For Immediate Release:

Friday July 7, 2006

Where Are My Listeners Going?

In November, 2004, Bridge Ratings & Research released initial results from a multi-year-long Audience Attrition project. The results in that report reflected audience erosion from terrestrial radio due to generally less time spent with AM/FM radio and more time spent with a variety of digital media, including MP3 players (including iPods), Internet radio, satellite radio and Compact Disc.

As part of Bridge Ratings’ on-going studies of radio listening behavior, the company updates the report quarterly. This overview reflects the findings relevant to Q2 2006 audience behavior.

This latest study, which has been tracking such behavior since January, 2004, reveals "recovery" behaviors for traditional radio, increased awareness for High Definition radio (HD) and "digital dispersion" among digital media competitive to terrestrial radio. This on-going project is intended to track radio audience migration over time in order to better understand the ebb and flow of listener preference.

Traditional Media Erosion to New Media - Update

Where Does the TSL Come From? - Update

Increased Use of Traditional Radio Due to...

After a slight dip in TSL during Quarter 1 of 2006 there where positive signs during the second quarter of 2006 that terrestrial radio was experiencing positive Time Spent Listening and Weekly cume audience tune-in.

Other updated findings include:

1. Terrestrial audience erosion to alternative audio entertainment reversed its downtrend this quarter with all demographics including 12-24 year olds who actually increased their weekly TSL to convention radio (51-55) while showing a slight decrease in the weekly time spent with digital media (70-68). 25-49 year olds also increased their weekly TSL to traditional radio (60-65) while slightly reducing their use of alternative media (60-55).

2. Terrestrial radio and Internet radio recorded slight dips in overall weekly time-spent-listening while time spent with MP3 players among all ages continues to increase.

3. MP3 fatigue as a function of duration of ownership continues to represent a natural behavior of use after a period of time. While the trend for MP3 fatigue among 12-24 year olds is not as severe as for adults 25+, the data continues to confirm its existance. MP3 device usage this quarter consumed a slightly lower overall 75% of a radio user's audio entertainment during initial ownership weeks and months. This number tends continues to be generally lower among 30+ women and 35+ men.

The following chart represents TSL changes among 12-24 year olds who purchased a new MP3 player in March 2006. The chart trends the number of hours per week on average during the post-purchase period April through June 2006.

4. Competition for traditional radio time-spent-listening continues. Time spent listening to terrestrial radio is fighting for its share of time with a multitude of digital options. Even television has regained viewership based on this quarter's data. The most often given reason for this by our sample: better programming and new shows. Meanwhile, music-intensive radio stations are vying for the attention of their constituencies as MP3 players continue to be more pervasive than ever (80 million sold). Though Podcasting showed evidence of cannibalizing radio time-spent-listening, we are seeing this behavior adjusted slightly this quarter as Podcasting continues to gain acceptance.

Podcasting is now showing strong signs of aiding terrestrial radio tune-in under certain format circumstances. Talk radio and NPR specifically have done a particularly good job of branding the benefits of coordinated podcast use between specific programming content and time-shifted podcast use. In fact, this is the only reason we show a slight increase in podcast use overall during the second quarter. Professional broadcast marketing and content is leading users of terrestrial radio to adopt podcasts in many ways as a "Tivo" device for radio. Interest in amateur podcasts, or podcast content created by what is perceived as the "average person" with the technical know-how to produce podcast content, continues to wane. This supports initial podcast data Bridge Ratings unveiled at the end of March 2006.

5. Terrestrial radio can benefit from some Internet radio and MP3 use. We found in this analysis that there are specific radio formats that lend themselves better than others to increased tune-in and time-spent-listening. More detail on this phase of the report can be found here.

6. Satellite radio time spent listening improved slightly this quarter. Satelite radio consumers who have been subscribers for longer than 6 months are actually spending less time than they were six months ago with their satellite service of choice. However, satellite radio TSL from "newbies" or new subscribers is increasing and for this reason when combined this quarter's overall satellite time-spent-listening is up about 1 hour per week. According to our panel, during the second quarter of 2005 average time spent listening to satellite radio was 16 hours per week. During the period of January 1 through March 31, 2006, weekly TSL for satellite radio was down to 12.6 weekly hours. During the second quarter of 2006, time-spent-listening among new consumers was 17.5 hours per week. Among those who have subscribed 6 months or longer TSL fell again - from 10 hours to 9.25 hours per week.

