Noble: Radio Index Shows ‘Remarkable’ YTD Increases, Even With Q3 Off 3%.


Noble Capital Markets' just-released quarterly Media Sector Review reports that even while its broadcast radio index declined 3% during third quarter, year-to-date the index remains up 66.4% and 131.6% over the past 12 months. The investment and merchant bank's report singles out Salem Media Group as a strong Q3 performer due to a refinancing, and Townsquare Media and Cumulus Media for re-branding moves toward digital and audio, respectively.


The report notes that broadcast's Q3 performance is a reflection of “giving back some of the strong gains over the past year, so it was not surprising that investors took some chips off the table.” At the same time, Noble shows that year-over-year revenue growth for these companies – which bottomed out in Q2 of 2020 during the COVID lockdown, off by nearly 50% – bounced back in Q2 of this year, with a year-over-year revenue gain of close to 70%.

According to Noble, Salem's refinancing, which pushed its index up 45.7%, has lowered its risk factor and set it on a path toward significant debt reduction, while it “assuaged investor concerns over the company's relatively high debt leverage.” Townsquare's re-branding from radio- to digital-first was followed by strong growth in its digital media segment, currently accounting for nearly half of its revenues and cash flow, while Cumulus announced its re-branding as an "audio-first, multi-platform" company – moves, the report says, that were “designed for investors to focus on the growthier elements of the companies.”


Noble's review also notes Cumulus' Q3 move to bring its more than 400 stations and podcasts to Audacy's streaming platform, following Audacy's similar deal with Urban One's 57 stations, giving its platform over 2,000 stations from more than 100 markets and 11 other radio companies. Taking into account as well iHeartMedia's Q3 partnership with TuneIn to distribute its 850 digital stations and podcasts on its platform, the report calls these moves “a solid strategy to reshape the narrative of the industry and to hit a refresh button with investors.”


The impact of supply chain issues on large-market radio advertising is an area of concern in the Noble report, with the belief that smaller market stations and companies with diversified revenue streams in higher growth digital media platforms should fare better, and that “companies that have solid debt reduction strategies should assuage investor concerns should the general economy falter.”

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