Radio revenue declines in '08

Third consecutive year of negative growth for the medium

NEW YORK -- Radio ended 2008 with a 10% revenue decline to $16.5 billion. Factoring in off-air and network revenue, the medium was down 9% to $19.5 billion, according to figures released by the Radio Advertising Bureau.

It's the third consecutive year of negative growth for a medium that has struggled to regain its place in the media mix.

But last year's declines might look like the good old days in light of several Wall Street forecasts, which have put radio down by 20% or more for the first quarter of 2009 and down by 13% or more for this year. Bracing for one of the toughest ad markets in recent memory, radio groups, many of them over-leveraged, have cut costs and staffs to the bare bones.

As for inventory, it's a buyer's market, making it difficult for stations to hold to rate cards.

Off-air revenue remains a bright spot for the medium, growing 7% in 2008 to nearly $1.8 billion. The RAB forecasts the segment to reach $2 billion this year.

Network also bucked the trend, coming in flat for 2008 at $1.15 billion.

As was the case with other media, radio advertising hit its lowest point during the fourth quarter of last year. Local tumbled 13% to $3.2 billion, and national plummeted 14% to $735 million. Network radio, which has outperformed all other segments with positive growth, dipped 4% during the fourth quarter to $298 million. Even off-air advertising, including online revenue, eked out only a 1% increase to $444 million during the quarter.

Much of radio's revenue decline can be attributed to its top ad categories. Automotive spending, which accounts for 15% of the medium's revenue and is its No. 1 ad category, declined by 22% to $2.5 billion in 2008.

Spending by communications, cellular and public-utility companies, radio's second-largest category, was flat at $1.7 billion.

Some categories increased spending last year, including political, grocery and convenience/liquor stores, professional services, insurance and restaurants. Select retail categories, including home improvement, department and discount stores and shopping centers, were flat.