Google to Shut Down Radio Business, Cut up to 40 Jobs
Google Inc., owner of the world’s most popular search engine, announced plans to shut its three- year-old radio-advertising business and cut as many as 40 jobs, saying the investment didn’t provide enough of a payoff.
The company, which expanded into the market with the 2006 purchase of DMarc Broadcasting Inc., is seeking a buyer for software that arranges ads on radio programs. Google will stop selling radio ads by May 31 and focus instead on online streaming audio, according to a blog posting today.
The move illustrates Google’s failure to parlay its dominance in Internet-search ads into offline media. The company said last month that it would close a business that sold ad space in newspapers. Google spent $102 million in cash for DMarc and agreed to pay as much as $1.14 billion in later installments depending on performance.
“They’re trying to penetrate a media that is really old and institutionalized,” said Sameet Sinha, an analyst with JMP Securities LLC in San Francisco. He recommends buying Google’s shares, which he doesn’t own. “It was in such a circular tailspin that even Google couldn’t go in and do anything. Tough times bring discipline.”
The growth of radio advertising has stalled in the past three years. Ad revenue climbed 0.4 percent in 2006, then fell 2.3 percent in 2007, according to Mark Fratrik, an analyst with BIA Financial Network in Chantilly, Virginia.