Radio shows surprising resilience in changing media world


Airline passengers between flights frequent the iHeartRadio facility at Denver International Airport in Denver on January 19, 2014.

Roberto Alejandro | Stock Photos | fake images

It’s a familiar refrain: “Traditional media is dead,” unless it’s radio.

Despite being one of the oldest media formats, dating back to the 1890s, radio has maintained a relatively stable audience over the past decade. Pay television, although newer, has faced more significant declines.

In 2009, 92% of Americans ages 12 and older listened to traditional or terrestrial radio in a given week, according to Pew Research data released last year. By 2022, that figure fell 10 percentage points. Pay TV penetration, on the other hand, fell 20 percentage points between 2014 and 2023, according to data firm Statista. In the third quarter of last year, the pay TV industry shrank at a record pace, MoffettNathanson analysts said in their latest cord-cutting report.

“Terrestrial radio has remained stable even as other media such as satellite radio, podcasts and Apple CarPlay have been incorporated,” said Guggenheim media analyst Curry Baker.

“Historically, radio personalities and stations have engaged with local audiences,” which tend to be “sticky,” Baker said. “Cable networks never did that.”

Radio has maintained the advantage over many media formats in part due to its accessibility and relative lack of cost barriers. Most cars already come equipped with access to AM and FM radio at no additional cost, and according to 2022 Statista data, the majority of American drivers choose to listen to terrestrial AM/FM radio over any other form of entertainment in the car. road.

But radio audiences have also been bolstered by the stations’ unique ability to capture the loyalty of local audiences. Listeners tune in to hear familiar voices, like Elvis Duran on New York’s Z100 or Ryan Seacrest on Los Angeles’ KIIS-FM. Conservative commentators have also traditionally built large followings on their radio shows, such as Fox News’ Sean Hannity.

Contests and sweepstakes represent another unique attraction for terrestrial radio. Major stations have been known to allow listeners to call in and win prizes like concert tickets or cash.

“Radio is an interactive medium, and part of that is competition,” Tom Poleman, director of programming at iHeartMedia, told CNBC. “For more than half of our listeners, contests are one of the reasons they come to the radio. Over time, contests have become more accessible with digital options like text-to-win and online contests Radio is also inherently social: 80% of our listeners say they come because they trust our host to be the voice of the community.

iHeartMediawhich controls 860 stations across the United States, attracts an average of 250 million monthly listeners, the company said in November, the largest reach of any radio station in the United States.

Wireless evolution

Like other legacy media, radio has faced a growing invasion of digital audio formats such as podcasting and streaming platforms. Radio giants like iHeartMedia and SiriusXM have adopted podcasts and digital production as part of their business models.

Podcasts, in many ways, function like the streaming version of radio, in the same way that Netflix was the cable broadcast iteration.

Major radio companies have positioned themselves to benefit from the rise of podcasting, in stark contrast to some media companies’ contentious relationship with streaming, as many have struggled to migrate their dwindling cable revenues to streaming.

“There’s something about being able to focus on a human voice that’s compelling,” Poleman said. “Our radio hosts have naturally become excellent podcasters and we were not surprised to see the explosion of podcasting. We think that is a great compliment to broadcasting.”

Still, like television, radio faces advertising headwinds as the industry seeks to recover from the fall of the Covid-19 pandemic, the Guggenheim’s Baker said.

In November, iHeartMedia CEO Bob Pittman noted ongoing “uncertainty” in the advertising industry. Multiplatform revenue decreased 5.1% year over year for the company in the third quarter of 2023, primarily due to a “decrease in television advertising due to a challenging macroeconomic environment and a decrease in political advertising,” the company said in a press release.

Guggenheim forecasts that iHeartMedia’s television advertising revenue will decline approximately 23% for all of 2023 compared to 2019 levels.

Likewise, other media companies have reported declining advertising revenue within their television units in recent months. CNN owner Warner Bros. Discovery reported a 12% drop in advertising revenue for its television segment during the third quarter of last year. Global TV advertising revenue by 2023 is expected to decline 18% year-over-year, according to media investment firm GroupM.

Baker also forecasts a “flat to low” streaming revenue outlook for iHeartMedia and the terrestrial radio industry as a whole. But amid the rapid decline of pay TV, radio is faring well amid broad contractions in the media industry.

An iHeartMedia spokesperson noted that listening habits have changed since 2019 as more customers shift to listening on a digital platform, contributing to declining advertising revenue from streaming.

The representative also noted the company’s total revenue growth compared to 2019, which takes into account advertising revenue from digital and streaming platforms. For the third quarter of 2023, iHeartMedia generated $953 million in revenue, they said, while in the third quarter of 2019, the company earned $948.3 million in revenue.

“For [radio broadcasters]”The hope is that you can stabilize the terrestrial business sufficiently and continue to grow the digital business until the digital growth offsets the terrestrial secular pressures,” Baker said. “If this is modeled, the digital business will simply overtake the legacy terrestrial business in the next five or six years.”

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