--October 5, 2009

After enduring two years of the worst recession since the Great Depression, we are all battered and shell shocked.  We have become so used to playing constant defense, fighting to minimize our losses, that we have become somewhat lost in the “Fog of War.”  But when you step back and look at the big picture of what is happening around us, you realize that radio is well positioned for very strong growth as our country recovers from the deep carnage of the recession. 

Here are the facts:

• For the past two years, the US economy has endured the worst recession since the Great Depression.


• Due to the recession, advertising has been clobbered across the board.  All media (including radio, TV, print, cable, internet display, outdoor, yellow pages, magazines, etc.) are down roughly 20-30% in the first half of 2009.  Radio is down low 20s, in line with other media.


• With all media ad revenues down significantly, it is clear this has been a cyclical decline.


• There is strong evidence that the economic recovery has begun.


• As business recovers, advertising will recover. In fact, over the past few weeks, many bellwether advertisers have stated that they will be increasing ad spending significantly.  The list includes Kellogg’s, General Mills, Unilever, Colgate Palmolive, Toyota, Yahoo, Toys ‘R Us, JC Penney, Best Buy and others.


• Wall Street is beginning to notice. Just last week, Morgan Stanley predicted a bullish recovery in advertising next year. They made this call based upon rapidly mounting evidence in channel checks and economic data.  Among their predictions: a double-digit increase in local auto dealer ad spending starting in first quarter.


• Our comps are embarrassingly easy. Radio revenues are down 30% over the past two years.  A 40% increase in revenues from current levels would merely get us back to where we were two years ago.


• Many of the local and national advertisers who stopped marketing or cut back significantly in 2008 and 2009 due to economic challenges will return.


• As demand accelerates, pricing will recover as the “recession discount” goes away.


• Will we be up 40% in 2010?  No.  But isn’t it reasonable to suggest that in 2010 as the economy rebounds, we can recover one-third of the damage caused by the recession?  That would put us up 12-15% next year.


• Even if we are up 12-15%, 2010 would still be the second worst year ever for radio advertising. So is up 12-15% really that heroic?

Radio is very well positioned for a major recovery, offering customers an outstanding value proposition that has actually grown even stronger over the past few years in comparison to most competitive media.  At a time when some other major media are facing existential threats and significant declines in usage, radio continues to show strong audience listening trends and reaches 93% of Americans weekly.  Radio also remains the most cost-effective major advertising medium in the nation.  And radio is rapidly reinventing itself through aggressive digital innovation that is expanding and enhancing listener interaction and engagement and offering unprecedented new opportunities for advertisers.  Recent new product announcements from Apple, Microsoft, and others provide further testament to radio’s bright future.

All of these facts add up to a single, simple conclusion: radio’s growth potential in 2010 is enormous.  The economy is starting to improve, advertisers are signaling a strong 2010 recovery, radio’s fundamentals are strong at a time when many competitors are hobbled, and next year’s comps are stunningly weak.  The only question that remains is how much of the 40% in recession-related damage we will claw back in 2010.

--David Field is chief executive officer of Entercom