PwC: Mixed Forecast for OOH Media

Prospects for out-of-home media—radio, out-of-home and satellite radio—will be a mixed bag over the next five years. Radio revenue will continue its decline, while satellite radio and out-of-home will continue to grow, according to PricewaterhouseCoopers media outlook released Tuesday (June 16).

In general, all three media will be significantly impacted by the stalled economy in 2009, and less so in 2010, with growth returning in 2011 as the economy improves.  

Hit hard by the decline in auto and retail spending, weak economic conditions and advertisers moving ad dollars to the Internet, U.S. terrestrial radio will decline by a 4.7 percent compound annual rate to $13.6 billion in 2013. Despite efforts to migrate its programming to other platforms, electronic measurement and HD Radio technology, advertising is expected to drop 14.2 percent this year to $14.8 billion. Negative growth will begin to moderate in 2010 and 2011 before posting positive growth of 0.8 percent in 2012.

While out-of-home has been hit by the economy, slowing the build out of digital boards, PwC expects out-of-home ad spending, boosted by interactive technologies and improved audience measurement, to hold up over the long term, growing at an annual compound rate of 2.5 percent to $8.2 billion in 2013. After a 4.9 percent decline this year, as spending in out-of-home is forecast to pick up with 0.7 percent growth in 2010, accelerating for the next three years with high single-digit percent revenue gains.  

Even though satellite radio relies heavily on new car sales for distribution, the recently merged satellite radio service has been able to resolve its liquidity issues thanks to a loan from Liberty Media, which now owns 40 percent of the shares and holds seats on the board.

Over the next five years, revenue from subscriptions will grow at an 8 percent compound annual rate to $4.3 billion. Advertising will more than double from $100 million in 2008 to $230 million in 2013, an 18.1 percent annual rate of growth.