Airline passengers between flights protect the iHeartRadio installation at Denver International Airport in Denver on January 19, 2014.
Robert Alexander | Stock Photos | Getty Images
It’s a familiar refrain: “Legacy media is dead” — unless you’re talking about radio.
Despite being one of the oldest forms of media, dates from the 1890s, radio has maintained a relatively stable audience over the past decade. Pay TV, although newer, has experienced more significant declines.
In 2009, 92% of Americans age 12 and older listened to traditional or terrestrial radio in a given week, according to data from Pew Research which was published last year. By 2022, that number has dropped by 10 percentage points. Pay TV penetration, on the other hand, decreased by 20 percentage points between 2014 and 2023, according to data firm Statista. In the third quarter of last year, the pay TV industry shrank at a record paceanalysts at MoffettNathanson said in their latest cable reduction report.
“Terrestrial radio has remained stable, even as other media such as satellite radio, podcasts and Apple CarPlay have been integrated,” said Guggenheim media analyst Curry Baker.
“Historically, radio personalities and stations have engaged with local audiences,” which tend to be “sticky,” Baker said. “Cable networks never did that.”
Radio has maintained the upper hand over many forms of media in part because of its accessibility and relative lack of cost barriers. Most cars are already equipped with access to AM and FM radio at no extra cost, and according to Statista data from 2022, The majority of US drivers choose to listen to AM/FM terrestrial radio above any other form of street entertainment.
But radio listening has also been boosted by stations’ unique ability to capture local audience engagement. Listeners tune in to hear familiar voices like Elvis Duran on New York’s Z100 or Ryan Seacrest on Los Angeles’ KIIS-FM. Conservative commentators also traditionally have large followings on their radio shows, such as Fox News Sean Hannity.
Contests and sweepstakes represent another unique draw in terrestrial radio. Major stations have been known to allow listeners to call in and win prizes such as concert tickets or cash.
“Radio is an interactive medium and part of that is competition,” Tom Poleman, head of programming at iHeartMedia, told CNBC. “For more than half of our listeners, contests are one of the reasons they come to radio. Over time, contests have become more accessible with digital options such as text-to-win contests and social media. Radio is also inherently social: 80% of our listeners say they come because they trust our host to be the voices of the community.”
iHeartMediawhich controls 860 stations in the US, captures an average of 250 million monthly listenersthe company said in November, the largest reach of any radio station in the US
Evolution through the air
Like other legacy media, radio has faced increasing encroachment from digital audio formats such as podcasts and streaming platforms. Radio giants like iHeartMedia and SiriusXM have adopted podcasts and digital output as part of their business models.
Podcasts, in many ways, act as the continuous stream of radio, in the same way that Netflix was the cable reflow.
The leading radio companies are positioned to take advantage of it podcasting boomin stark contrast to some media companies’ contentious relationship with streaming, as many have struggled to shift their declining cable revenues to streaming.
“There’s something about being able to focus on a human voice that’s exciting,” Poleman said. “Our radio hosts have naturally become great podcasters, and we weren’t surprised to see the explosion in podcasting. We feel like it’s very complimentary for broadcast radio.”
However, just like TV, radio faces advertising headwinds as the industry tries to recover from the downturn of the Covid-19 pandemic, said Guggenheim’s Baker.
In November, iHeartMedia CEO Bob Pittman noted continued “uncertainty” in the advertising industry. Cross-platform revenue fell 5.1% for the company on a year-over-year basis in the third quarter of 2023, primarily due to a “decrease in radio advertising due to a challenging macroeconomic environment and a reduction in political advertising,” the company said in a Press release.
Guggenheim forecasts that iHeartMedia’s broadcast ad revenue will decline approximately 23% for the full year 2023 compared to 2019 levels.
Similarly, other media companies have reported a decline in ad revenue at their TV units in recent months. Owner of CNN Discovery by Warner Bros reported a 12% drop in ad revenue for its TV division for the third quarter of last year. Global television advertising revenue for 2023 is expected to decrease by 18% year after year, according to media investment firm GroupM.
Baker also predicts a “downward” broadcast revenue outlook for iHeartMedia and the terrestrial radio industry as a whole. But in front of pay TVs rapid declineradio is doing well amid major contractions in the media industry.
An iHeartMedia spokesperson noted that listening habits have changed since 2019 as more customers shift to listening on a digital platform, contributing to a decline in broadcast advertising revenue.
The spokesperson also pointed to an increase in the company’s overall revenue compared to 2019, which affects advertising revenue from both digital and radio platforms. For the third quarter of 2023, iHeartMedia grossed $953 millionthey said, while in the third quarter of 2019, the company grossed $948.3 million.
“For [radio broadcasters]the hope is that you can stabilize the land-based business enough and continue to grow the digital business where the digital growth offsets the land-based secular pressures,” Baker said. five to six years”.
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