Radio's revenue story still bleak

Local and national spot ads drop 8% in Q2

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

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

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

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

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 RAB, radio off-air revenue is "exceeding expectations," increasing at a compound annual growth rate of 12.3% during the past two years. 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 lastcq 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," he wrote. "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."

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