UK Radio Underperformed TV In 2002, Says Merrill Lynch
The UK radio sector underperformed in 2002 as compared to the UK television and US radio markets, according to analysts at Merrill Lynch.
Radio revenue has been slightly below ITV’s growth in three out of the last five quarters, as shown. Howver, prior to this, throughout most of 2001, radio spend was stronger than ITV’s.
| UK Radio And ITV Quarterly Revenue Performance | |||
| Radio | ITV | Radio’s performance | |
| Q1 2001 | 0.8 | -7.9 | Outperforms |
| Q2 | -12.2 | -21.0 | Outperforms |
| Q3 | -6.4 | -13.3 | Outperforms |
| Q4 | -11.6 | -9.4 | Underperforms |
| Q1 2002 | 0.4 | -13.3 | Outperforms |
| Q2 | 2.0 | 2.8 | Underperforms |
| Q3 | 3.2 | 4.4 | Underperforms |
| Q4 | 3.5 | 1.2 | Outperforms? |
| Source: Merrill Lynch, January 2003 | |||
The growth in radio revenue has come largely from the sponsorship and promotions (S&P) sector, which enjoyed a 17.6% rise to £19.1 million in Q3, far outstripping the overall market’s growth (see UK Radio Beats Revenue Forecasts In Third Quarter). National advertising remains weak, dipping by 0.7%, whilst local grew by 5.9%.
If S&P revenues are stripped out, 2002’s growth would only be around 0.5%. S&P accounted for around 13% of total radio sales in 2002.
Merrill predicts that Q4 figures will show a 5.0% rise for local revenue, a 0.5% rise for national and a 16.0% jump for S&P. This will lead to an overall 3.5% increase for the quarter.
| Breakdown Of UK Radio Spend | ||||
| Local | National | S&P | Total | |
| 2001 Q1 | -9.8 | 6.2 | -4.3 | 0.8 |
| Q2 | -2.7 | -17.6 | 0.6 | -12.2 |
| Q3 | 3.1 | -11.8 | 5.2 | -6.4 |
| Q4 | 1.3 | -18.7 | 6.5 | -11.6 |
| 2002 Q1 | 8.7 | -4.7 | 15.0 | 0.4 |
| Q2 | 3.1 | -1.2 | 16.8 | 2.0 |
| Q3 | 5.8 | -0.7 | 17.2 | 3.2 |
| Q4 | 5.0 | 0.5 | 16.0 | 3.5 |
| Source: RAB; Merrill Lynch | ||||
Forecasts Merrill Lynch is forecasting that UK radio revenues will rise by 3.0% to 4.0% this year and by 5.0% next year. OMD UK predicts that growth will be just 2.5% this year and 4.2% in 2004.
The Advertising Association is more optimistic, forecasting 6.5% growth this year, whilst Initiative Media expects just 2.9%. Forecasts from ABN AMRO put FY 2002 radio growth at 2.0%, with 2003 expected to show a 4.0% rise – pretty much in line with the consensus.
| UK Radio Revenue Growth Forecasts | ||
| Growth (%) | ||
| 2003 | 2004 | |
| Merrill Lynch | 3.0-4.0 | 5.0 |
| ABN AMRO | 4.0 | – |
| Advertising Association | 6.5 | 7.0* |
| OMD UK | 2.5 | 4.2 |
| Initiative Media | 2.9 | – |
| * to Q3 2004 only | ||
| Source: As above, various dates | ||