Slight increase in Radio Industry Revenues for 2010.

The radio industry will see its over-the-air revenues in 2010 climb 4.4 percent over last year to $13.93 billion, with another $459.3 million in revenues coming from digital and online sources, according to a revised forecast issued from BIA/Kelsey. This uptick, reported in the third edition of BIA/Kelsey’s quarterly “Investing In Radio® Market Report,” comes from collective increases across the country in the various radio markets. Stations in top 10 market cities will average a 6.26 percent increase from 2009, while, notably, San Francisco and Philadelphia can expect overall revenue growth of eight percent due primarily to an increase in spending by national advertisers.

Scattered cities in a number of markets will hit 7.5 percent or greater growth this year, including Miami-Ft. Lauderdale-Hollywood, Florida (7.5 percent); Denver, Colorado (8.5 percent); Syracuse, New York, Little Rock, Arkansas, and Springfield, Massachusetts (8 percent); and New Haven, Connecticut (7.7 percent). Markets 11 to 25 will raise an average of 4.05 percent, while others will see average revenue increases of between 2.73 percent and 3.66 percent.

“We’re glad to see positive growth in most U.S. radio markets but still feel there remains enough uncertainty in the country’s overall economic performance to tread carefully stepping into the second half of the year. Bear in mind, too, that the third and fourth quarters of 2009 were better than the first half of that year, so we do not expect the change to be that large by the end of this year,” said Mark Fratrik, Ph.D., vice president, BIA/Kelsey. “Radio’s performance this year will largely be driven by the success of the top markets; however, its impact will resonate to smaller ones.”

The chart represents BIA/Kelsey’s updated five-year forecast for the radio industry:

BIA/Kelsey also notes that the small volume of radio station transactions this year have been a function of the revenue and profit decline experienced in recent years and a lack of bank financing. As of July there were only $168 million in transactions compared with $207 million in 2009.

“Station owners are hesitant to sell at today’s lower multiples, while potential buyers’ view the growth potential conservatively in light of the economic uncertainty. Additionally, the inability to get sufficient debt financing to lower the cost of capital leaves the transaction marketplace stuck in neutral,” Fratrik said. BIA/Kelsey’s valuation techniques and access to historical market data can help buyers and sellers trying to assess value in the current environment and lenders evaluating the sector.

For more information at http://www.bia.com