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Analyst: Facing Competitive Media And Ad Challenges, Radio Remains Resilient.


In the current and arguably volatile advertising and media environment, radio will take whatever good news it can get – especially when there's not-so-great economic news overall.


While Guggenheim Securities Media and Live Entertainment Analyst Curry Baker's terrestrial radio revenue forecast for full year 2023 is “flat or down,” he notes that compared with other media, radio has shown remarkable resilience.


“Terrestrial radio has stayed steady, even as other mediums like satellite radio, podcasts, and Apple CarPlay have come on board,” Baker tells CNBC. “Historically, radio personalities and stations have engaged with local audiences,” which he says tend to be “sticky. Cable networks never really did that.”


As a point of comparison, Baker cites pay TV, where audience penetration has fallen 20% since 2014, according to data firm Statista, and declined at a record pace during Q3 2023, according to MoffettNathanson. Additionally, media investment firm GroupM forecasts TV to fall to 18% of total ad revenue globally for 2023.


Pew Research, meanwhile, reported that 82% of Americans age 12 or older listened to terrestrial radio in a given week, off by just 10 percentage points since 2009.


What makes radio, the oldest of all electronic media, so stable? It's a combination of a lack of cost barriers, greater accessibility to consumers, loyalty of listeners to local air personalities, and ongoing promotions and contests – this while AM/FM radio still dominates listenership in cars by a wide margin.


“Radio is an interactive medium, [and] inherently social,” iHeart Chief Programming Officer Tom Poleman tells CNBC. “80% of our listeners say that they come because they trust our host to be the voices of the community. For over half, contesting is one of the reasons they come to radio. Over time, contests have become more accessible with digital options like text-to-win, and social media contests.”


Also to radio's credit, it has leveraged rather than run from other audio platforms, using podcasts and other digital media to their advantage. “Our radio hosts have naturally become great podcasters, and we weren’t surprised to see the explosion in podcasting,” Poleman says. “We feel it’s very complimentary toward broadcast radio. There’s something about being able to focus on a human voice that is compelling.”


As to how radio will handle the continuing changes in advertising and competitive media as it looks to recover from the revenue lost during the worst of the pandemic, Baker says, “The hope is you can stabilize the terrestrial business enough and continue to grow the digital business to where digital growth offsets terrestrial secular pressures. If you model this out, the digital business simply overtakes the legacy terrestrial business in the next five to six years.”

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