One day after the recession was officially declared, BIA Advisory Services, a subsidiary of BIA Financial Network, delivered a somber forecast for the radio business. For the second consecutive year, radio revenue is expected to drop 7 percent this year to $16.7 billion, the lowest total in more than five years, BIA reported Tuesday (Dec. 2). And that’s not even the bottom.
Next year radio revenue could plummet 10 percent, going as low as $15 billion. Positive growth isn’t forecast until 2010 with a very modest 1.5 percent gain.
“The already low forecasts for growth in radio coupled with a general dismal economic climate have also placed a particular strain on the valuations radio stations need to maintain their financing or to be sold,” said Mark Fratrik, vp of BIA Advisory Services. “The waters are very rough right now but the general profitability of radio keeps us optimistic that the industry will weather the storm providing it strategically invests in its online presence, which will prove to be its rescue as ad budgets continue to shift to more measurable online media.”
Station values are down and transactions have significantly slowed. Between Jan. 1 and the end of October, some 641 radio stations were sold in transactions valued at $698 million, a 34 percent decline in the number of stations sold compared to the first 10 months of 2007 and a 44 percent decline in value, the lowest level since 1992.