BIA Advisory Services Sees Growth in Radio Valuations Dependent on Industry’s Ability to Transform into an Expanded Operation

Series of Record Lows Supports Need to Increase Value through Additional Offerings

CHANTILLY, Va.--(EON: Enhanced Online News)--Cornered by weak radio station sales in the first quarter of 2009 and all of 2008, the radio industry’s sole opportunity for valuation growth relies on the ability to transform itself into a blended operation of broadcasting, online and other activities, according to analysts at BIA Advisory Services, a leading financial and strategic advisory firm serving the media and communications industries. Reviewing recent station transactions in the first edition of BIA’s quarterly, Investing In Radio® Market Report, demonstrates that stations with more than just over-the-air offerings provide the foundations for appraisals that raises its value above their competitors not involved in these other activities.

“Transforming the business model may not come easy for owners, particularly because there is no magic formula, but they will increase the value of their operations simply through off-air diversification, which can take a number of forms”

Through March 2009, 164 stations were sold for a total of $46 million. With 769 stations sold for an estimated $700 million last year, it was the sixth time since 2001 that one thousand stations or less were sold, but the first in that period for total transaction values to sink below $1 billion. In 2002 the identical number of stations went for $5.4 billion. Also of note, 2008 was the first year since the late 1980s where the number of stations sold in metro markets (383) was virtually equal to that of unrated markets (386). BIA recently reported 2008 radio revenues of $16.7 billion.

“Transforming the business model may not come easy for owners, particularly because there is no magic formula, but they will increase the value of their operations simply through off-air diversification, which can take a number of forms,” said Mark R. Fratrik, Ph.D., Vice President, BIA Advisory Services.

A chart showing the amount of radio station transaction volume and the number of stations sold from 1999-2008 (without the stations involved in the Clear Channel privatization) is available at http://www.bia.com/pr090414-radiotrans.asp.

At the same time, radio broadcasters may also immediately take advantage of other media troubles to increase their revenues and their values. Mike Andres, Managing Director of BIA Capital Strategies, an investment banking affiliate of BIA specializing in the communications industries, sees vulnerabilities in the newspaper industry as real revenue opportunities for radio stations.

“Radio's upside potential lies in its ability to accelerate the pace they take local advertising dollars away from newspapers, once advertisers that have been dormant begin returning," said Andres. "Many local newspapers have been ceasing operations, or moving to online versions, creating opportunity for other local media to fill this need.”

The struggles of the radio industry began a few years ago, but have been exacerbated by changing technologies and the recent problems in the financial markets. Station owners have been left to grapple with both strategic and tactical decisions for the long and short term in order to remain solvent.

“While expense cutting may be necessary in this economy, radio broadcasters must accelerate their transformative process and recognize where they exist in the media ecosystem,” said Rick Ducey, chief strategy officer of BIA Advisory Services. “To do this they must recondition their sales teams, think more locally, look at their advertisers through a different lens, consider migrating to other platforms, and start partnering with other organizations to provide more for their consumers and advertisers.”

BIA has created a new conference, “Winning Media Strategies,” to discuss critical topical issues for broadcasters and provide them with a tangible means to improve their operations. In a three-day program, May 20-22, 2009 in Washington, D.C., speakers will discuss new technologies, shifting consumer demographics, media usage trends, new competition, and how different business models are driving new revenue to traditional media. Additional details and registration information is available at www.bia.com/WMS.

A comprehensive profile of all 302 radio markets is available in the first edition of the quarterly Investing In Radio^® Market Report and the new 2009 Investing In Radio^® Ownership Report published by BIA. Both publications are part of the Investing In financial guide series that includes market trend analysis, demographic and economic overviews, competitive overviews, technical data, ownership data, pending and completed transactions, and Arbitron ratings. Information on these publications is available on the BIA website at http://www.bia.com/publications_reference_radio.asp.

BIA also publishes investment reference guides and provides data services for the television and newspaper industries. For more information, call 800.331.5086 or email [e-mail].

About BIA Advisory Services, LLC

BIA Advisory Services, LLC, a subsidiary of BIA Financial Network, provides research, data, analysis, and financial and strategic consulting to media, telecommunications, technology, directory publishing, and local search companies. BIA Advisory Services includes: The Kelsey Group, experts in traditional and online local media and advertising; BIA Research, providers of competitive and comparative market information and analysis through data services, specialized reporting, engineering studies and mapping; and, BIA Consulting, specialists in business intelligence and corporate growth strategy, and the nation’s leading communications appraisal and valuation firm. Additional information is available at www.bia.com. BIA’s blog is located http://blog.bia.com/bia and the company can be found on Twitter http://twitter.com/BIAfn.

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