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Online Radio Revenue to Jump 12% in ‘09

Online radio revenue is expected by SNL Kagan to grow 12% this year, to $441 million; in 2010, online radio revenue will leap by 20%, to $530 million.

Online revenue will also grow from 2.7% of total radio revenue in 2009 to 3.2% of the total in 2010. By 2013, online revenue growth is expected to level off, making up 4.7% of radio’s total revenue.

SNL Kagan analyst Justin Nielson points out that radio broadcasters were slow to embrace new technologies, but says that, with the decline of traditional ad spending, radio stations have “turned to online initiatives to grow top-line revenues, improving their Web sites and embracing online streaming and mobile apps to drive their local base to their multiple platforms. With total radio revenue only expected to post modest growth over the next five years, it has become increasingly vital for stations to monetize digital innovations.”

ZenithOptimedia predicts that overall radio revenue will return to positive growth in 2011.

PricewaterhouseCoopers expects that terrestrial radio will decline by a 4.7% compound annual rate over the next several years, to $13.6 billion in 2013. Radio advertising is expected to drop 14.2% this year to $14.8 billion, but will begin to turn around in 2010 and 2011; PwC says positive growth won’t be seen again until 2012.

Radio One is one radio company that is beginning to pull itself out of the advertising slump. Though third quarter revenue fell 12% - and automotive and financial sector advertising dropped 37.6% and 22.9% respectively - Q3 was the company’s second consecutive profitable quarter, having earned $14.2 million, compared with a loss of $266.1 million last year (the year ago period results were affected by a one-time write-down of $337.9 million).

Radio One said some categories, like food and beverage, healthcare and retail are showing signs of improvement.

“It’s a pretty decent result,” said industry analyst Mark R. Fratrik of BIA Financial (via the Washington Post). “They are moving in the right direction. But like every other radio company, there are both long-term and short-term challenges.”

Emmis Radio revenue also recently improved