Radio Website Values Increase

THIS POST IS REPRINTED FROM KENRADIO.COM–AN EXCELLENT BLOG ON INTERACTIVE MEDIA.

Radio, along with local television and pure-play websites, is poised to post the largest gains of all local media sites. Currently, U.S. newspaper websites are the most lucrative of local media sites, with uppermost valuations reaching between $300 million and $450 million for the largest newspaper sites, according to a study by BIA Financial Network. The value of top local TV sites is between $30 million and $40 million, while top local radio sites sit at between $15 million and $20 million. But as newspapers’ online growth stagnates due to reliance on classified and display ads and shrinking real estate and automotive business, radio, local TV and pure-play sites will take up the slack, with strong revenue gains coming from a growing demand for rich media and video advertising.

Strong growth is not a given, but in order to live up to growth predictions, local radio, TV and pure-play sites must adapt to the new demands in the interactive advertising arena, providing rich media and digital video products that represent the fastest-growing revenue opportunities. In 2008, the oldest newspaper, radio, TV and “city.com” websites turned 14 years old, evolving from interesting experiments to “financial saviors” for their parent organizations, the report points out. Obviously, there are fundamental changes taking place in the value of media properties, with the value of their websites becoming more meaningful as a percent of total value. Given their growth potential, the value multiples of media websites may be 2 to 4 times that of the core business.

– TV and radio to grow rates double newspapers’: From 2002 to the end of this year, local newspaper sites’ growth rate is expected to have amounted to 33.5% gains, compounded annually. Local TV and radio station sites, during this same period, are projected to have grown 67.2% and 69.9% on that same basis. That’s also ahead of what Borrell calls “pure-play” internet companies like AOL, Yahoo and Google, which don’t have a traditional ad spend side. The pure play category is anticipated to have grown 40.5 percent every year through the end of 2008. But because of newspapers’ head-start and cross-selling opportunities, their value will still dominate.

– Display’s decline hurts newspapers: Newspaper online revenue growth is below overall local online spending growth. Also, the rate of growth in newspaper online ad revenue is declining. Newspaper sites’ reliance on display and classified ad categories, which face declining spending. Standard-format ads – banners, pop-ups, tiles and classified listings – comprise 50.6% of all local online spending in 2008 and only 13.4% in 2013. The analyst sees substantial increases in the shares captured by local e-mail marketing and streaming audio/video ads (particularly long-form, opt-in video), which will grow from a combined 19% share of the online ad market in 2008 to more than 59% in 2013.

– Local media valuations: Looking at the largest local newspaper sites in the U.S., eestimates show their worth to be between $300- to $450 million. Local TV sites are still playing catch-up to some extent, but they’re expected to gain on newspapers. The same is true for radio. But as it stands now, the values of the largest-grossing U.S. TV station sites are between $30- and $40 million. Sites operated by local radio groups in are valued between $15- and $20 million. Independently owned pure-play sites are just beginning to make significant inroads in local on-line markets. While these sites are expected to pickup significant gains over the next few years, they have a natural disadvantage against traditional local media properties – namely promotion, content and, perhaps most importantly, direct relationships with local marketers. But for the moment, pure-plays still rule by dint of having the largest share of the local media revenue pie, with 67.7% of all local online ad dollars, followed far behind by newspapers with 10.7%, magazines (8.6%), TV (5.6%), directories (4.2%), cable/satellite (2.4%) and radio at a mere 0.6%.

Radio Statics
83% music buyers find their music from hearing a song on the radio, on TV, or in a movie
49% of consumers listen to radio for new music
18% of US consumers have listened to an audio podcast
41% of weekly online radio listeners have a social networking profile
28% of those online users who listen to radio have a MySpace page
33 mln Americans listen to online radio stations
4.85 bln hours spent on online music in 2007
17% of Internet users bought digital content
Radio stations to make $28.7 bln by 2016
US HD radio adoption to reach 30 mln by 2012

Newspaper Statics
$3.2 bln spent on newspaper Web site ads in 2007
Newspapers made $2 bln in online local ads in 2007
Newpaper digital ad revenues to reach $150 bln by 2011
Only 0.4% of grocery coupons get used
$847 mln spent on newspaper Web site ads in Q4 2007
56% of online newspaper readers researched a product advertised in the newspaper
47% of newspaper readers go directly to an advertised URL
52% of newspaper readers would buy the product after seeing newspaper ad
70% of newspaper editors think requiring real names would improve comments