Radio Industry Economics, Advances and Forecasts

By The Myers Report Archives
Cover image for  article: Radio Industry Economics, Advances and Forecasts

The radio business is undergoing a transformation. As I mentioned in in my opening comments at Radio Ink's Forecast '12 conference held last week, radio is an industry that's embracing change, with an established and engaged audience and a distribution model that's moving more and more digital. Ad revenues for 2011 are significantly greater than most economists and forecasters anticipated, with Myers' 2011 estimates increasing to +1.8 for legacy revenues and digital revenues growing 20%. With political tail winds and strong category growth for both local and national advertising anticipated for 2012, we are increasing our forecasts to +6.1%, including 5.4% legacy revenue growth and 25% digital advertising growth. Consumers continue to engage with radio, with more than 95% of all radio and online listening to traditional AM/FM signals. While new digital technologies and competitors are impacting how and where audio is consumed, the radio industry is actively responding, with Clear Channel and CBS in the lead, followed closely by most of the industry's station group owners.

The Year That Was, Looking Ahead

The Radio Ad Bureau (RAB) reported last week that radio revenues for 2011 through September were up a modest 2.0%, to $12.89 billion, "capping seven consecutive quarters of upward momentum." Digital was clearly supporting this growth, up 18% year to date. Off-air also posted strong results, rising 8% through September 2011. Compared to the double-digit declines that some forecasters projected for 2011 ad revenues as recently as late 2009, the medium has proven to be impressively resilient. Fourth quarter revenues should be strong with Black Friday giving marketers optimism and with consumers ignoring their low economic confidence political uncertainty.

My forecasts for 2012 at +6.1% are comparatively bullish, compared to the forecasts profiled below and to the 3.0% growth estimated by Wells Fargo's Marci Ryvicker. My more bullish forecasts are based on stronger digital growth expectations resulting from the aggressive initiatives launched by Clear Channel, Cumulus and CBS, along with most leading industry players. Significant inroads made by the Radio Advertising Bureau and Katz Radio, along with other national sales organizations, have been generating positive results with agencies and marketers. As marketers hold budgets back until the last minute before making commitments, radio is the leading beneficiary. The medium actively promotes its ability to deliver mass reach among concentrated demographic groups with targeted creative messaging. As I commented at the Radio Ink conference, radio still has a targeting advantage over other media and advertisers still appreciate the ability to reach specific markets with specific messages.

At the Radio Ink conference, station executives heard pitches from Group Commerce CEO Jonty Kelt, Live Gamer president Andrew Schneider and Linkable CEO Tom Burgess, who outlined their offers to actively invest in radio stations' digital initiatives in the commerce, gaming and social spheres. Radio stations, I pointed out, are uniquely positioned to partner with VC-funded firms that are eager to establish their beachhead with the huge radio audience. Station groups can venture into digital businesses with limited investment or risk and significant upside potential.

The key political constituencies driving increased spending in 2012 will not be politicians themselves but political advocacy groups (PACs), coming off an almost negligible spending base in previous years.

Media Agency and Wall Street Forecasts for Radio

  • ZenithOptimedia: The agency released its global advertising forecasts this week and the firm expects an increase of 2% in radio ad spending, mainly from dollars flowing to sporting events and increased activity in emerging markets. While forecasting growth, the firm scaled back its expectations for 2012.
  • MagnaGlobal: The division of IPG sees radio continuing to struggle with the economic slowdown,not seeing much growth over the next year (-.4%). "The signs of the slowdown ... point to continued declines through the second half of 2011 and into 2012," a recent report said. The firm also cut its prognostications for ad spending in the near future.
  • Pivotal Research: Pivotal sees radio ad spending barely growing (.2%) for 2012 and doesn't see a lot of growth on the horizon. "Local radio is still valued by core advertisers, but the medium has lost its sheen for most of the largest marketers, many of whom are unlikely to consider the medium," said Brian Wieser, CFA, author of the report.

How a Couple of the Major Players Performed

ClearChannel ( The radio giant, continues to right-size its company, recently cutting dozens of DJs, part of the restructuring of more than 600 regional stations. The company's stock has suffered, down 50% so far in 2011. With Bob Pittman, ex of MTV, AOL, and Time Warner, recently elevated to CEO, the company is trying to reinvent itself with its iHeartRadio as its digital backbone. The industry is betting on Pittman's success, with good reason. He wasted little time in launching iHeartRadio and striking a group commerce deal with Cumulus Radio to offer discounted deals to listeners and compete with Groupon and Living Social.

CBS (CBS): The media conglomerate is also sorting out its radio strategy. Its expansion into added sports content appears to be working, now with presence in nine out of the top 11 markets. While radio revenues haven't grown significantly for CBS over the past year, the company still believes its terrestrial assets are core for its business. When asked about a potential sale of its radio business, CBS' Les Moonves replied, "Highly doubtful, highly doubtful. We like the way they're performing ... we're pretty pleased with what we have right now."

Summary: Radio in 2012

  • Growth, but sluggish: Most firms see growth up ahead, however slight. Most forecasts have already slashed expectation going into 2012 because of macroeconomic concerns. The industry's growth is tied to the health of global markets. I have a more bullish take based on the significant outperformance of radio in 2011 compared to most forecasts heading into the year, exceptional digital investments, plus strong category growth and positive political positioning.
  • Quadrennial events: 2012 ushers in three events that happen only every four years: the summer Olympics, the European Football Championship, and of course, the U.S. Presidential elections. If spending is strong around these events, it could mitigate any macroeconomic malaise.
  • Radio still the king of the car: Radio still dominates four-wheel environments, per a recent study commissioned by Arbitron. In-car AM/FM radio usage is strongest in the key buying demos it has long targeted, reaching nearly 90% of adults age 25 to 54. "AM/FM radio has remained strong in a much more complex in-car media landscape and continues to be the first choice of consumers for in-car entertainment and information," said Bill Rose, Senior Vice President of Marketing, Arbitron Inc. In spite of iPods, Pandora, Spotify, and Sirius/XM vying for consumer eardrums, drivers still tune into radio. Pandora captures 2.5% of all radio listening (online and terrestrial), and an estimated 50%-60% of all online radio listening. Online originated audio content captures less than 5% of total radio listening.
  • Pimping out the radio: Consumers are keenly interested in new telematic technology, including HD and the ability to navigate through programming. "41% are interested in pause, rewind and replay functionality for radio in-car and 40% are interested in built-in wireless internet for the car," according to the Arbitron study.


You are receiving this e-mail as a corporate subscriber to Jack Myers Media Business Report. Re-distribution in any form, except among approved individuals within your company, is prohibited. As a subscriber you have full access to all archives and reports at If you require your ID and password, contact

Copyright ©2019 MediaVillage, Inc. All rights reserved. By using this site you agree to the Terms of Service and Privacy Policy.