“Spots” in radio lingo means commercials, and commercial radio (at least they got the name right) is so full of them now that even the advertisers are complaining:
- The strategy of stuffing commercial radio full of ads has backfired, as a handful of investment banks predicted slower growth, downgrading six key radio stocks — Clear Channel, Emmis, Cox Radio, Entercom, Citadel and Westwood One — and the sector as a whole.
Wall Street’s piling on the industry comes two weeks after the sector’s most outspoken advocate, Mel Karmazin, exited Viacom. The media conglom subsequently hinted that it may consider selling its giant Infinity radio division.
….As radio companies merged, the number of spots has surged to a high of 25 minutes per hour in some cases, said Goldman Sachs analyst Richard Rosenstein.
He and others said the ad inundation — which consumers have bemoaned for years — has eroded the value of the spots. Advertisers have started to worry that their message is being diluted by the sheer number of blurbs.
Radio stocks will be stuck, said Banc of America analyst Jonathan Jacoby, until the industry faces up to challenges.
Rosenstein said radio companies can either lower their prices or reduce the number of spots. But “it is difficult to believe that such a structural improvement in pricing/inventory can happen overnight, and could take as many as two quarters or longer to accomplish once undertaken,” he added.
….Overall, the radio sector has been the slowest in the media to recover from an ad downturn and the start of the Iraq war last year. Generally, TV and newspapers have had a nice boost since then.
As a result, radio stocks are down nearly 20% since April, with many trading at or near their 52-week lows. [Variety]
Who, honestly, wants to listen to commercials with an occasional song thrown in? Of course it’s been that way on the morning shows for years, but now it’s round the clock. It’s just one more reason radio consolidation (in particular) sucks out loud.
Satellite radio loves to hear this kind of stuff, but satellite will never be local.