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Revenue growth for TV and radio stations will be fueled by the Central Gulf, Pacific and Mountain media regions, boosted by fast-growing Texas and California, according to a study from SNL Kagan, Radio/TV Station Annual Outlook.
The Kagan report projects that radio revenues in rated markets will grow by a compound annual growth rate (CAGR) of 3.3% from 2006 to 2011, with unrated markets growing at a CAGR of 2.8%. Total radio revenue, including network revenue, is expected to increase at a 3.2% CAGR for the period, writes MarketingCharts.
Television’s return over the same period is affected by its odd/even cycle (with additional political and Olympic Games revenues in even years) - the current CAGR calculation is based on an ending odd year and beginning even year. Kagan expects a five-year CAGR of 1.5% for local and national spot ads. Network compensation is expected to decline from $267 million to $66 million during that time - a CAGR -24.3%.
“Competition from new media is pressuring broadcasters to better leverage their greatest asset - their connection with the local community,” says Michael Buckley, analyst for SNL Kagan. “Broadcasters communicate with their local-market constituency better than any other media, but a fresh stage of monetizing those relations will require greater insight into the local market’s growth potential over the next several years.”
Radio/TV Station Annual Outlook provides market-by-market projections, using multiple factors to calculate growth rates. For TV, factors include retail growth rates, estimates for political revenue, Olympic Games viewership, World Cup soccer viewership, and changes in local economic factors. For radio, individual markets are based on estimated retail growth in core-based statistical areas; estimates are also based on economic factors, spillover when TV inventory becomes tight due to political ads, and international sporting events.
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