A slow start to the year for US radio has forced market analysts at Merrill Lynch to re-think 2004 growth forecasts, the broker said today.
The US radio industry growth for 2004 was forecast by Merrill Lynch to reach 8.0%, but due to poor quarter one results, analysts have gone back to their crystal ball and revised this down to 6.0%.
The US Radio Advertising Bureau revenue release for January and February shows that results were weaker than expected. Therefore quarter one forecasts have also been revised down to 3.6% from 4.5%.
Merrill Lynch fears that a negative radio industry trend is slowing longer-term growth revenue. Consequently, it has refined long term radio growth forecasts from 5.0-6.0% to 5.0-5.5%.
Merrill Lynch said: “At this level, radio should grow more in line with the growth of both GDP and the advertising industry.” This suggests the medium will maintain its 8% share of the advertising pie, rather than increase to 9% as Merrill Lynch previously believed.
Although February national sales were disappointing, Interep, a national radio rep firm, revealed to Merrill Lynch that national radio advertising is accelerating in March and beyond. Interep predicts a national radio advertising growth of 7-8% in 2004.
The report also showed that local business advertising is expected to outpace national sales in 2004. Interep’s findings indicated that including local business, March 2004 radio industry revenues grew by 10% and promising April results are also expected.
The analysts at Interdeco agree with Merrill Lynch that a sector decline is in store for radio. The latest Ad Barometer report shows that radio is expected to grow globally by only 1.1% in 2004, down from 2.2% in 2003 (see Market Recovery Is Back For Good Says Ad Barometer).
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