Cautious optimism abounds for the economic outlook, with the Federal Reserve predicting that the Great Recession is “leveling out.” Financial markets are improving, the Fed says. Household spending is “stabilizing.” Businesses are realigning inventory with sales. Thus “market forces will contribute to a gradual resumption of sustainable economic growth in a context of price stability.” Hooray!
But the prospects for big radio continue to look pretty darned grim. Clear Channels’ second quarter report for this year is particularly gnarly. The company says that its revenue has dropped nearly a full twenty five percent from the same time last year. $692.1 million in the second quarter of 2009; 914.8 million in the second quarter of 2008.
The report also discloses that Clear Channel, recently acquired by Bain Capital, has slashed the operating expenses of its advertising company, Clear Channel Outdoor, by twenty percent.
Meanwhile Westwood One posted a revenue drop of 16.7% for the last quarter, which rather neatly translates into an actual loss of $16.7 million. “The decrease in revenue is primarily attributable to the current economic downturn and the continued decline in advertising spending,” the company notes. Network radio revenue fell by $7 million, aka 14.9%. “The decline was principally due to the decline in advertising spending in news, talk and sports programming, particularly from automotive advertisers.”
The press release continues:
The difficult economic environment continues to negatively impact revenue across the advertising industry in general including radio advertising. In early July 2009, Magna, the research and marketplace intelligence arm of Interpublic Group’s Mediabrands, released projections that concluded that the first half of 2009 will likely turn out to be the worst period of the recession for the advertising industry, with an 18% drop in overall advertising revenue versus the first half of 2008. In June, BIA Advisory Services, a subsidiary of BIA Financial Network, Inc., released 2009 radio projections, noting that “[t]he economy has affected the radio industry more this year than originally projected”, and predicting significant revenue declines in 2009 compared to 2008.
The question, of course, is whether this stark free fall is simply a result of the recession, or the decline of terrestrial radio in general. If it is both, does big over-the-air radio have any strategy for reclaiming its share of the media pie after the economic comeback?
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