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Radio Dips 7% for First Half of '08

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No matter how you spin it, radio's revenue story is still bleak. Combined local and national spot radio advertising dropped 8 percent in second quarter to $4.6 billion for a 7 percent drop in the first half of the year to $8.4 billion, according to figures released Thursday (Aug. 21) by the Radio Advertising Bureau.

Even factoring in a robust 12 percent growth in off-air advertising to $889 million and a healthy 3 percent climb for network radio to $567 million, radio advertising is still down 5 percent to $9.9 billion at mid-year.

Radio continues to be hit by a very soft national ad market with national spot dropping 11 percent in second quarter and staying there. For the first half of the year, national spot is down 11 percent to $1.4 billion.

Local advertising was only slightly better, down 7 percent in second quarter to $3.8 billion, and down 6 percent to nearly $7 billion for the first half of the year.

While off-air advertising can't make up the difference, it's additional revenue the industry is clinging to in this tough ad market. According to the RAB, radio off-air revenue is "exceeding expectations," increasing at a compound annual growth rate of 12.3 percent over the past two years. The RAB has forecast off-air revenue, made up primarily of online activity, to pass $2 billion in 2009.

What radio can do to turn around its fortunes is a popular topic among Wall Street and other observers. In a report released earlier this week, Jim Boyle, an analyst with CL King & Associates accused radio of doing little to reverse the negative trends.

"The industry's larger groups do not appear ready to institute revolutionary changes yet in sales, programming, promotion or station clusters. There is a notable sense of denial of how harsh the prospects have been and continue to be for radio. The classic CEO reply is radio is not bleeding as badly as newspapers," Boyle wrote.

The RAB's figures are based on pool of more than 100 markets as reported by the accounting firm of Miller, Kaplan, Arase & Co.