The digital advertising income of U.S. radio stations continued its ascent in 2016, as the industry reported a 14 percent increase in online revenues, compared with only a slight bump in over-the-air (OTA) income, according the first-quarter edition of BIA/Kelsey’s 2017 Investing In Radio® Market Report. Washington, DC all-news station WTOP-FM was the top revenue-generation station, taking in $67.5 million in advertising revenues, as the overall industry over-the-air advertising revenue stayed relatively flat at around $14.1 billion. The news-talk category experienced an overall improvement in 2016, likely due to the presidential year.
“In an age where consumers have many entertainment choices, local radio maintains its strength and popularity in the marketplace among national and local advertisers,” said Mark Fratrik, SVP and chief economist at BIA/Kelsey. “Our forecast also notes that by 2021 we expect radio to surpass newspapers and become the fifth largest media category among advertisers.”
Fratrik added that the prospects for 2017 remain similar, with OTA revenues increasing less than one percent and online about 12 percent. BIA/Kelsey forecasts that the radio industry’s revenue in 2017 will reach a total of $14.9 billion, representing 10.5 percent of the $148.8 billion U.S. local advertising marketplace as estimated by BIA/Kelsey.
More promising this year over last are radio transactions and station sales. With the February announcement that Entercom and CBS Radio will be combined into one company, after regulatory approval, the industry will experience renewed activity due to the sale and realignment in some markets. In 2016 the market was slow, with 556 station sales and nearly $500 million in transactions across the industry.
“We are encouraged by the Entercom purchase and how it will affect the competitive landscape,” Fratrik said. “The combined group will be closer to the size of industry leader iHeart Media and we expect the transaction to have a positive effect on radio since both organizations are progressive and well-run.” In February, Fratrik commented on the proposed merger in a blog post, “ENTERCOM – CBS: What Does it Mean?”