John Blackledge, a media analyst at J.P. Morgan, sees radio revenue shrinking 3% this year as radio companies are undercutting each other on price in critical big markets.

Another factor in the shrinkage is the increased entertainment options available, including the Internet and mobile phones. People are spending less time with radio–particularly at home and work.

Blackledge says while similar audience erosion confronts the television industry, the broadcast networks and cable TV generally are managing to keep advertising prices firm or growing.

The Radio Advertising Bureau reports that radio advertising revenue fell back to 2003 levels last year, with ad revenue totaling $19.63 billion, a 2.6% drop from $20.14 billion in 2006. The figure has held steady at about $20 billion for the past few years, and hasn’t seen any big gains since the Internet boom of the late 1990s.

Radio’s Internet and other off-air revenue rose 10% to $1.68 billion.

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