Editor’s Note:  For today’s post I’d like to deep dive into what’s occurring in Broadcast Radio right now.  Today we’ll break down the current revenue erosion of the major players, and offer some insight into what’s causing this to happen.

Last Thursday-Friday several major Radio Broadcasters announced their Q1’17 earnings.  So what happened?  Let’s just say there was more red in these reports than a mafia movie.  While each company has their own story, the whole picture looks bleak for the industry.  To help sort this out I’ve included the following set of links.  The first three are about individual broadcasters’ earnings calls, and the last is Radio Ink’s very honest and telling reaction to what’s happening in the industry right now.

• iHeart CFO Richard Bressler says “we were surprised by a soft ad market”, and tries to explain why iHeart’s cash on hand dropped by half a billion dollars. (link)
• Radio One CEO Alfred Liggins basically asks to be bought by saying they’d be a “willing participant if there was further consolidation”, after Q1 rev dropped 7% YoY. (link)
• CBS buries a $12M YoY revenue decline for their Radio division deep inside their overall financials as they prepare to spin it off in to Entercom. (link)
• Radio Ink reacts to a steady drum beat of layoffs and declining revenue reports with an article title “Can We Be Honest? It Wasn’t A Great Week For Radio”. (link)

Now that you’ve read the “What” is happening to the radio business it’s important to understand the “Why”.  On the surface the answer to why Broadcast Radio’s business is eroding seems simple enough – technological advancements like satellite, downloads and now streaming make it possible to get the same music delivered in a better, more personalized way.  But what if that was just a small portion of the dilemma for Radio?  Like every iceberg, the part of the problem you see above the water line shouldn’t worry you . . . it’s the larger part lurking beneath the surface that’s the real problem.  In the following Jacobs Media link a theory is put forth on the digital transformation of the retail environment as the fundamental problem for Radio.  Simply put, Radio’s core strength of playing commercials to someone in a car as they’re heading off to a store no longer works, because consumers aren’t going to traditional retail stores like they used to.  As evidenced by the following graph, 53% of consumers did half or all of their Holiday’16 shopping online.  Marketing to this group requires more of a digital approach (either on web or in app), which Radio is woefully ill-equipped to deliver.  Keep in mind as you read this that Jacobs is one of the top Radio Consultancies in the industry.  So if these guys are sounding the alarm for Radio’s entire revenue paradigm, you know there’s a problem.

Hopefully this is useful perspective as you start your week.  Have a great Monday guys!