Faced with a pullback in advertiser spending last year, radio’s hustle paid off. Thanks to a mix of revenue streams, the industry ended the year with revenue that again topped $15 billion according to Kagan Research, which estimates the total was roughly $1.5 billion above the pandemic lows of 2020. Kagan estimates radio revenue totaled $15.15 billion, down 1.5% from $15.39 billion in 2022.
“The radio station business has been challenged to remain relevant and part of national ad budgets, although it is still relatively strong in the local ad markets,” says Justin Nielson, a Senior Research Analyst with Kagan Research. “Radio ads are predominantly local and focused on the auto, retail, travel, and entertainment categories, which have been under pressure from inflation and a higher interest rate environment over the past couple of years,” he writes in a new report.
With that backdrop, Kagan Research projects local radio ad sales will slip 0.9% to $11.86 billion in 2024. That is roughly $1 billion higher than radio ad revenue in the pandemic ad recession of 2020 but still approximately $2 billion lower than pre-pandemic levels.
Nielson sees some things working in radio’s favor as Kagan Research projects the radio industry’s overall revenue will remain relatively steady during the next several years.
“Radio also must compete with streaming music and podcasting alternatives and with a remote working class that has reduced commuting hours during prime in-car radio time,” he says. “Despite those challenges, radio's lower ad cost, community outreach, and relatively high return on investment compared to other media should help maintain its ad share in its local markets.”
There are also some opportunities for broadcasters this year. For radio, none may be bigger than the windfall of political ad dollars. Kagan predicts they will be spent disproportionately on local stations in swing-state markets and those with higher expected population growth — such as Arizona, Georgia, Michigan, Nevada, North Carolina, Pennsylvania, Texas, and Wisconsin — which are forecast to rise more than the national average. Nielson says markets in three of those eight — North Carolina, Texas, and Wisconsin — are among the top five TV and radio markets that are expected to grow most quickly, based on Kagan’s most recent ad revenue growth forecasts for the 2023–2028 period.
The year-end report also looks at radio’s deal market, such as it is. Kagan Research’s tally shows there were $212.5 million worth of radio deals in 2023. That was down by 35.6% compared to $329.9 million a year earlier.
The environment for deals has been hurt not only by a decision by the Federal Communications Commission to maintain the current ownership limits but also by higher interest rates. Yet Nielson thinks the second half of 2024 could bring some new interest in buying and selling. He says that will be driven by Audacy’s chapter 11 bankruptcy restructuring and the asset moves by some smaller, privately held drops, such as the recent announcement by the Neuhoff family that it will exit radio ownership.
The biggest radio deal of the past few years was a $60 million purchase of 18 stations by Latino Media Network from TelevisaUnivision in 2022. Urban One also spent a combined $52.5 million to buy seven stations. That included a $27.5 million deal with Cox Media Group to add four stations in Houston. Urban One also struck a $25 million deal with Emmis to bolster its clusters in Indianapolis.
Kagan is a media research group within S&P Global Market Intelligence.
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