[opendtv] News: Wachovia Forecasts Radio Doom In '09
- From: Craig Birkmaier <craig@xxxxxxxxx>
- To: OpenDTV Mail List <opendtv@xxxxxxxxxxxxx>
- Date: Tue, 17 Feb 2009 08:36:47 -0500
http://www.mediapost.com/publications/?fa=Articles.showArticle&art_aid=100330
Wachovia Forecasts Radio Doom In '09
by Erik Sass
If anyone is still cherishing hopes of a radio turnaround in 2009,
Wachovia analyst Marci Ryvicker's latest note to investors should
doom that idea. The outlook is overwhelmingly negative, as Ryvicker
sees a 9% decline in revenues in 2008 followed by a further 13%
decline in 2009.
"It's the same depressing story," Ryvicker noted. "Advertisers are
cutting back significantly, given rising unemployment and the general
state of the economy."
The revenue trends would be bad enough. The real problem, Ryvicker
said, is the considerable burden of debt carried by many big radio
broadcasters, often as a result of mergers and acquisitions over the
last decade. Flatly asserting that "it's all about the debt," she
warned that "quarterly conference calls will be focused on
de-leveraging events"--that is, paying off debt by any possible
means, including cost-cutting through layoffs and asset sales.
There may be a bright spot: Ryvicker noted that banks would rather
not own radio stations, so they are more likely to agree to refinance.
Ryvicker's gloomy forecast follows a year of accelerating revenue
declines. Although fourth-quarter figures are not yet available, the
first three quarters of 2008 were already trending sharply downward,
with a -5% decline in the first quarter, a 6% decline in the second
and a 9% decline in the third.
The losses are the result of big declines in local
advertising-traditionally the mainstay of radio revenues--as well as
national. Both these trends are likely to accelerate as the economic
downturn worsens.
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