NAB SESSION: RADIO DOING IT TOUGH WITH GLIMMERS OF IMPROVEMENT Scott McKenzie – Billboard A largely upbeat session with leading broadcasters today (Sept. 21) at the National Assn. of Broadcasters Radio Show was tempered by cautionary notes from analysts on the rollout of HD radio.
The general consensus from the analysts was that, while the emergence of HD would have some positive longer term financial impact, the short term required radio companies to deliver the right content, twinned with the right business model, particularly on HD side channels.
Hank Kush, managing director of Commerce Bank's media finance group, urged broadcasters to use side channels creatively and not just deliver variations on existing formats.
"Radio too often eats its young," Kush told the opening financial session of the NAB Radio Show. He also said he did not see significant immediate threats to radio from iPods but saw them, and similar products, as "generational" with a longer term impact. On the question of satellite radio penetration, Chuck Dreifus, managing director of lending institution CIT Group, said he believed there would always be a strong demand for free radio but satellite would take some market share. He did not believe this would have a negative impact on the viability of terrestrial radio.
Jim Downey, director of media originations for Wells Fargo Foothill, said he believed the rollout of HD radio would not have a significant impact on the marketplace or on new revenue until automakers widely installed them as cheap options.
Broadcasters at the session expressed strong belief in HD radio and the resilience of the industry.
Ed Christian, CEO of Saga Communications, Peter Smyth, CEO of Greater Media, Jeff Smulyan, CEO of Emmis Communications, and Lew Dickey, CEO of Cumulus Media, all urged content-driven side channels that were free to users.
Dickey said his company remained interested in acquisitions and believed radio would overcome challenges by satellite radio and other platforms. "There is no viable model for pay radio," Dickey said.
Dickey also pointed to the Clear Channel-led "Less Is More" campaign as a positive move that would reap rewards.
Also on "Less is More," Alta Communications managing director Brian McNeil, said LIM was short term pain for long term gain. "What's bad for Clear Channel is bad for the industry … but in the long run it's a positive thing."
McNeil said fewer and shorter ads on radio reduced terrestrial radio's vulnerability to other forms of listening. He said this should, coupled with increased demand, drive pricing power for radio ad inventory.
Dickey said he was a strong believer in LIM and that the move away from 60 second spots to 30s and 15s was a good one. "30s will be the new 60s," Dickey said.
Today's session opened with a presentation by Bear Stearns broadcast analyst Vic Miller, who said radio was still paying the price of the many acquisitions made in the late 1990s.
Miller said 2003-2005 had seen fairly steady to flat revenue growth in the low single digits, against double digit percentage declines in stock performance of many radio companies. He called this a "benign revenue environment" tied to "violent market reaction."
He said this difficult environment also contrasted significantly with that of major radio advertisers such as the auto and telecoms sector where stock performance had been strong.
Miller said part of the downward trend in radio stocks was driven by a "migration" of the top 10 shareholders out of radio at a time when radio companies were repurchasing their own stock.
The NAB Radio Show runs until Sept. 23. A Billboard Radio Monitor team is in Philadelphia through the week covering the sessions. |