Report: There May Only Be A Decade To Save FM Radio

• FM radio is facing attacks from streaming services but still reaches more Americans than smartphones and television.
• iHeartMedia CEO Bob Pittman is confident in FM radio and says he does not view Spotify as a competitor.
• Apple’s Beats 1 radio station and Spotify’s “Your Daily Drive” feature are proving that even if traditional FM radio sees its demise, its core programming format can survive in the digital era.

With the tuner now tucked slyly between the Bluetooth and auxiliary options on car dashboards, the days when FM radio reigned as the nucleus of musical enjoyment are fading, according to Joe Andrews at CNBC.

Music enthusiasts are turning to personalized streaming services such as Spotify, Sirius XM’s Pandora and Apple Music to find their next favorite artist. “Clock radios” are joining the ranks of clamato juice as product combinations that once made sense but now feel dated and unnecessary.

The rapid transformation in consumer listening preferences has led Larry Miller, the director of New York University’s music business program and host of the “Musonomics” podcast, to predict FM radio is near a breaking point.

“I think that we’re in the last decade of influence the way we grew up with radio’s influence on music listenership,” Miller said.

A former disc jockey himself, Miller pointed to the downward trend in radio station valuations to prove his point.

Earlier this year, Cumulus Media sold flagship radio stations in New York City, Los Angeles, Washington D.C., Atlanta, and San Francisco to the nonprofit Christian broadcasting company EMF for $103 million. Disney’s 1995 merger with Capital Cities saw ABC Radio, WABC, and WPLJ alone valued at over $130 million, according to Miller.

“This is the lowest pricing and by far the lowest multiples that I’ve seen in decades of looking at this stuff,” Miller said.

This past July, Emmis Communications sold their majority stakes in its Austin and New York City radio stations. The company is planning to use the $88 million in proceeds from the sale to invest in “non-radio companies with a higher growth profile. ” Investors responded positively, sending the stock to a four-year high. Miller believes this reaction was in part because investors were happy to obtain any price in the declining market.

Perhaps more alarming is the trend in radio advertising revenue, the primary form of financial sustenance for radio stations.

“I mean you’d have to pull out a magnifying glass in order to find any nominal growth,” Miller said. “If you were to look for real growth, it’s absolutely negative.”

Real revenue for terrestrial radio advertising has indeed declined every year since 2015, according to data obtained from PwC.

CEO Bob Pittman said iHeartMedia has seen year-over-year revenue growth 22 of the last 24 quarters, but the growth has been slow. For the fiscal year 2018, iHeartMedia generated $3.6 billion in revenue, $50 million in net income, and $976 million in adjusted EBITDA, according to an SEC filing.