Challenging Times Ahead For Radio Industry

A new analyst report suggests that radio is in for some tough times ahead. James Boyle, vice president and senior analyst for CL King & Associates (an investment research firm with offices in New York and Boston), paints a less than flattering picture of the radio industry.

“Why should the plunge radio stocks have taken the last 30 months reverse itself when the industry’s prospects haven’t brightened sufficiently? “All the trends are weak to disappointing, if not downright depressing,” he contends...and this from an analyst whose family has been in radio for 50 years.

Among the red flags pointed out by Boyle: Erosion. He suggests it is worse than industry observers realize and is accelerating. “Radio listenership is actually declining faster than analysts, investors and journalists thought.”

He says the rate of that erosion is inexplicably faster among women, which he points out is counter to conventional wisdom. “This is not a good trend,” Boyle notes.

According to his report, radio’s latest quarterly ratings book reported the worst year-over-year drop in the last 10 years, with listenership down nearly 3%.

Additionally, the industry’s traditionally strong advertising categories are cutting back. The CL King report says the telecom industry, for example, purchased 35% fewer radio spots in 2005 compared to 2004. The auto industry, another important buyer of radio, is also looking elsewhere.

“Too many of us have for too long kidded ourselves that the radio sector was, is, or is soon to be poised for a marked upturn,” Boyle admits in his report.