Radio strong in rough economy

Radio continues to attract large group of listeners.

By Allan J. Vestal

Published March 16, 2009

Although the effects of the economic downturn have left their mark on the radio industry, several veterans of the mid-Missouri airwaves said they are enduring the recession.

Nearly three-fourths of Americans older than age 12 listen to the radio each week, according to a 2008 survey by research firm Arbitron. Despite a slowing economy and competition from newer forms of media, such as satellite radio and the Internet, terrestrial radio remains a stable enterprise.

"Business is slightly slower, but generally not a whole lot different for us," said Gary Leonard, general manager of Mexico, Mo., radio stations KWWR/95.7 FM and KXEO/1340 AM.

Steve Mallinckrodt, sales manager for Fulton's KFAL/900 AM and KKCA/100.5 FM, said the stations haven't seen a substantial drop in advertising, and stations in the Midwest, specifically in mid-Missouri, have done better comparatively because of the strength of the local economies.

"We just haven't seen the big crash and burns," he said.

KBIA/91.3 FM manager Michael Dunn said advertising money is more prevalent in more rural areas such as mid-Missouri.

"Smaller markets tend to be more insulated from this," Dunn said. "In larger markets, (radio stations) are all driven quite a bit by ad-agency buys. A lot of our business, there's no ad agency involved."

Dunn said KBIA has yet to face a severe downturn, but said local stations are not immune to the recession.

"Everybody's being hurt," he said. "It's just a question of how much."

The station mangers said their traditional source of income, advertising, has been fairly reliable despite the shaky economy.

The economic trouble of local radio stations might be insubstantial compared to that of satellite radio.

Sirius XM, the only licensed satellite radio provider in the U.S., was loaned $530 million by a private investor in February to cover debts, and has been hit hard by what chief financial officer David Frear called "an absolutely awful" retail market in a conference call with investors on March 12.

Some are forecasting that Sirius XM, which formed after a merger of competing satellite radio providers Sirius and XM, will have a difficult time registering new customers in the coming months.

"It's not a great model," Dunn said. "When people don't have enough money, who is going to spend $15 a month on stuff they can get from other stations for free?"

Leonard agreed satellite radio's business model has hurt them financially.

"Satellite radio has not made money since they signed on," Leonard said. "They're still not making money and their business plan does not show them making money in the foreseeable future."

But there might be a threat to traditional radio on the horizon: the Internet and online radio services.

"The only thing that's holding them back now is radios that are able to access the Internet without being plugged into a computer," Dunn said. "That's going to revolutionize the listening market."

Such services, which are largely ad-supported and free to end-users, can originate from anywhere in the world. Dunn said the variety of online channels far exceeds the varieties of traditional radio stations in every way but one.

"We think that the future's going to be in local radio," he said. "We keep bolstering our local programming."

KBIA has numerous online offerings, including more than 600 podcasts and three streaming online stations, Dunn said.