Summary
Radio revenues are miserable for the second quarter of 2009, down 22% from a year ago. The industry is struggling with a lack of cash at a time when many of its biggest companies are suffering from servicing large amounts of debt.
Analysis
The Radio Advertising Bureau has released second quarter advertising data for the industry, and the numbers are glum. Revenues were down 22% compared to the second quarter of 2008. The only bright spot in the report is in the area of digital revenues; that number was up 9% from a year ago.
It is not surprising to see local advertising--radio's main revenue stream--fall during a recession. As businesses cut costs, advertising is often one of the first areas to chop, especially for small businesses. Still, it is a lost quarter for the industry, which has several of its biggest companies (e.g., Clear Channel, Citadel, Cumulus, etc.) in terrible shape due to heavy debt loads. These companies need cash, and local advertising is not delivering.
Third quarter should be better--one industry projection suggests a loss of 10% for the third quarter would be in order. Hard to imagine any excitement over a double-digit loss but -10% beats -22% as this "new normal" for the radio industry unfolds. Perhaps the data won't be as bad given the success of the "cash for clunkers" program from the government and its ability to trigger automotive advertising.
While there are encouraging signs the worst of the recession are over, there are few signs to suggest that the radio industry is going to recover from this continuing secular trend of losing ad dollars.
Bloggers, journalists, and even some of the few visionary leaders left in the radio industry continue to call for change and for radio to focus on opportunities, such as building on the demise of local newspapers (see one of my earlier posts) and expanding in to social networking and other digital media. But the industry seems mired in gloom and unable to move forward. This bad news is more of the same.
Alan Albarran consults with leading institutions through GLG
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
