Continued growth in podcasting helped offset a lackluster second quarter at Audacy. The company still isn’t sharing specific numbers, but said Friday its podcast revenue grew among “senior teens” in the second quarter – excluding the loss of advertising rep Crooked Media’s business, who left his platform in early May, podcast revenue has increased. 27% during the quarter.
“We continue to see very strong growth in the podcast industry with downloads up 40% in the quarter,” said CEO David Field. “We see no significant macro-impact on [ad] demand in podcasting. And we still see great opportunities for this company. Audacy also continues to make what Field called “strategic adjustments or pivots” to its podcast business which includes its Cadence13, Pineapple Street and 2400Sports content studios, as well as ad marketplace Podcorn.
CFO Richard Schmaeling said it meant “tough choices” as they “reshaped the content mix” in a bid to drive profits in the podcast business. “We expect this to be an increasingly profitable business over the next few years, and it’s a really attractive adjacency to our core radio business,” he said on a conference call. with analysts on Friday.
Audacy’s podcast business is also growing with outside deals. This includes the just-announced partnership with CBS Sports Digital that will see Audacy serve as the exclusive, multi-year ad sales and distribution partner for the CBS Sports Sports Podcast Network. Audacy already has a deep reach into sports content. It owns content studio 2400Sports and its radio broadcast division has the largest collection of sports formatted stations in the major market.
“We continue to invest heavily in our podcast network and the creation of award-winning audio content at a time when our network is experiencing sustained periods of audience growth and engagement,” said Jeffrey Gerttula, executive vice president of digital for CBS Sports. CBS Sports Digital has grown to over 90 million monthly active users, with more than 65 streaming video shows as well as the 247Sports podcast network.
Ken Lagana, executive vice president of digital sales at Audacy, said the deal adds a number of sports, fantasy sports and betting podcasts to their sales slate. He says all are areas where Audacy has had “significant success” to date and are important to customers. “This partnership couldn’t come at a better time with the football season fast approaching,” added Lagana.
Digital audio ‘not immune’ to slowdown
As seen with several other broadcasters in the second quarter, digital revenue growth accelerated at Audacy. It rose 19% to $69.3 million, compared to 16% growth in the first quarter. This allowed him to post a year-over-year revenue gain, even though revenue from basic radio spots was flat. Audacy says its second-quarter revenue was $319.4 million, up 5% from a year ago. The collective contribution of digital has gone from 10% of turnover in 2019 to 22% today.
But activity in the third quarter is on the decline due to what Field blamed on “deteriorating macroeconomic conditions” and “elevated uncertainty.” He said the result is that advertising “headwinds” have impacted Audacy’s business.
Still, Schmaeling said they still see growth in digital advertising in the third quarter.
“We are seeing some slowdown,” he said. “I don’t think digital advertising is immune, but I think we saw at least in the second quarter that across all audio companies, digital audio advertising was relatively stronger than other digital media and we we see continued strength in the third quarter.”
Field said Audacy’s podcast revenue will also be boosted by new ad technologies in the coming months. “We believe this will significantly accelerate our growth,” he said. Field gave no details on the call with investors, but said they would address what he considered an “area of weakness” for the company. “We have historically relied on third parties for services that have negatively impacted revenue, increasingly in recent quarters,” he said.
The Audacy Digital Audience Network is already benefiting from last October’s $40 million deal to buy digital audio ad server and rebranded streaming business AmperWave. Field said it serves as their “ad technology foundation” and they have since ramped up staffing investments and new product rollouts planned for the next few months.
“Our emerging advertising technology will allow us to unlock new pools of digital advertising demand, improve our sell-through rates and improve yield and also allow us to bring additional off-platform offering to market,” explained Field. “It will also allow us to offer holistic, cross-platform advertising products and programs that tap into our total audience of 200 million, 60 million of which are digitally addressable.”
Audacy is also giving its app an overhaul with a series of releases coming through the end of the year. Field said it has made a “significant investment” in updates that will deliver new capabilities and features that will also provide a “more personalized curated listening experience.” The hope is that this will bring more listeners to the Audacy app.