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Bad reception: Radio sales slip

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Radio, still reeling from the dizzying dot-com demise, this year could experience its first revenue decline in a decade, showing that even a medium thought to be cost-effective and resilient is a victim of the economic and advertising slowdown. Any real turnaround won't happen until next year.

Radio's 2001 path is even bumpier due to unusually tough comparisons with last year, when radio enjoyed unprecedented growth thanks to dot-com ad dollars.

Those days are over.

Total radio revenue was down 7% for the first four months of the year, according to the most recent figures from the Radio Advertising Bureau. In that period, national radio dollars were off 20% and local decreased 3%, compared with the same four months in 2000. For April, total revenues were down 9%, a slight improvement over March's 10% downtick, but not enough to propel radio toward the double-digit growth it has enjoyed the past several years.

"The key message is that things aren't getting worse, but they're also not getting better," said Lehman Brothers' VP-Equity Research William Meyers, who added that positive growth is not likely to occur before August or September. In his most recent report, Mr. Meyers revised his 2001 radio outlook to 1% to 2% growth, down from estimates of 2% to 2.5%. However, after May revenues are released, sometime early this month, he is likely to revise downward again, he said. "Things are stabilizing, but not nearly where they want them to be."

Radio's dot-com dollars evaporated in the wake of the spring 2000 stock-market debacle. Radio's difficult comparisons ease after May, its toughest month of the year considering radio grew 25% in May 2000.

Yet Mr. Meyers said he's still not getting a good vibe from radio companies or advertisers. "Things aren't getting worse, but that's not always enough."

Tim Wallace, managing director-equity research at Banc of America Securities, forecasts no radio growth for the year, though he's optimistic about radio long-term continuing to pick up market share from other media.

"The underlying economy is continuing to go sideways, and in some areas, a little weaker," Mr. Wallace said. "In radio, the visibility remains limited. National advertising continues to be soft. Everyone's kind of waiting to see national pick up, and that will drive stronger revenue growth. We're not there yet."

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