San Diego Business Journal

In 2005, local affiliates of TV networks raced to reach the Hispanic market with Spanish-language broadcasts and daily newspapers coped with shrinking circulation rates.

But perhaps the busiest media outlet in 2005 was terrestrial radio, and it looks like 2006 will be another hectic year for the industry.

On the heels of multiple on-air talent swaps, a handful of format changes and several stations being put up for sale, San Diego's radio industry will be busy in 2006 defending itself against satellite radio and integrating new digital technology into station broadcasts.

"I think 2006 will be a lot quieter than last year only because so much happened in 2005, but I anticipate there is still going to be a lot going on to keep us busy," said Sharon Massey, the executive director of the San Diego Radio Broadcasters Association.

Although both Sirius and XM satellite radio systems have garnered attention lately, thanks to shock jock Howard Stern's recent move to Sirius and more high-tech products given as gifts this past holiday season, Massey insists San Diego's radio industry has little to worry about, despite any concern.

Massey points to recent figures released by the Texas-based audience surveyor Media Audit showing San Diego has one of the lowest levels of satellite radio penetration in the country. According to the most recent Media Audit report dated March 2005, satellite radio claims less than one-tenth of the San Diego radio listening market.

Chris Carmichael, who operates the Internet site SDradio.net, doesn't see that number changing drastically anytime soon.

"Until satellite radio has a sizable audience in the county, it's like watching Channel 795 on cable," Carmichael said. "Sure, you have it, you enjoy it, but how many of your friends really watch the Crochet Channel?"

Carmichael also said other trade services estimate that both satellite services combined have about 6 million listeners nationwide , slightly more than the Bay Area's individual radio market and only slightly more than twice San Diego's market, which is 2.48 million, according to New York-based media and marketing research company Arbitron, Inc.

"What could have an impact is 'podcasting,' MP3 and other digitally delivered media," Carmichael said. "I take the train from Oceanside to Downtown. There are a lot of white earphones and video. Friends tell me they listen to more streaming radio at work than FM or AM stations. That not only hurts the local radio station, it hurts the local advertiser."

At least two radio stations' programs already embracing the podcasting and online digital delivery trend are the "Mikey Show" on KIOZ-FM Rock 105.3 and "A.J.'s Playhouse" on KHTS-FM Channel 93.3.

"The development of high-definition radio and other new technologies will be big this year," said Massey, of the San Diego Radio Broadcasters Association. "On the receiver end (for the listeners), it will take probably another two to three years for consumers to get all the upgraded equipment to get all the benefits in the mainstream, but it is coming sooner than later."

On the revenue side of the industry, Massey predicts strong returns to continue. Massey said that in 2004 and 2005, the San Diego radio market had the highest revenue returns ever, with a little more than $200 million made in 2004 and a little less than $200 million made in 2005. Those figures are significant because 2004 revenues surpassed 2003 revenues by about $15 million and the momentum of the increase appears to be lasting, Massey said.