That’s according to Wells Fargo analyst Davis Hebert who made a financial presentation during the Pillsbury Broadcast Finance breakfast at The Radio Show, Wednesday morning. Hebert said despite the booming economy, radio has underperformed since the recession. And the reality is digital is taking share and that’s pretty much in line with consumer consumption moving to the digital world.
Mobile advertising is sucking up all the growth, according to Hebert, “with its immense amount of data and growing audience.” Mobile advertising is expected to grow nearly 40% this year with radio down 2%. And the majority of that ad revenue is going to Google and Facebook. Hebert says it doesn’t help radio that auto sales are tapering and retail faces headwinds from Amazon.
There was some good news in the Hebert presentation. Political is back and Hebert says Magna Global is forecasting this election season at $2.9 billion. “Most of that will go to local TV but radio could get 5-7% of that money, which could be a shot in the arm.”
Hebert also recognizes that audio listening is growing. And radio retains a leadership position in that space. “Regarding time spent with media every day, radio has been consistent , just over two hours per day. Radio’s time vs. mobile? People are spending over three hours per day on their mobile device and one hour and 46 minutes with radio.”
The Wells Fargo analyst says 2018 is a major transition year for the radio industry and he’s hoping the future will bring less debt for the major players. Hebert sees four areas for growth for radio: mobile streaming, podcasting, smart speakers, and big data.
What is an investor’s wish list for radio, according to Hebert: stabilization in non-political ad sales, successful mobile extensions, reduced leverage, and iHeart emerging from bankruptcy.
