Advertising budgets that took a beating during the recession are now on the mend, according to Canada's two largest owners of radio stations, Astral Media and Corus Entertainment Inc.
During a call on Wednesday to discuss the company's second-quarter earnings, Corus chief executive officer John Cassaday told investors that he is "quite confident that the ad recession is behind us."
While revenues were down slightly in Corus' radio segment in the three months ended Feb. 28, the declines were milder than they have been. The segment was down 4 per cent in revenues, compared to a 6-per-cent decline in the first quarter. Corus owns 50 radio stations across the country as well as specialty television channels.
Mr. Cassaday said the top advertising categories in radio - such as retail, automotive, entertainment, and restaurants - showed signs of growth. This was driven overwhelmingly by automotive advertising, which was up roughly 20 per cent in the quarter.
Corus' results follow the release by Astral last week, in which executives also said that the strong rebound in car ads was a major driver behind the company's ad revenue recovery.
"I think the entire industry, and TV, has seen the rebound, and basically because of the car business; there's been a return," Astral chief executive officer Ian Greenberg told analysts on a conference call last week. He singled out GM and Ford, which like many companies slashed their advertising budgets last year. Both "are back in full force," Mr. Greenberg said. Honda and Kia have also stepped up their advertising buys.
Radio is watched closely as a barometer of the health of the advertising market, Mr. Corus' Mr. Cassaday said. "It really reflects what is going on up and down main street."
Local advertising makes up roughly the bulk of Corus' ad revenue potential in radio, he said. Those local advertisers were the first to ramp up their spending as budgets came back, and in the past few weeks, he said national advertisers are also beginning to increase their spending.
Though industry watchers do not expect advertisers to stretch their budgets to fit the big ad spending trends before the downturn began, the consensus now seems to be that recovery is now on its way.
Results were also made uncertain by the switch to a new ratings system for radio last year, which measures listenership differently and has changed the ratings results at many stations. Mr. Cassaday said that at the 10 stations in Corus' largest markets - Vancouver, Toronto, Edmonton and Calgary - which represent about 90 per cent of Corus' earnings in radio, the ratings change has been positive over all.
Alberta is the market with the most challenges in terms of the recovery for Corus. Mr. Cassaday said the downturn was exacerbated there by new stations. There were roughly a dozen of these licensed in the last two years, he said.
The federal broadcast regulator has been too inclined to give those licenses to smaller players for independent stations, Mr. Cassaday said, arguing that The Canadian Radio-television Telecommunications Commission should allow larger media companies "to control more of the shelf space."
Corus also saw strong results from its television division, which increased revenues by 11 per cent.
The media company reported net income of $14.6-million or 18 cents per share in the quarter ended Feb. 28. Results were down from year-ago earnings of $29-million or 36 cents per share, largely due to a debt refinancing loss.
Revenues for the quarter totalled $192.7-million. This was up almost 6 per cent from $181.4-million last year.