Everyone knew that the consolidation among radio and television stations would result in higher rates for small advertisers. Still, results from a post-consolidation study are staggering. In nine markets across the country, radio ad costs have increased at a rate far higher than that of inflation, research firm MediaCom Worldwide found. The premium was highest in Atlanta, 184%, followed by Austin, 105% (see chart). Given that the advertising marketplace has been sluggish over the past three years, the surge in costs is all the more troubling for entrepreneurs who depend on advertising. "It's an absolute shakedown," says MediaCom co-CEO Jon Mandel. Rising costs have already driven some longtime radio advertisers to explore alternatives, like Internet and outdoor advertising. But for many regional businesses, says John Rash, a media buyer for Minneapolis-based Campbell Mithun, affordable rates are "increasingly challenging to negotiate."

Rising Rates

The premium advertisers now pay for airtime

San Diego: 62%
Las Vegas: 74%
Austin: 105%
Tulsa: 88%
Minneapolis: 73%
New Orleans: 48%
Atlanta: 184%
Washington, D.C.: 24%
New York City: 42%