Now that virtually all of radio’s publicly traded companies have filed their third quarter financial results, a clearer picture is emerging of how the industry’s category mix has been rearranged. Among major trends is the explosive growth of sports betting in states where online gambling has been legalized. And the negative impact supply chain and labor shortages are having on auto industry advertising.
Radio’s largest operators reported swift growth in sports betting ad sales and forecast more for 2022 as additional states permit legalized online wagering, “We expect sports and sports betting to be a significant growth engine for us going forward,” said iHeartMedia Chairman and CEO Bob Pittman, pointing to the company’s partnership with DraftKings as “further evidence of that potential.”
Rich Bressler, President, COO and CFO of iHeart, called it “one of the fastest-growing advertising categories” and said the DraftKings deal, which is non-exclusive, “touches on all of the audio giant’s platforms, including its sports podcast network, which has partnerships with the NFL and NBA, along with shows hosted by marquee talent like Colin Cowherd and Dan Patrick. The deal also encompasses the iHeart Sports Network, the company’s sports stations, and live sports play-by-play.
Also citing rapid growth in the category was Audacy with CEO David Field projecting revenues will more than double in 2021 after an earlier forecast that called for 50% growth. “We continue to expect sports betting to grow into a $100 million category for us in a few years as legalized sports betting continues to spread across the country,” Field said.
Multiplatform Sportsbook Partnerships
Like iHeart, Audacy is using its multiplatform sports footprint to lure lucrative deals with sportsbooks. Audacy’s sports holdings include play-by-play deals with 47 pro teams, many of the nation’s biggest sports stations, the CBS Sports Network and the BetQL network, which provides sports betting content. In March Audacy announced a multi-year strategic partnership with BetMGM that makes the sports betting and gaming platform a preferred partner across the company’s sports stations, the Audacy and BetQL apps and digital platforms and the BetQL Audio Network.
Cumulus Media touted its multi-platform partnership with WynnBet with CEO Mary Berner noting they wrote up ad deals with eight additional sports betting operators in the last several months. “We're on track to grow this category by more than four-times 2020 spend,” Berner told investors.
Sports betting pulled in $4.3 million in third quarter at Beasley Media Group, representing 7.2% of total revenue. More than doubling in size year-over-year, it has quickly grown into the company’s second largest ad category, thanks to its Philadelphia, Detroit and New Jersey market clusters.
With four of the country’s most populous states – New York, California, Texas and Florida – expected to legalize sports betting in the months and years ahead, the category is poised for exponential growth.
Slow Rebound Ahead For Auto
Sports betting’s fortunes are in sharp contrast to automotive, which most companies said showed significant year-over-year declines due to depleted new car inventories on dealer lots. “Things like the chip shortage clearly are impacting the advertising segment of our business,” Townsquare Media CEO Bill Wilson said, noting the category was down 30% from 2019 levels, giving it the dubious distinction of producing the largest dollar decline from 2021 to 2019. Wilson predicted auto ad sales would rebound in the second half of 2022 and return to normal in 2023. “We'll get that benefit of auto dollars coming back from an advertising standpoint,” Wilson said. “The same goes for entertainment, retail, food, and travel. Those categories, from an advertising standpoint, are still negative, not only double digits, but down probably 20% roughly from 2019 levels.”
Audacy CFO Rich Schmaeling said auto “is going to take quite a bit of time further to recover. Many of our dealers are telling us they don't expect their stocks to normalize until sometime in 2023,” he added. “So that's an important category. It's going to take time and likely doesn't fully recover until '23.”
But auto wasn’t down across the board at radio in third quarter. Urban One reported the category was among those that had double-digit year-over-year increases in the quarter.