Radio's Revenue Falls Even as Audience Grows

Can radio save itself? Listeners are diverted by iPods and Internet and satellite radio. Companies are loaded with debt. Advertisers are heading to television or the Web — and the advertisers that have continued to advertise on radio, like auto dealers and retailers, are being hit by the economic crisis and pulling back. And even though the audience for broadcast radio is actually growing, stations cannot seem to increase their revenue. Radio advertising was down 10 percent last month from October 2007, according to the Radio Advertising Bureau, the 18th consecutive month of declines. And the third-quarter numbers are dismal. Problems in the radio industry have been piling up for years, said Marci L. Ryvicker, an analyst at Wachovia Capital Markets. In the 1990s, radio companies consolidated, then began increasing the ad time available. "They started to fight for share, instead of being proactive and thinking of new ways to generate revenue," Ms. Ryvicker said. Then, when advertisers decreased their spending around 2001, radio stations were stuck with too much time and too few advertisers. "There was too much inventory out there, and rates kept going down, down, down," Ms. Ryvicker said. Recent years have not changed the fortunes of radio. Many companies borrowed money to buy back their stock, leaving them saddled with debt. And the industries that supported radio advertising — finance, retail and autos — have all been particularly hard-hit by the current economy.