7. HD radio showing signs of cannibalizing terrestrial. While still very early in the life of HD radio, 1% of this quarter's panel had spent time listening to HD radio and indicated that they were spending fewer hours per week listening to terrestrial radio because of the time they were spending with HD. A small percentage of HD radio consumers also indicated they subscribed to satellite radio at the time of this study. Data returned indicate that their time-spent with satellite radio was not impacted by their use of HD. Third quarter data should provide further insight into this very new phenomenon.

8. Time spent listening to terrestrial radio was up slightly quarter to quarter and is 25 minutes lower than a year ago. See chart below for other media trending.

Methodology. Bridge Ratings measures CUME SHARE and FAVORITENESS rather than CUME and Average Quarter Hours.  AQH is a fabricated mathematical measurement of cume x an average quarter hour number composed of 'best guesses' by diary keepers.  Thus, the AQH number tells a station or its client nothing about the capability of the station to deliver listeners.

FAVORITENESS is a better measurement of loyalty especially when combined with the Cume number. The cume number divided by the favoriteness number yields a conversion number which more accurately measures station loyalty.  In Bridge Ratings studies, stations that convert their cume audience to favoriteness at the rate of 40% or more are powerful instruments in their communities. This is powerful information for both station and advertisers alike.

For the “Erosion Studies”, Bridge Ratings selected a 6000 person panel over six national markets to be interviewed on a weekly basis regarding the listener’s use of AM/FM radio and, where applicable, their use of digital media players, Internet Radio, CD’s, Podcasting, HD radio or satellite radio. Questionnaires were structured to seek overall daily use of the aforementioned media with short recall requirements. Panels allow us to accurately trend like users over time.

The results represent the multi-market sample’s behavior and reflects quarter hours of usage per week.

             Chart 1

Traditional Radio Audience Erosion to New Media    

Number of weekly quarter hours listened or used     

How to read: In the above chart, during quarter 1 of 2006, 25-49 year olds surveyed were spending 60 quarter hours per week with traditional radio (AM/FM) and 60 quarter hours per week with alternative media. During quarter 2, 2006, traditional radio usage among this group improved to 65 quarter hours per week while their use of alternative media decreased slightly to 55 quarter hours.

Where Does the Time Come From?

Looking at other media use among 25-49 year olds for example, daily use of television increased in Q2 2006 with the average U.S. adult spending 5.75 hours a day viewing television programming. From our consumer intereviews, this figure is being impacted by improved viewing options on more channels and increased out-of-home TV viewing. Restaurants, bars, sporting events, mobile devices, computers and even grocery stores are credited with out-of-home viewing minutes which Bridge Ratings is now trending on a quarterly basis. Out of home television viewership12+ in the second quarter stood at .91 hours or 55 minutes per week. This figure reflects behavior by the entire sample studied and is deceptive.

When out-of-home viewership is broken into quintiles of use, heaviest OOH viewership is occurring in the 25-44 male demographic.

Internet use was essential flat last quarter (-2 mins per day), listening to personal music collections continued its upward trend up 5 minutes per week overall and reading books and magazines saw a slight dip.

Chart 2

Bottom Line

During the quarter 2 2006 study, Bridge Ratings attempted to learn how multi-media consumption is affecting traditional radio listenership. When viewed by demographic, the Bridge Ratings report determined that compared to a year ago, weekly listenership to traditional radio has been impacted as follows:

12-24 = -23%
25-49 = - 9%
35-64 = +14%

Chart 3

*Behavior or listening locations changed, i.e. more time in-car/more listening in-office. Columns total more than 100%.

An update of data collected during Q3 2006 will be released by Bridge Ratings the first week of October 2006.

For additional information, contact Dave Van Dyke at 818.291.6420.

Markets measured: Los Angeles, Phoenix, Chicago, Miami, Boston, St. Louis.

Sample size: 6000 persons 12+. Sample error: +/- 1.2%

Bridge Ratings is a ratings and research company based in Glendale, California. We are dedicated to providing on-going, immediate, reliable, useable and affordable audience measurement services for the radio industry. Our methodology is based on sound consumer research principles. We are in the business of tracking listeners - not listening. Because we are a true research company we offer flexibility