BIA/Kelsey's Local Media Index Shows Radio Up 2.1%
January 18, 2012 at 3:55 AM (PT)
Stocks of publicly held local media companies performed worse last year than the overall stock market, falling 18.7%, according to BIA/KELSEY's Local Media Index (LMI). The LMI tracks the local media sector, with a market capitalization of $2.2 trillion, to better reveal underlying dynamics in both secular and cyclical industry trends.
BIA/KELSEY concludes, overall, there is a "secular shift toward growth in digital revenues as an increasing component of a fairly flat local advertising economy." As local media companies shift their ownership portfolios along with their sales and product strategies, eventually the results are reflected in share prices, with local media companies more involved in the digital space benefiting most.
Certain sub-sectors, such as YELLOW PAGES and newspapers, brought down the LMI, with those sectors' indices dropping by 77.5% and 27.8%, respectively.
Radio, up 2.1%, was one of the elements of the LMI that were positive last year and hold equal, if not greater, promise in 2012. Others rising included online advertising and search (8%), diversified media (7.8%) and broadcast television (6.1%).
"BIA/KELSEY's Local Media Index is showing the values of local media companies can be more volatile to the perceptions about the future of the economy and local ad spending than the S&P itself, a fact that would not reveal itself through other indices," said VP MARK FRATRIK. "Last year's poor performance of the LMI was caused by deep concerns over the health of the global economy in Q3 and the belief that businesses would severely cut back on their advertising spending. While the last quarter of 2011 saw a rebound in media stocks, the drop-off had been too significant to overcome."
BIA/Kelsey sees the prospects for local media companies improving along with the economy in 2012. The anticipated strong political advertising year and the outlook for radio and television stations should bolster several sectors in the LMI.