Gilford Securities analyst Jim Boyle is in the business of making forecasts, but he’s reached out to top broadcasters for their take on what to expect for radio revenue growth in 2011, with the election year and easy comps in the rear view mirror. The consensus is 3.5%, with Boyle finding some surprises as he gathered responses.
“Ironically, I had expected the public CEOs to be typically more optimistic than the several private CEOs in their ’11E [2001 estimated] forecast as private groups do not have a stock price to defend or investor perception to be spun. It was the opposite as public execs forecast an average 3% Radio revenue growth in ’11E whereas the private execs, with no axe to grind, forecast a higher 4.7% growth,” Boyle noted.
“Assuredly, the CEOs can be prone to Lake Woebegone tendencies where all their children are viewed as above average. Thus, one could logically temper the 2011E forecast. Nevertheless, I think many investors are very concerned that the roughly 6% growth anticipated by the Radio Advertising Bureau for the first half of 2010E will drop off dramatically in the H2E [2009 2nd half estimated] when the very easy comps become less easy; as well the bearish potential for 2011E to be flat or much worse. To date, the anecdotal evidence I confidentially gather from about 50 markets (comprising over 40% of the Industry revenue) does not indicate any H2E plummet in bookings, or pacings to date. When you combine that with the CEOs’ 2011E forecast, it appears quite possible that investors have overshot in their bearish perceptions of the embryonic Radio industry revenue growth revival disappearing in the next several quarters. It is almost as though investors fleeing radio stocks feel the industry is still too much like newspapers or Greece,” Boyle said.
The analyst noted that the Wall Street bears are expecting radio revenues to fall back to flat after the boost of 2009.
To arrive at his consensus forecast of 3.5% growth in 2010 Boyle said he got responses from CEOs of Top 20 groups accounting for roughly a third of the industry revenues in those Top 20 groups. His respondents were about two-thirds from public companies and one third from privately-held ones.
RBR-TVBR observation: Sounds reasonable to us. Radio is not nearly as subject to the wide swings of political spending as TV. So while TV revenues are expected to be more or less flat with 2010 next year – but up excluding that big political chunk – radio should continue to post growth. To be sure there’s no return expected to the good old days of 7-8% growth every year, but a number in the lower single-digit range shouldn’t be a high hurdle to clear.