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Analyst Rips Big Radio Again

Monthly revenue numbers are a prompt for more critical words from Boyle.

Radio financial analyst Jim Boyle says that, from what he can tell in talking to radio executives, ad salespeople in our business aren’t really trying to grow the ad pie.

“We recently had lunch with four private radio executives. They have operated stations in many sized markets. They had no falling stock prices to defend or ‘spin,’” wrote the senior analyst for CL King & Associates this week.

“We listened to them, as many others in the last few years had detailed as well, that in the big markets the big groups are indeed different. Big-market groups tend to overcentralize decision-making regardless of differences in cities. They budget and plan from the ‘top-down’ rather than from the ‘bottom-up.’

“They ponder Excel spreadsheets and tweak assumptions as though that will make it all come true,” Boyle continued. “Big markets sell based on price. The big groups say they attempt to develop new business from outside of existing radio ad budgets. But we are told by sales execs year after year they really just try to steal other radio peer ad business so as to shift market share, not build the overall ‘radio ad pie.’”

When most radio groups went public in the 1990s, he said, top executives declared radio was management-intensive, locally-focused and people-oriented.

“No longer, it seems to us and to the many veterans unshackled by the typical company talking points.”

Boyle was commenting in a newsletter to clients on the latest industry revenue figures.

In the month of July, overall U.S. radio revenue was down 6%, according to the Radio Advertising Bureau. Off-air revenue was up again, though not by as much as we’ve seen in some recent months; it grew 6% compared to the same month a year earlier.

Boyle noted that July was the 15th straight negative revenue month for U.S. commercial radio revenue.

He also said that in July, according to his numbers, small-market radio grew 1% while big markets were down 7%. Why? Because small-market radio practices “local radio” or “old radio” and thus is healthier than big-market radio. “Small-market radio has much more local radio content. Small-market radio sells quality rather than price and results, more than switch-pitching their radio peers’ clients.”