Despite the fast-paced changes in the media landscape, radio shows continue to demonstrate remarkable resilience.

• Radio, although one of the oldest media formats, has demonstrated durability over time.
• In contrast to the rapidly declining pay TV industry, radio's stability makes it a legacy medium.
• While radio faces challenges, major players like iHeartMedia can capitalize on digital formats as well.

Radio remains the exception to the rule that "legacy media is dead."

Although it originated in the 1890s, radio has experienced relatively stable listenership in the past decade. In contrast, pay TV, despite being newer, has faced more significant declines.

In 2009, 92% of Americans aged 12 or older listened to traditional radio in a given week, according to Pew Research data from last year. By 2022, this number had fallen by 10 percentage points. Meanwhile, pay TV penetration fell by 20 percentage points between 2014 and 2023, according to Statista. In the third quarter of last year, the pay TV industry experienced a record pace of shrinkage, as analysts at MoffettNathanson reported in their latest cord-cutting report.

Despite the emergence of other mediums such as satellite radio, podcasts, and Apple CarPlay, terrestrial radio has remained stable, according to Guggenheim media analyst Curry Baker.

Cable networks have not traditionally engaged with local audiences as radio personalities and stations have, according to Baker.

The widespread availability and low cost of radio have contributed to its dominance in various media formats. Many vehicles come with built-in access to AM and FM radio at no extra expense, and a 2022 Statista survey revealed that a majority of U.S. drivers prefer listening to terrestrial AM/FM radio while driving.

Radio stations have gained more listeners due to their ability to connect with local audiences. Listeners tune in to hear familiar voices, such as Elvis Duran on New York’s Z100 or Ryan Seacrest on Los Angeles’ KIIS-FM. Additionally, conservative commentators have traditionally had large followings on their radio shows, including Fox News’ Sean Hannity.

Radio stations offer contests and sweepstakes as an additional attraction to listeners. Prizes such as concert tickets or cash are often awarded to callers.

According to Tom Poleman, chief programming officer at iHeartMedia, radio is an interactive medium that involves contesting. Over half of iHeartMedia's listeners come to radio because of contests. Contests have become more accessible with digital options like text-to-win and social media contests. Additionally, radio is inherently social, with 80% of listeners saying they come because they trust the hosts to be the voices of the community.

The largest reach of any radio broadcaster in the U.S. is 250 million monthly listeners, according to the company that controls 860 stations across the country, as stated in November.

Over-the-air evolution

Digital audio formats, such as podcasting and streaming platforms, have increasingly threatened radio's dominance, prompting giants like iHeartMedia and Cumulus to incorporate podcasts and digital content into their business strategies.

In essence, podcasts are the streaming version of radio, just as streaming services have replaced traditional cable TV.

Podcasting has benefited top radio companies, while some media companies have struggled to transition their declining cable revenue to streaming.

Poleman stated that there is a captivating quality to concentrating on a human voice, which is why their radio hosts have excelled as podcasters. They were not surprised by the surge in podcasting and believe it is a testament to the complementary nature of broadcast radio.

As the industry struggles to recover from the Covid-19 pandemic slump, radio and TV advertising are facing similar challenges, according to Guggenheim's Baker.

In November, iHeartMedia CEO Bob Pittman acknowledged the ongoing uncertainty in the advertising industry. The company's multiplatform revenue decreased by 5.1% year over year in the third quarter of 2023, mainly due to a decline in broadcast advertising caused by a challenging macroeconomic environment and a decrease in political advertising, as stated in a press release.

In 2023, iHeartMedia's broadcast advertising revenue is predicted to decrease by approximately 23% compared to 2019 figures, according to Guggenheim's forecast.

In recent months, other media companies have reported declining ad revenues in their TV units. CNN's TV segment experienced a 12% drop in ad revenue during the third quarter of last year. According to media investment firm GroupM, global TV ad revenue is expected to decline by 18% year over year in 2023.

Despite the decline of pay TV, radio is performing well amid the broader media industry contractions, according to Baker's forecast for iHeartMedia and the terrestrial radio industry.

Since 2019, listening habits have shifted, with more customers opting for digital platforms, resulting in a decline in advertising revenue from broadcast, according to a spokesperson for iHeartMedia.

The company's revenue growth from 2019 to 2023 was highlighted by the representative, who pointed out that the total revenue includes advertising revenue from both digital and broadcast platforms. In the third quarter of 2023, iHeartMedia generated $953 million in revenue, while in the same quarter of 2019, the company recorded $948.3 million in revenue.