EXECUTIVE SUMMARY
CONTENTS Executive Summary... i Introduction... 3 Capital Markets and Industry Outlook... 4 Values of Public Companies (Radio and Overall Local Media Companies)...4 Multiple Analysis...6 Station Trading Activity Analytics...7 Regulatory Issues...9 Capital Market Trends Conclusions... 10 Audiences Analytics and Insights Outlook... 10 Audience Trend Analytics and Insight for Local Radio... 11 Connected Cars... 12 Rise of Podcasting... 13 Live Streaming for Local Radio Stations... 14 Smart Speakers... 15 Audience Analytics Conclusion... 17 Competitive Advertising Market Outlook... 17 Competition and Local Radio Growth Strategies... 17 Overall Industry Growth... 17 Importance of Local and Regional Advertisers... 18 Local Market Intelligence: BIA ADVantage... 21 The Local Advertising Marketplace New Competition for Local Radio Stations... 22 Advertising Verticals Reliance on Local Radio... 25 Data-Driven Audience Buying... 25 Competitive Advertising Market Conclusion... 26 Programming and Content: Music, Sports, News, Talk... 26 Popularity of Formats... 26 Programming Conclusions... 30 Maturing Digital Platforms and Local Radio Opportunities... 31 NextRadio Progress and Directions... 31 Podcasting and Streaming... 31 HD Radio Use of Multicast Signals with Translators (Number and Impact)... 32 Increased Use of FM Translators by AM Stations (Number and Impact)... 33 Opportunities Conclusions... 34 Conclusions and Recommendations... 35 About BIA Advisory services... 36 TABLES Table 1 - America's Top Formats in 2016... 29 i
FIGURES Figure 1 - Publicly Traded Radio Companies Stock Index...5 Figure 2 - Yearly Valuation EBITDA Multiples (Median) for Publicly Traded Radio...6 Figure 3 - Radio Station Transactions: 2008-2017...7 Figure 4 - Radio Station Sales by Rated Market Sizes: 2015-2017...8 Figure 5 - Average Price Paid per Radio Station...9 Figure 6 - Weekly Time Spent Listening to AM/FM Radio (Hours: Minutes)... 11 Figure 7- Audio Sources Used in Primary Car... 13 Figure 8 - Podcast Listening... 14 Figure 9 - Monthly Online Radio Listening... 15 Figure 10- Percentage of Smart Speaker Owners Who Spend Less Time with Other Devices... 16 Figure 11 - Local Radio Station Over-The-Air and Online Advertising Revenue... 18 Figure 12- Types of SMBs That Utilize Local Radio Stations... 19 Figure 13 - Distribution of Spending by Radio SMBs... 20 Figure 14 - Marketing and Advertising Platforms Used by Radio SMBs... 21 Figure 15-2018 U.S. Local Advertising Market: $151.2 Billion... 22 Figure 16 - Share of Local Media by Type: 2008-2022... 23 Figure 17 - Local Radio Stations OTA Advertising Share of Total Local Advertising Market: 2008-2022... 24 Figure 18 - Nationwide Advertising Spending for Financial/Insurance Companies... 25 Figure 19 - Distribution of Formats for Commercial Stations, January 2018... 27 Figure 20 10-Year History of Format Genres... 28 Figure 21 - Distribution of 2016 Revenue by Format in Nielsen Audio Radio Markets... 30 Figure 22 - AM Stations Use of FM Translators... 34 ii
EXECUTIVE SUMMARY Local radio stations have a long history in their local markets. Many have been around for a considerable amount of time providing news, information and entertainment to their listeners, and access to local audiences for their advertising clients. Throughout these years, these radio stations have faced new media competing for those audiences and advertiser clients, and never more so than in the current digital environment. There is an unprecedented number of new audio entertainment/information sources and new advertising platforms competing with radio, and many of them are unregulated creating an even more aggressive environment. To evaluate the position of local radio stations in today s environment, BIA Advisory Services focuses on five major trends in the radio industry in this new State of the Industry Report for Local Radio: 1. Capital markets views on the radio industry 2. Audience analytics and insights 3. Radio station competition in local advertising market 4. Programming trends in radio industry to combat new entrants 5. Maturing digital platform for radio and opportunities for these radio stations i
Five key overarching takeaways BIA offers on the radio industry include: 1. Radio stations are generally looked in capital markets positively with some publicly traded groups showing strong gains, though several bankruptcies of large radio groups have made some investors a little more cautious. 2. Radio audiences are slowly decreasing with the increased number of audio entertainment and news alternatives, but many local radio stations still garner sizable audiences. 3. Radio stations shares in the local advertising market continues to decrease, but radio stations advertising is still an important part of many different companies advertising mixes. 4. Radio stations are adapting to the new competition from audio streaming services, in part, by focusing less on music formatted stations, though some music formatted stations still attract sizable audiences and can generate noticeable advertising revenue as a result. 5. Radio stations are continuing to try to improve the quality of their over-the-air signal and expanding the types of services that they provide. In the face of increased competition for both audiences and advertisers, it is encouraging that radio stations are working to improve their signal and reach their audiences. Innovation needs to continue with the realization that not every new initiative will succeed. But without trying to adapt to these new competitors, local radio stations will continue to see their importance diminish both to consumers and to their advertiser clients. This State of the Industry Report offers an in-depth assessment of the radio industry. It examines how the radio industry can maintain a prominent position in the local marketplace by leaning into new digital platforms and opportunities like podcasting, streaming, HD radio and FM translators. It also explores advertiser satisfaction, audience demographics, off-air advertising offers, local station revenue history and industry revenues within the context of all local media that compete for advertising spending. Click to purchase the report here. ii
ABOUT BIA ADVISORY SERVICES BIA Advisory Services is the leading authority for data-centered research, analysis, strategic consulting and valuation services for the local media industry. Business leaders from traditional and digital media companies, brands and agencies and solution providers rely on us for quality data combined with high-powered analytics and services to operate successfully in today s multiplatform, interactive media environment. BIA s portfolio includes powerful data platforms including BIA ADVantage, a local market advertising intelligence dashboard, and MEDIA Access Pro, a broadcast and publisher data service for organizations in the U.S., Canada and Mexico. Our services include strategic consulting that deliver actionable recommendations in key areas like sales efficiencies, digital transformation and business value drives and valuation and appraisal services that deliver quality assessments our clients require for their financial projects. We are committed to delivering to deliver a clear competitive edge for our clients. Let us help you put yourself in the best possible position to compete and win in local turn to BIA Advisory Services. Connect with BIA Advisory Services: www.bia.com Local Media Watch blog Daily newsletter 36