RADIO AD RATES DOUBLE AS AUDIENCE DECLINES Jeffrey Yorke – Radio and Records Despite a two-year-price dip from 2002 to 2004, the cost of buying radio advertising has doubled in the 10 years since the Telecom Act of 1996 was signed, according to the just-released “Review of the Radio Industry, 2007” by the FCC.
Radio consolidation “may have had an effect on radio advertising prices if advertisers have fewer radio owners to bargain with over prices,” finds the report. “Consolidation in the radio industry may allow radio companies to exercise market power in local markets or possibly nationally.”
The report notes that average radio advertising prices have increased since September 1996. In its 2002 report on radio, the FCC showed that radio advertising prices had increased steadily in excess of the Consumer Price Index from 1996 to 2002. But prices dipped between 2002 and 2004 “before continuing to increase. This dip in prices was probably a lagged response to the sharp decline in growth in retail sales between 2000 and 2002, according to the report written by George Williams, a senior economist in the FCC’s Media Bureau. “Overall, it appears that the cost of radio advertising has nearly doubled since the 1996 Act was passed. By contrast, the CPI increased 29% during the same time period.”
The report also finds that the trend in the average number of listeners to radio per quarter has continued to decline since the FCC’s 2002 report. From the fall of 1998 to the fall of 2006, Arbitron found that the average number of listeners per quarter hour fell 6.6%, from about 19.7 million to about 18.4 million. While a review of Arbitron numbers shows that there was a slight listenership decline between the fall of 1998 and the fall of 2000, Williams reports that “listener ratings held steady between the summer of 2000 and the early portion of 2005. During 2005, radio listenership appears to have taken another substantial dip. Between fall 1998 and fall 2006 the average annual decline in the average number of listeners per quarter hour is 0.82%.”
The report also notes that while the 1996 Act “unleashed a wave of consolidation in the radio industry, it appears that the pace of consolidation has slowed.” It also notes that the “increase in the revenue share of the top owners in each Metro market has generally leveled off.” |