4-23-13
As we head toward first quarter earnings calls in early May, Wells Fargo analyst Marci Ryvicker reports that while radio started out soft in the quarter, business appears to be picking up. Her analysis concludes that Outdoor is the most stable platform and executives will still be focused on revenue control in the quarter. Radio revenue, at least for companies reporting to Wall Street, has been relatively flat for many quarters. Ryvicker says "we do believe that March ended in positive territory, with upward trends continuing in April."
In her report Ryvicker clicks off six points she'll be keeping a close eye on when company CEO's step up the earnings microphone, including ratings at NASH-FM in New York. Cumulus has been putting a lot of marketing muscle behind NASH after launching the first Country format in New York City in about a decade. CEO Lew Dickey said in the current issue of Radio Ink, NASH can be a ratings and revenue leader in New York and at launch the station had 80 advertisers. "Ratings have surpassed our expectations for the first 30 days. NASH is off to a terrific start. It?s difficult to project exactly where it?s going to be, but we see some strong, steady growth. We believe this is going to be a very competitive music station in New York City and do very well on the top line for us."
Another hot topic in the industry is sports. Ryvicker says she'll also be keeping an eye on that battle. We should hear how the Cumulus/CBS rollout is going when Cumulus reports (CBS doesn't say much about radio). The CBS Sports Network rolled out on January 2 of this year. In the May 6th issue of Radio Ink, with ESPN's Mike and Mike are on the cover. The ESPN Radio morning show stars are now in their 13th year together and face challenges from CBS's morning show of Tiki Barber, Brandon Tierney and Dana Jacobson and the recently launched NBC/Dial Global network which starts the day with Erik Kuselius morning show.
Don Martin is the Senior Vice President, Sports Programming at Premiere Networks and oversees all sports programming and operations for Premiere and The FOX Sports Radio Network. Martin is also part of our May 6th sports issue and says the growth for that format over the next 3 to 5 years will continue. "Thanks to the ?Big Four? TV Networks, Sports Radio has resurfaced as a ?must? medium, or at least a piece of the magic puzzle. The ?Big Four? realized that they need to be wherever their audience is, 24 hours per day. To accomplish that feat, they are using the power of radio, the internet (both streams and podcasts) and websites to back up TV. This concept will now drive more simulcast shows, sharing of talent and resources. The listener, viewer and user will now be able to connect with their favorite shows and personalities where ever and whenever they want. The content will become platform agnostic, while each platform becomes more important to the success of the whole."
What else will Ryvicker be keeping an eye on?
- The potential for shareholder returns; particularly at Saga, which paid a $1.65 dividend in December, but has no regular dividend despite a low leverage ratio. We note that ETM is focused on utilizing free cash to pay down debt rather than enact capital returns, until its leverage ratio is within its 4-4.5x ?comfort range?, which we currently estimate is a 2014 event.
- Competition; especially commentary on internet radio providers such as Pandora;
- The impact of lower radio royalties (ASCAP and BMI) specifically on opex; and
- The potential upside should NextRadio perform well (we think it could). Recall that NextRadio is the receiver application for FM and HD Radio enabled smartphones?with Sprint (J. Fritzsche) as the first wireless provider (announced 1/8/2013).
(4/23/2013 6:53:24 AM)
If the industry is down mid single digits the first two months of the year and will probably be down at least that much in October/November due to 2012 political revenue, it doesn't appear that 2013 will be a "Big" year let alone show any growth at all. Radio industry revenue will most likely decline in 2013.
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