good content and service, provide popular music and up to-date sports coverage which is the only way for advertisers to follow.
