Look For Low- To Mid-Single Digit Growth For Radio In Third Quarter.


Radio’s third quarter earnings season gets underway Friday when Cumulus Media becomes the first company out of the chute with fresh financials for the three months ended Sept. 30. The radio industry overall is expected to post year-over-year revenue growth in the low- to mid-single digit range, driven by double-digit revenue expansion in digital with spot ad sales down compared to the same period in 2021. This consensus estimate is based on conversations with broadcasters.


Fueled by high demand and an infusion of sports betting dollars, the year got off to a roaring start with double-digit revenue growth virtually across the board. Among those with revenues gains north of 12% in the first quarter were iHeartMedia (+19.4%), Urban One (+17.4%), Beasley Media Group (+15.6%), Cumulus Media (+15.0%), Audacy (+14.3%) and Townsquare Media (+12.9%).


Second quarter revenues were sturdy, albeit not at the double-digit growth rates seen in Q1. Townsquare Media jumped 13.6%, Urban One grew 10.4%, iHeartMedia was up 10.7%, Beasley grew 8.8% and Audacy and Cumulus each gained 5%. According to Nobble Capital, radio revenue grew an average 8.9% in Q2.


Third quarter is expected to remain in positive growth territory, but recessionary fears caused by rising inflation, climbing interest rates and the ongoing war in Ukraine have triggered a slowdown throughout the advertising economy. The consensus for radio in Q3 is low- to mid-single digit growth.


“In looking forward toward the upcoming third quarter results, which will be released in coming weeks, we believe that the effects of rising inflation and weakening economy will start to show,” Noble Capital Markets said in its third quarter 2022 edition of the Media Sector Review. Companies with diversified revenue streams are most likely to beat the average.


On its second quarter call, iHeart said they expect third quarter revenue to increase approximately 3% to 7% year over year. Cumulus said it was on track to see Q3 revenue decline by low-single digits, citing the “challenging macro environment.” Beasley said third quarter revenues were pacing flat. Townsquare’s outlook called for third quarter revenue to grow between 8% and 14%. Audacy said its third quarter business was likely to be flat to down low-single digits.


B. Riley Securities is calling for national radio ad sales to stabilize after a rocky first half, and for local business to remain relatively strong through the third quarter. “Following advertising checks with companies and third-party sources, national advertising spend looks to be stabilizing after taking a meaningful leg down in the first half of the year while local ad spend has continued to hold up relatively well through 3Q,” said B. Riley Securities analyst Daniel Day. B. Riley’s radio outlook is based on the three radio companies it covers: iHeart, Audacy and Cumulus.


The forecast is for midterm election spending to exceed that of 2018, making political a likely Q3 bright spot. With control of Congress on the line in the mid-term elections, B. Riley is upping its political revenue estimates for radio’s three largest companies. “Spending has thus far exceeded even the most optimistic expectations from earlier this year,” Day said in the report. He anticipates political coming in at a stunning 50% higher than in the last mid-term election cycle in 2018.

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