Radio saw its eighth monthly revenue drop in a row in December, according to RAB figures this past week.
Total U.S. commercial radio revenue was down 5% compared to the final month of 2006, hurt by a 4% drop in local and a 12% plunge in national revenue.
Commenting on these numbers, business analyst Jim Boyle of CL King & Associates called it a “negative surprise” because Wall Street had been expecting a 2% drop. “We feel this should raise further fears of a coming recession.”
He said fourth-quarter pacings don’t bode well and expects most groups to miss their projections for revenue in the first quarter of 2008.
Boyle took a further step this week of issuing some advice to radio, suggesting that a rebound is possible if the industry improves its alternative revenue streams by “monetizing” core listeners.
“Radio groups fetch about 2%–3% of revenue from Internet initiatives, but that hasn’t stopped 2007 from being a down revenue year or saved newspapers, with their more developed Web site revenue, from a bigger revenue drop,” Boyle told his clients. “So what else is out there?”
“We would strongly recommend that radio look to the second of its two constituencies. Not just its advertisers, its audience! Radio’s most loyal, engaged listeners are dubbed P-1 listeners. We believe radio should sell small local content and branded items to its biggest fans.”
He predicted “many failed attempts” by radio to monetize listeners, but potentially some large successes. “Most people forget that the cable network that allowed cable to garner non-subscription revenue from the consumer Home Shopping Channel started as a Florida radio show. We also believe radio station personnel and younger employees are more likely to come up with successes than the corporate or top executives.”
Radio should establish a second revenue stream or resign itself to joining the newspapers as very mature industries, the analyst wrote.