FM Radio’s Staying Power

Amid all the doom and gloom surrounding the future of the newspaper, magazine and television industries, it’s fascinating to see how the commercial radio market continues to thrive in Canada. According to the CRTC, revenue hit a record $1.4-billion in 2006 (with $1.1-billion flowing to FM stations), while profit margins remained healthy at 20%. This explains why there has been so much M&A activity in the market.

The question that begs to be asked is how radio has continued to thrive while many of its mainstream media peers have suffered. It could be because radio is a very local medium so it’s been able to fend off the online hordes. After all, if you want to know what’s happened to the local sports team or at city hall or the traffic, radio is a default for many people. Given how well this focus has worked for radio, it’s interested to see how long it has taken newspapers to embrace the same approach. The Toronto Star, for example, recently decided it was going to emphasize local coverage, highlighted by a concerted effort to have a big Toronto-focused story on the front page every day.

It has also been interesting to see commercial radio in Canada do well despite the launch of satellite radio, which increasingly look to be a niche service for road warriors and cottage owners looking for more than just than the CBC (Canada’s version of NPR) and local rock station during their weekend getaways. For all the talk about satellite radio being such a great experience, it doesn’t do local well, if at all. And with more people using their iPods to get commercial-free music, satellite-radio’s appeal is pretty limited.

For more thoughts on Canada’s radio market, check out Inside the CBC.