BIA/Kelsey State of Industry Report Details Ad Revs

RADIO ONLINE | Monday, June 27, 2016

Although local radio stations have faced an onslaught of new competitors for years, they remain an important part of the local media marketplace. Local radio stations still reach a vast majority of their audiences during the week, but those listeners have many more options available to them. Additionally, advertisers have multiple platforms (audio and other formats) from which to choose to relay their messages. As a result, local radio stations in recent years have seen meager increases in total industry revenues and even some slight decreases in over-the-air advertising revenues.

According to BIA/Kelsey's "State of the Industry" Radio 2016 report, radio still reaches a considerable amount of the population and its ability to deliver local audiences to national and local advertisers allows it to maintain a position in the local ad marketplace. On the other hand, the increase in competition for listeners from other sources of audio entertainment and information and the rise in competition from other local media to sell advertising have put constraints on the revenues generated by local radio stations.

In recent years, BIA/Kelsey says total radio industry revenues have remained relatively constant, with over-the-air ad revenues either holding steady or decreasing by a few percentages points. Online/digital revenues generated by local radio stations have shown much stronger growth, mitigating some of that decrease. In 2015, on-air advertising revenues declined by 1.6% while online revenues grew by 11.6%. The firm believes local radio stations will be able to turn around this negative on-air revenue growth slightly. As long as the economy maintains moderate growth in the next few years, BIA/Kelsey expects total radio advertising to grow in the 1% to 1.25% CAGR range.

BIA/Kelsey's report said that one of the reasons investors are generally more confident in public radio companies is simply that these groups are diversified, owning a number of stations in different markets across the country. After many years of acquiring stations and merging larger radio companies, the radio industry is characterized by a greater degree of national consolidation. The following is a listing of the top 10 radio groups, in terms of 2015 gross advertising revenues, along with the overall share of total industry revenues.

While these ten radio groups account for nearly 19.0 percent of the total number of U.S. commercial radio stations, they garner nearly half (47.4 percent) of all radio ad revenues. A key reason is simply that they own a vast majority of stations in the largest markets and, as shown earlier, these markets generate a significant proportion of the entire industry revenues. Additionally, these groups manage some of the most popular stations in these markets.