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Faster Radio Revenue Rebound in Small and Midsize Markets

While large radio markets across the country continue to struggle, small and midsize markets are showing slight gains in revenue and the promise of faster growth than the top 10 markets, according to the estimates of BIA Financial Network.

The following chart shows BIAfn’s expectations of the average anticipated revenue growth - by market rank - up to 2012:

BIAfn expects that by 2011 small and midsize radio markets will reach revenue levels equivalent to those in 2007. This time frame is two-three years before large markets - such as New York, Los Angeles, and Chicago - will rebound to that level, it said.

Examples of medium and small markets that are expected to see revenue increases in 2008 include McAllen-Brownsville, Texas (2.8%), El Paso, Texas (3.8%), Madison, Wis. (1%), and Baton Rouge, La. (3%).

“We don’t foresee radio operators returning to the double-digit growth they experienced in the earlier part of this decade, but it is evident that a resumption of slightly stronger revenue growth will bolster their financial futures as they continue to capitalize on their digital assets and, simply, their positions in their local markets,” said Mark R. Fratrik, PhD, VP of BIAfn.

The markets ranked 11th and higher will record better revenue growth in large part due to local advertising support, differences in competition, and their audiences’ embrace of technological improvements, finds BIAfn’s second edition of the quarterly Investing In Radio Market Report.

“The trend toward revenue increases in the small and midsize radio markets are significant because they indicate that advertisers in these smaller regions continue to find radio to be an effective medium to reach consumers,” Fratrik said.

“Listeners are also beginning to respond favorably to the digital innovations their favorite stations are making through multicasting and live audio streaming, enhanced websites, and HD Radio.”