Lag in ad spending rebound hits Nine’s radio business

The advertising spending rebound across television has largely bypassed the radio industry, devastating Nine Entertainment’s radio earnings.

2GB radio host Ben Fordham. Picture: John Feder

The advertising spending rebound across television has largely bypassed the radio industry, devastating Nine Entertainment’s radio earnings.

As big companies across banking and the automotive industry resume spending on national TV ad campaigns, medium to smaller advertisers have refrained, which has hurt radio companies.

Last week’s earnings results of Nine Radio — which consists of Sydney’s 2GB, Melbourne’s 3AW and Brisbane’s 4BC — plus HT&E’s radio business ARN and Southern Cross Media, underscored the ad recovery lag despite an increase in listeners during the coronavirus crisis.

Nine Radio’s earnings drop of 62 per cent to $2.9m for the six months to December was on the back of a 24 per cent drop in revenue to $44m, following major hosting changes including Ben Fordham taking over Alan Jones’s long-running breakfast program on 2GB in Sydney.

It was the worst performer within Nine’s broadcast operations, which also includes its TV network and broadcast video on demand service 9Now.

Nine chief financial officer Maria Phillips described its radio results as “disappointing” on its earnings investor call last week.

In its earnings statement, Nine blamed a “weakness in direct sales” for the poor performance as growth in agency share was in line with expectations.

Outgoing chief executive Hugh Marks said Nine Radio was expected to improve into the 2022 financial year “as the radio market begins to recover”.

The radio industry’s ad revenue across the five capital cities dropped by 19 per cent over the six months to December. That compares to 0.6 per cent increase in ad revenue across the metro free-to-air TV market over the same period, according to figures from industry groups, Commercial Radio Australia and ThinkTV.

Southern Cross’s audio business, which comprises metro and regional radio stations as well as podcasting and other related businesses, reported an 8.6 per cent rise in first-half earnings to $70.7m, despite a near 18 per drop in revenue to $173.3m.

Southern Cross CEO Grant Blackley said its radio business, consisting of FM radio stations Triple M and Hit, had a “slightly higher disposition towards the local and SME market”, noting the group had more than 19,000 clients across 100 markets in audio and TV.

Mr Blackley said some of the SMEs were not recovering at the same rate as big businesses.

ARN, which boasts FM radio stations KIIS and The Edge as well as digital audio operations, booked a 22 per cent drop in earnings to $28.1m for the six months to December following a 15 per cent fall in revenue to $92.2m.