Having said that she sees television holding up better than other media in the current stressed economy, Wells Fargo Securities analyst Marci Ryvicker has a simple explanation for why radio has been choppy: “It’s the economy, stupid.” She told clients that longer term prospects look better for radio, while the slow economy is keeping radio ad sales slow as well.
“We came away from our most recent radio discussions with three over-riding thoughts,” Ryvicker said.
1) The industry randomly had a fabulous August;
2) Such fabulousness was no trend – business post August has been slow but in line with the economic environment.
3) The issue has been general malaise by the advertising community rather than cancellations.
And, she noted, “Pacing data in the radio industry has been very misleading. The months start off very strong but tail off as we get inside the month, making it extremely difficult to predict actual performance.”
As noted, Ryvicker reduced her Q4 revenue estimate for Entercom, although that was partly due to the impact of some format changes, and held steady on Saga.
Here is her bottom line on how things look in the radio industry: “The overall tone from the radio groups has been a lot more positive with regard to the longer term prospects of this industry. It feels like there is real innovation going on, particularly within industry-leaders such as Clear Channel and CBS. However, the current radio environment seems to be in line with the economy – slow. Again, nothing like what we saw in 2008/2009 but just general softness due to advertisers holding back,” the analyst wrote.