JP Morgan analysts think radio ad revenue will fall 3% this year.
John Blackledge and Aaron Chew issued their outlook saying cyclical and “secular” pressures will produce a down year.
“We estimate that radio industry advertising revenue should decline 3% in 2008, driven by continued secular pressure (with continued audience losses leading to loss of ad share) as well as cyclical pressure as the soft macro trends should lower demand for advertising on the medium,” they wrote.
“We believe the radio industry is already amidst an advertising recession,” given declines in the second half of last year. The radio industry has underperformed nominal GDP by 5% on average annually since 2004, they said, but in recent months it underperformed by about 9%.
“We believe the below average underperformance will likely persist for most of 2008, offset to some degree by political spending” in the second half.
They also noted that the radio industry underperformed real GDP by about 8% during the 2001 recession.
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