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Still one of the industry's strongest segments, the U.S. radio market thrived in 1999 on a wave of consolidation.
Growth in radio advertising over the last five years has outpaced all other major media except for cable. Growth has been climbing steadily since the Telecommunications Act of 1996 was passed, reaching record levels in 1999. The Act permitted radio station operators to own an unlimited number of stations nationally and up to eight in larger cities.

Radio enticed domestic advertisers to spend a total of $16.9 billion in 1999, up 12.3% from 1998. With projected spending to reach $26.6 billion in 2004, a CAGR of 9.5% for the forecast period. This compares with a 10.0% CAGR for the period 1994-1999.

National spot advertising posted double-digit growth for the third consecutive year in 1999, advancing 11.1%, while local advertising experienced its highest growth since 1981, with revenues climbing 13.0% for the year.
Source: Veronis Suhler Communications Industry Forecast


The radio industry outdid itself in 1998, recording its largest expansion since 1984.
A total of $15.1 billion was spent by advertisers on radio, 11.7 percent more than in 1997. Advertising on radio stations was up 11.8 percent, the third double-digit increase in the last five years, and radio network advertising rose 11.1 percent, the first double-digit gain in that category since 1989.

National spot advertising climbed by 15.0 percent for the second consecutive year, and local advertising posted an 11.0 percent advance, an improvement over the high single-digit increases of the prior three years. Over the last five years, advertising on radio stations rose at a 9.9 percent compound annual rate-11.2 percent for national spot and 9.6 percent for local. These sustained growth rates, impressive for a mature medium, reflect the benefits of consolidation.

Radio advertising will grow at a projected 9.7 percent annual rate over the forecast period, virtually matching the 9.8 percent annual increase of the last five years, but growth after 2000 will be relatively modest.
Source: Veronis Suhler Communications Industry Forecast


Following passage of the deregulating Telecommunications Act of 1996 (permitting increased ownership of radio stations within a market and unlimited ownership across markets), transaction activity exploded.
The value of transactions among publicly reporting companies in the two-year period 1996-1997, $27.3 billion, was seven times that of the 1993-1995 period. Radio station assets rose from $4.0 billion in 1995 to $15.4 billion in 1997, nearly quadrupling in just two years.

Driven primarily by acquisitions, revenue growth reached 33.4% in 1997, following a 31.9% rise in 1996.

In 1997, the operating income margin rose to a five-year high (15.8%) as the benefits of the recent wave of consolidation began to be realized. These benefits include the opportunity to package and sell inventory across an array of stations within one market and to offer national advertisers a greater reach in a single buy -- opportunities that led to double-digit radio advertising growth in 1997.

Operating cash flow margins climbed steadily in the five year period 1993-97, from 23.0% to 31.3%, with a 3.1% increase in 1997. Overall, radio broadcasting profit margins well outstripped overall communications industry averages.
Source:Veronis Suhler Stevenson Communications Industry Report

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