Radio broadcasting companies have witnessed changes in customer preferences, as many now prefer Internet radio. Currently, there are around 970 million Internet radio listeners in the U.S. However, the large listener base contributes only 10% to the total revenue of the radio companies, and more than 70% of the revenue is generated from advertisements. As Internet advertising is cheaper than any other form of marketing, more and more companies are focusing on this area.
In this article, I have picked three broadcasting companies, Cumulus Media Inc (NASDAQ:CMLS), Pandora Media Inc (NYSE:P), and Sirius XM Radio Inc (NASDAQ:SIRI), that have shown impressive growth in the past few years with effective strategies and are expected to perform well in the future. Let’s explore the strategies adopted by these three companies in order to gain higher market share.
Focus on building network
Cumulus Media Inc (NASDAQ:CMLS) has entered into a joint venture with the iHeartRadio platform to improve its sales and radio broadcasting network. In the first quarter of 2013, the company’s revenue declined by 1.3% year over year, amounting to $232.9 million. Cumulus reported that this downtrend was due to its weaker sales and broadcasting network. Cumulus, with this JV, will offer Clear Channel’s best technology in the U.S. with the support of iHeartRadio. The company is planning to run its “570 radio station” on the iHeartRadio platform and will add 800 broadcasting channels in 150 U.S. cities to Cumulus’ network, which originally belonged to iHeartRadio. Additionally, Cumulus will also have the benefit of the iHeartRadio mobile app, supported on Android and Apple phones. IHeartRadio has a record of 44 million downloads of its mobile app and 65 million digital user hours, which will help Cumulus boost revenue. The company expects total revenue of $1.07 billion in 2013 and $1.41 billion in 2014.
On the other hand, Cumulus Media Inc (NASDAQ:CMLS) took new initiatives in January 2013 to improve its network by purchasing CBS Sports and SweetJack. CBS remained a challenge in the first quarter of 2013 but is expected to improve in the second quarter. This improvement is expected because CBS has launched a 24-hour broadcasting network service. With this, it is expected that CBS will generate revenue of $9 million in 2013 and $36 million in 2014.
Cumulus invested $2.5 million for the purchase of SweetJack, which is a daily advertising deal platform currently working in 200 markets. Cumulus Media Inc (NASDAQ:CMLS) plans to efficiently utilize the advertising platform of SweetJack in order to boost its revenue. SweetJack, under this deal, will advertise on approximately 1,400 radio channels and its websites in the country. The revenue expected from SweetJack is $2 million in 2013, but over the long term, revenue of $11.5 million is expected in 2014.