It’s a well-recognized chorus: “Legacy media is dead” — until you are speaking about radio.

Despite being one of many oldest media codecs, relationship again to the Nineties, radio has maintained comparatively secure listenership over the previous decade. Pay TV, whereas newer, has confronted extra important declines.

In 2009, 92% of Americans age 12 or older listened to conventional, or terrestrial, radio in a given week, in line with information from Pew Research revealed final 12 months. By 2022, that quantity fell 10 proportion factors. Pay TV penetration, alternatively, fell 20 proportion factors between 2014 and 2023, in line with information agency Statista. In the third quarter of final 12 months, the pay TV business shrank at a document tempo, analysts at MoffettNathanson stated in their newest cord-cutting report.

“Terrestrial radio has stayed steady even as other mediums like satellite radio, podcasts and Apple CarPlay have come on board,” stated Guggenheim media analyst Curry Baker.

“Historically, radio personalities and stations have engaged with local audiences,” which have a tendency be “sticky,” Baker stated. “Cable networks never really did that.”

Radio has maintained the higher hand on many media codecs partly due to its accessibility and relative lack of value obstacles. Most vehicles come already geared up with entry to AM and FM radio at no further value, and in line with Statista information from 2022, nearly all of U.S. drivers select to hearken to terrestrial AM/FM radio over every other type of leisure on the street.

But radio listenership has additionally been bolstered by the distinctive skill of stations to seize native viewers loyalty. Listeners tune in to listen to acquainted voices, similar to Elvis Duran on New York’s Z100 or Ryan Seacrest on Los Angeles’ KIIS-FM. Conservative commentators have additionally historically commanded giant followings on their radio shows, similar to Fox News’ Sean Hannity.

Contests and sweepstakes signify one other distinctive draw to terrestrial radio. Major stations are recognized to permit listeners to name in and win prizes similar to tickets to concert events or money.

“Radio is an interactive medium, and part of that is contesting,” Tom Poleman, chief programming officer at iHeartMedia, advised CNBC. “For over half of our listeners, contesting is one of the reasons that they come to radio. Over time, contests has become more accessible with digital options like text-to-win and social media contests. Radio is also inherently social: 80% of our listeners say that they come because they trust our host to be the voices of the community.”

iHeartMedia, which controls 860 stations throughout the U.S., captures a mean of 250 million month-to-month listeners, the corporate stated in November, the biggest attain of any radio broadcaster in the U.S.

Like different legacy media, radio has confronted growing encroachment from digital audio codecs, similar to podcasting and streaming platforms. Radio giants similar to iHeartMedia and SiriusXM have adopted podcasts and digital output as a part of their enterprise fashions.

Podcasts, in many respects, operate because the streaming iteration of radio, in the identical approach that Netflix was the streaming iteration of cable.

Top radio firms have positioned themselves to profit from the podcasting growth, in stark distinction to some media firms’ contentious relationship with streaming, as many have struggled emigrate their declining cable income to streaming.

“There’s something about being able to focus on a human voice that is compelling,” Poleman stated. “Our radio hosts have naturally become great podcasters and we weren’t surprised to see the explosion in podcasting. We feel it’s very complimentary toward broadcast radio.”

Still, identical to TV, radio faces promoting headwinds because the business seems to be to get well from the Covid-19 pandemic droop, stated Guggenheim’s Baker.

In November, iHeartMedia CEO Bob Pittman famous ongoing “uncertainty” in the promoting business. Multiplatform income was down 5.1% for the corporate 12 months over 12 months in the third quarter of 2023, primarily brought on by a “decrease in broadcast advertising due to a challenging macroeconomic environment and a decline in political advertising,” the corporate stated in a press launch.

Guggenheim forecasts iHeartMedia’s broadcast promoting income to say no about 23% for the complete 12 months 2023 in comparison with 2019 ranges.

Likewise, different media firms have reported declining advert revenues inside their TV items in current months. CNN proprietor Warner Bros. Discovery reported a 12% drop in advert income for its TV section for the third quarter of final 12 months. Global TV advert income for 2023 is anticipated to be down 18% 12 months over 12 months, in line with media funding agency GroupM.

Baker additionally forecasts a “flat to down” broadcast income outlook for iHeartMedia and the terrestrial radio business as a complete. But in the face of pay TV’s fast decline, radio is faring nicely amid the broad contractions in the media business.

A spokesperson for the iHeartMedia famous that listening habits have modified since 2019 as extra clients make the change to listening on a digital platform, contributing to the decline in promoting income from broadcast.

The consultant additionally pointed in the direction of the corporate’s progress in complete income when in comparison with 2019, which elements in promoting income from each digital and broadcast platforms. For the third quarter of 2023, iHeartMedia introduced in $953 million in income, they stated, whereas in 2019’s third quarter, the corporate captured $948.3 million in income.

“For [radio broadcasters], the hope is you can stabilize the terrestrial business enough and continue to grow the digital business to where digital growth offsets terrestrial secular pressures,” Baker stated. “If you model this out, the digital business simply overtakes the legacy terrestrial business in the next five to six years.”

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