News

On the heels of strong political battles nationwide, increased automotive advertising and an improving economy, the radio industry has experienced a better year than expected and will end 2010 with over-the-air revenues of $14 billion, a 5 percent increase over 2009, according to BIA/Kelsey, adviser to companies in the local media space. In the fourth edition of BIA/Kelsey’s quarterly “Investing In Radio^® Market Report,” the company also cites more than 13 markets that will have 9 percent or greater revenue increases this year, including five top markets: Boston, Philadelphia, Denver, Miami and Tampa.

“The radio industry has proven it remains an important component of the advertising mix by reaching local audiences in all demographic ranges,” said Mark Fratrik, Ph.D., vice president, BIA/Kelsey. “We might be a long way from pre-recession over-the-air revenue numbers, but broadcasters are supplementing those revenues by taking steps to change the landscape by attracting advertisers through online and mobile and also by extending their signals to attract new listeners.”

A chart with BIA/Kelsey’s updated five-year forecast for the radio industry is available at http://www.bia.com/pr20101130-IIradio4.asp

Fratrik pointed to the industry’s innovative use of FM translators to increase its presence in some markets. The “Investing In Radio^© Market Report” includes in its comprehensive market-to-market comparisons more than 400 AM radio stations across the country that is using FM translators to improve their nighttime coverage areas. Huntsville, Alabama, for example, currently has five AM stations using translators to rebroadcast on another frequency to cover areas not adequately served by their main signal. In addition, FM HD multicast stations are rebroadcasting in analog to expand their audiences..

“Stations are embracing the FCC’s 2009 ruling allowing retransmission through the use of FM translators,” said Fratrik. “It’s an innovative way to broaden their reach, provide more options to listeners in the market and appeal to advertisers.”

Spending on Automotive Advertising is on the rise as Gannet last week and now Journal Communications report an increase in automotive ad spending.   This is a promising trend that has now been confirmed by large media companies.  PCG has also witnessed a rise in sales inquiries and spending for automotive digital advertising services.

According to the Journal Communications website and press release:

“Improving revenue trends combined with permanent cost reduction initiatives taken over the last year led to another quarter during which we increased our operating earnings and our operating margin from the prior year. We also reduced our debt during the quarter by another $16.9 million,” said Steve Smith, Chairman and Chief Executive Officer of Journal Communications. “While the economic recovery seems to be somewhat uneven across the country, we were encouraged by the operating results for the quarter at most of our local markets including Sun Belt markets like Nevada and Florida.

“In the second quarter, Broadcast revenue increased as automotive advertising was up 31% compared to the prior year and we recorded $1.9 million in political and issue advertising. The rate of decline in advertising revenue moderated in our Publishing business, down 8.5% in the second quarter versus down 13.0% in the first quarter compared to the prior year.

“As we look ahead, developing our digital business and enhancing our local market content in order to grow audiences and build new advertising revenues remain a priority for us.”

Second Quarter 2010 Results

Note that unless otherwise indicated, all comparisons are to the second quarter ended June 28, 2009.

For the second quarter, revenue from continuing operations of $104.4 million increased 0.1% compared to $104.3 million. Operating earnings of $14.4 million are compared to an operating loss of $9.5 million which included a $19.0 million impairment charge for broadcast licenses. The loss from discontinued operations of $0.2 million is compared to a loss of $0.3 million. Net earnings were $8.1 million compared to a net loss of $4.8 million.

In the second quarter, basic and diluted net earnings per share of class A and B common stock were $0.14 for both. This compared to basic and diluted net loss per share of $0.11 for both in 2009. Basic and diluted earnings per share of class A and B common stock from continuing operations were $0.14 for both. This compared to basic and diluted loss per share from continuing operations of $0.10 for both in 2009. Basic and diluted loss per share of class A and B common stock from discontinued operations were $0.01 for both in 2009.

The operating margin was 13.8% for the second quarter compared to a negative 9.1% margin. Excluding the $19.0 million impairment charge last year, the operating margin was 9.1%. EBITDA (net earnings (loss) excluding the gain/loss from discontinued operations, net; total other expense, net; provision (benefit) for income taxes; depreciation; amortization; and, if any, non-cash impairment charges) was $21.1 million compared to $16.5 million, an increase of 27.7%.