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BIA Kelsey Updates Radio’s Growth Outlook

‘Performance this year will largely be driven by the success of the top markets; however, its impact will resonate to smaller ones.’

Most radio watchers expect U.S. commercial radio revenue to be up this year; they differ by how much. Now BIA/Kelsey has updated its outlook, saying on-air revenues should be up 4.4% over last year to $13.93 billion; another $459.3 million is expected from digital and online sources.

Top 10 markets should see an increase of slightly more than 6%. “Notably, San Francisco and Philadelphia can expect overall revenue growth of 8% due primarily to an increase in spending by national advertisers.”

It expects revenue in markets 11–25 to be up around 4%, and smaller increases in other markets.

VP Mark Fratrik said in the announcement, “We’re glad to see positive growth in most U.S. radio markets but still feel there remains enough uncertainty in the country’s overall economic performance to tread carefully stepping into the second half of the year. Bear in mind, too, that the third and fourth quarters of 2009 were better than the first half of that year, so we do not expect the change to be that large by the end of this year.”

The second chart shows the average 2010 increase for over-the-air radio advertising revenues for different market sizes.

The company also tracks station transactions, and said there were only $168 million worth so far this year compared with $207 million at this point in 2009; it attributes that to revenue and profit declines and lack of bank financing.

“Station owners are hesitant to sell at today’s lower multiples, while potential buyers view the growth potential conservatively in light of the economic uncertainty. Additionally, the inability to get sufficient debt financing to lower the cost of capital leaves the transaction marketplace stuck in neutral.”

The forecasts are in the company’s latest “Investing in Radio Market Report.”

At Mid-Year, U.S. Radio Revenue Is Up 6%