Radioâ??s Revenue Falls Even As Audience Grows

Audience May Be Up, But Money's Tight

THE NEW YORK TIMES asks in TODAY's edition: Can radio save itself?

Listeners are diverted by iPODS and Internet and satellite radio. Companies are loaded with debt. Advertisers are heading to television or the Web -- and the advertisers that have continued to advertise on radio, like auto dealers and retailers, are being hit by the economic crisis and pulling back. Even though the audience for broadcast radio is actually growing, stations cannot seem to increase their revenue.

Problems in the radio industry have been piling up for years, said MARCI L. RYVICKER, an analyst at WACHOVIA CAPITAL MARKETS. In the 1990s, radio companies consolidated, then began increasing the ad time available. "They started to fight for share, instead of being proactive and thinking of new ways to generate revenue," RYVICKER said.

From an advertiser’s perspective, the consolidation of radio companies has resulted in sound-alike stations, said JIM POH, VP/Director of Analytics and Media Planning at CRISPIN PORTER & BOGUSKY, which handles radio ads for clients like BURGER KING and DOMINO’S. "The group ownerships in various markets tended to blunt the edges of the formats, so that each of the stations could play across more demographic groups, and that way could share more of the revenue from various advertisers," POH said. "The downfall of that is the medium isn’t as relevant, the stations aren’t as relevant to people as they were."

There are some signs of hope, though. The radio audience is increasing: radio now reaches more than 235 million listeners in a week, versus 232 million last year, according to a study by ARBITRON.

Stations in small markets are doing relatively well. Stations in the 10 biggest markets had revenue drop about 12 to 15% this year. Stations in the smallest markets, though, have been about flat, LELAND WESTERFIELD, an analyst with BMO CAPITAL MARKETS, said. "The ad agency-placed business that predominates in larger cities has been subject to a greater level of pricing pressure."

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