Radio Revenue Booms

By Glenn Dyer | More Articles by Glenn Dyer

In good news for the five listed companies with an interest in the Australian radio industry, figures released by Commercial Radio Australia show that in the six months to June 30, radio revenues accelerated, rising 7 per cent to $301 million, with a turnaround in the highly competitive Sydney market apparent for the first time.

And the growth in the second half will get better because in the back half of 2006, revenues slumped, led by a sharp fall in revenue in the competitive Sydney market.

But now things are picking up and in June alone, revenues for the whole industry were 10 per cent above those for June of last year.

The listed companies with an interest in radio include Austero (AEO, $2.01, up 3.5c), Fairfax (which is about to buy the Southern Cross AM Network) closed at $4.89, down 2c, yesterday). Macquarie Radio Network, which may or may not be sold, was trading around $1.26 yesterday with not much interest.

Macquarie Media (which is buying rural stations from FXJ to add to its 85 regional outlets) was steady on around $4.70. APN which owns stations in Australia and NZ with Clear Channel was trading up 3c at $5.77. APN has been in some disfavour since the buyout proposal from Independent news and the O'Reilly family failed.

Looking at the revenue figures, you might wonder if Southern Cross Broadcasting may have been smarter to have hung on for another quarter before agreeing to be split between Fairfax and Macquarie Media.

SBC would have priced its selling value after taking into account the rise in revenue, but it seems to have been a little better than expected.

Commercial Radio Australia chief executive, Joan Warner said there was a significant improvement in the advertising market in the half, as well as a turnaround in Sydney.

She said Sydney has come out of a weak December 2006 half with 5.3 per cent growth in the June half and a better performance is expected in the next six months, especially with a Federal election due.

The CRA figures also showed metropolitan radio advertising revenue rose 10.1 per cent in the month of June to $58.5 million, from $53.1 million in the same month last year, which gives a firmer indication of the extent of the recovery.

For the 2006-07 financial year, the industry's revenue rose 3.7 per cent to $619.5 million, but that includes the depressed first six months to December which saw revenue in Sydney go backwards.

That's why revenue in the Sydney market was down 0.3 per cent at $221.4 million in the financial year.

"Perth and Brisbane have performed strongly in the June half, and Sydney has come out of a weak December 2006 half with 5.3 percent growth in the June half, so we are heading in the right direction and the market is quite positive," Ms Warner said.

"If you look at the trends, commercial radio ad revenue has increased every year for the past five years and we are up 33 per cent compared with 2002/03.

"That is a good result, but there is still room for radio to grow its share of the pie when you consider there is still a large gap between radio's share of revenue and the amount of time people spend with radio compared with other media."

"In the month of June the industry saw growth across the board and Sydney has now experienced growth in five out of the past six months," Ms Warner added.

For the 2006/07 financial year, metropolitan radio advertising revenue totalled $619.5 million, a 3.7 percent increase over the previous year.

Perth was the best performing of the five capital city radio markets during the financial year, with ad revenue up 13.7 per cent to $70.5 million, followed by Adelaide, which grew by 6.8 per cent to $58.3 million.

Brisbane rose by 4.8 per cent to $94.9 million, while ad revenue for Melbourne stations increased by 3.9 per cent to $174.4 million. Sydney was down 0.3 per cent to $221.4 million over the 12 months.

There's good news in these figures for the TV industry which will release its figures in about 10 days time.

Radio and TV advertising usually go hand in hand, so a 7 per cent rise in June half ad revenues would help all networks, and SBS. It would actually lighten the load on the struggling Nine and Ten networks and help them achieve what seemed to be tough targets in the first months of 2007.

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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