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Radio Stocks Hold Up During ‘Secular Shift’

BIA/Kelsey explores trends in value of local media company shares

The stocks of local radio companies trended upward a tad in the latest report from research company BIA/Kelsey, and certainly did better than those of Yellow Pages.

BIA/Kelsey publishes a Local Media Index, or LMI. It said overall, stocks of publicly held local media companies fell 18.7% last year, underperforming the market. Dragging the numbers down were Yellow Pages and newspapers, down 77.5% and 27.8% respectively.

“BIA/Kelsey concludes, overall, there is a secular shift toward growth in digital revenues as an increasing component of a fairly flat local advertising economy,” it stated in a summary. “As local media companies shift their ownership portfolios along with their sales and product strategies, eventually the results are reflected in share prices, with local media companies more involved in the digital space benefiting most.”

Though the index fell, some parts were in the positive including online advertising and search (8%), diversified media (7.8%), broadcast television (6.1%) and radio (2.1%).

VP Mark Fratrik stated in the report that “values of local media companies can be more volatile to the perceptions about the future of the economy and local ad spending than the S&P itself. … Last year’s poor performance of the LMI was caused by deep concerns over the health of the global economy in Q3 and the belief that businesses would severely cut back on their advertising spending. While the last quarter of 2011 saw a rebound in media stocks, the drop-off had been too significant to overcome.”

He thinks the prospects for local media will improve in 2012 thanks in part to political spending and an improved outlook for broadcast media.

“With the maturity of digital technologies driving the delivery of content across multiple platforms, advertising opportunities are significantly increasing, and local media firms are starting to book incremental sales.” The company thinks that a quarter of ad dollars spent in local media will be in digital media by 2015. “Increasingly, this will occur in coordinated cross-platform media buying with integrated creative and marketing campaigns.”