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SNL Kagan Predicts Steep Declines in 2009

Study forecasts a market adjustment in 2010 as radio/TV owners cut costs and provide digital alternatives to their local communities.

Radio and TV revenues will continue to fall in 2009 but are expected to regain some ground over the long term.

That’s according to SNL Kagan’s updated “Radio/TV Station Annual Outlook,” which takes into account overall broadcast revenue trends, market demographics and projected ad revenues in determining a market’s growth potential.

In 2008, the broadcast sector suffered deep declines as the recession intensified, with radio revenues down 10.0% to $17.7 billion and local and national spot TV ad revenues dropping 6.9% to $20.1 billion. SNL Kagan estimates 2009 revenues will slide even further, with declines of at least 15.0% for radio and 15.7% for TV stations anticipated.

“The outlook for 2009 indicates another grim year for broadcast revenues,” said Robin Flynn, senior analyst at SNL Kagan. “Those radio and TV station owners who are able to reduce expenses while continuing to transition their business models to develop digital assets and non-traditional revenue streams will survive and reemerge as more efficient operations. If broadcasters have an advantage over Internet companies, it is their reach within local communities, and their financial success will depend on how they work to meet the needs of the local market.”

SNL Kagan forecasts a turnaround in 2010, with modest growth through 2013 offsetting some of the declines of 2008–2009. In the five-year outlook, SNL Kagan expects radio revenues to decline by 1.9% and TV revenues to drop 2.0%.