Radio Is On Road to Recovery But Needs More Help From Podcasts

Radio is rebounding after a rough 2020, as seen in recent earnings reports from iHeartRadio, Entercom and others showing revenue declines shrinking.

3/2/2021 7:32:00 PM

Radio is rebounding after a rough 2020, as seen in recent earnings reports from iHeartRadio, Entercom and others showing revenue declines shrinking.

Radio is rebounding after a rough 2020, as seen in recent earnings reports from iHeartRadio, Entercom and others showing revenue declines shrinking.

Podcasts' double-digit growth creates an attractive narrative for investors.Only in a pandemic could a business have bounding optimism after losing a fifth of its revenue in one year. That's radio in 2021 as companies dug themselves out of a deep second-quarter hole caused by store closures and stay-at-home orders across the country.

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iHeartMedia's 2020 revenue was $2.95 billion, down 20% from $3.68 billion in 2019, according to the company's earnings report released Thursday. That deep loss is secondary to the improvements made over the year, however. Although revenues for the fourth quarter period covering October through December were 9% lower than a year earlier ($1.03 billion compared to $936 million), they were an improvement from the 47% and 29% deficits in the second and third quarters, respectively.

The upward trajectory makes sense: just as radio companies quickly took a hit when the economy sank in March, they have benefitted from economic expansion. At Cumulus, 2020 revenue fell 26.7% but fourth quarter revenue was down 13.9% year over year. Entercom's revenue fell 19% in the fourth quarter, slightly better than the 22.8% annual decline.

Country Radio Confronts a Jumbled Future: 'We Need to Throw Out Our 1980s Playbook'Despite showing year-ending improvements, radio companies had mixed results on Wall Street on the days following their earnings releases: iHeartMedia shares fell 7.2% before recovering 2.6% the following day, Cumulus's share price barely moved, and Entercom Communications' shares plummeted 23.9% one day and fell another 11.1% on the next -- 27.4% in total.

Each of these leading radio companies are managing expectations for the future differently. After a year of social distancing,"pent-up consumer demand" and"an economic bounce-back" will drive iHeartMedia sales back to 2019 levels by the end of 2021, president, COO and CFO 

Rich Bresslersaid during iHeartMedia's earnings call on Thursday.Not so fast, said Cumulus CEOMary Bernerin the company's Thursday  earnings call. Despite the upswing from a miserable second quarter,"we're not out of the pandemic woods yet," she said.

Beasley Media Group CEO Caroline BeasleyAs Texas Freezes, Radio Scrambles to Stay On Air & Pivot From Music to Emergency ProgrammingThe bright spot throughout the past year has been podcasts' continued  growth, which is expected to play a key role in these companies' recovery.

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At iHeartMedia, 99.8% growth in podcasting revenue helped digital revenue improve 53% in the fourth quarter. Cumulus' 12% growth in digital sales was"led by podcasting growth of nearly 40%" in 2020, said Berner. Its stable of podcasters -- including political commentators Ben Shapiro and Mark Levin, both in Apple's top 10 podcasts in January -- have Cumulus' podcast revenue"pacing up nearly 30%" in the first quarter of 2021, she said.

For an industry needing to expand its digital footprint, podcasts' double-digit growth creates an attractive narrative for investors. Read more: billboard »

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