Market analyst group, Merrill Lynch, today announced that it is revising down its quarter two 2004 growth forecast for the US radio industry, from 5.5% to 4.0%.
Merrill Lynch returned to the crystal ball after April radio advertising revenue results were weaker than expected, growing by only 4%, down from 10% in March 2004 and up only 1% on the same period last year. As a result, the 2004 forecast has also been downsized to 5.6% from 6.1%.
During April, national radio advertising outpaced local for the first time since November 2003, up 6% and 4% respectively. However, Merrill Lynch says this is concerning since it believes the health of the radio business and a strong recovery in 2004 are dependent upon the recovery of local advertising; this market represents 75-80% of total radio industry sales.
Radio revenues for May have also been cut from 6% to 2%, current outlook suggests revenues will grow by just 1-2% but May is an important month in terms of US local radio, representing 10% of annual revenue thanks to the Memorial Day Weekend. However, on a more upbeat note, the outlook for June is positive, Merrill Lynch has revised growth upwards from 5% to 6%.
The report from Merrill Lynch concludes by saying, ‘over the longer-term, we feel the radio industry is undergoing negative secular changes as it evolves from a growth sector to a mature business following several years of acceleration largely driven by consolidation. Consequently, we expect the radio industry to grow more in-line with the growth of both GDP and the advertising industry (5-5.5%), while maintaining its 8% share of the advertising pie.’
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