dying AM radio

[Goat Rodeo Cowboy]

The herd needs to be thinned. But looking back to the pre-FM early and mid 60's, the FCC Financial reports showed half of all stations not making a profit. In many cases, those break-even and money-losing stations were doing badly because they were daytimers, stations in markets too small to sustain a station, incompetently run or too directional to cover their market.

We have to take some of those profit statistics from the 50s and 60s with a grain of salt..... maybe a SPOONFUL of salt!

You were acquiring stations and putting together deals when I was not, but this is the story as it was told to me, and as I saw in other businesses when I moved out of radio.

Because of the tax laws, a LOT of businesses didn't make a profit back then. (Publicly held corporations that are listed had to play the tax game more 'straight-up' but many of the non-profit-generating stations were family owned, even if incorporated. They were not required to be adited by the big silk-stocking accounting firms and there were games to be played.

I worked for one broadcaster who bought a desireable AM station but the transmitter site was rented.... at a higher than market rate. So, he bought the radio station from the owner, and the trust funds he had set up for his young children bought the transmitter site that was over priced from that owner. What made the deal work was that if he had set up a new arrangement and tried to pay his own children that high a rent bill, the tax people would have "taken the top of his head off" as we said back then. Thus the station alone was reporting rather anemic income to the FCC, but his children' trust fund was making out like a bandit.

If you wanted to see some really slick tax wizardry, find a car dealer from that era and on through the 80s who will tell you the hide-and-seek business schemes they set up to avoid taxes back when corporate taxes were 70% and higher. Yeah, I worked for one of those guys, too. Holy Cow, Batman! How many ways are there to 'skin a cat' just to stay ahead of the tax auditor?

I did the books one year for a dealership that was being operated by a dysfunctional family. They shut down one franchise but the old man would approve me writing off some bad inventory numbers. I figured out how he had been burying some other things for several years so one day I "pulled the trigger" and buried his elephant among the "skinned cats" he had been hiding for years. I think I kept my fingerprints off that move.

It was easier to 'skin cats' in family owned broadcasting operations. You didn't have a General Motors or Ford or Chrysler accounting department going through your books to find elephants and cats.

 

[TheBigA]

It was easier to 'skin cats' in family owned broadcasting operations. You didn't have a General Motors or Ford or Chrysler accounting department going through your books to find elephants and cats.

Truthfully, I've never met an accountant who wouldn't do whatever you told him. The books are whatever you tell them they are.

But down the hall from the accountants are the lawyers. They'll tell you all the problems that the accountants didn't want to tell you.

Then you have the stockholders. THAT'S when things get dicey. Because when it was a private business, it was your money. When you go public, it's theirs. Because of them, you need to turn a profit. Whoops.

 

[Ravens]

The egomaniacal GM of the station that I mentioned above hosts such a program during what passes for morning drive in that small town, and it is SIMULCAST over both the AM and FM stations, as well as the translators for both. (Told you he was an egomaniac!)

Once while I was working for him, he went to a city council meeting and got into an argument with the mayor of that small town! He recorded the whole thing and used it on newscasts for the next couple of days! I can't help but think that this had a chilling effect on the mayor ever wanting to be interviewed by anyone on that station ever again! The irony here is that this GM usually never showed his "true colors" to the community at large, but that was a glaring exception!

And therein lies the problem with "hyper" local. I think too many people defending "hyper" local are focusing on the local part and think we're bashing local radio. At least in my case, I'm not at all. But some places don't have enough local events to fill 15 or 20 hours a week without the host making everything about himself, like in your example. That never ends well. Rush Limbaugh can bash Nancy Pelosi because Nancy Pelosi isn't buying the spots on his show. The host in Bumblefoot, Minnesota bashing the mayor, who just happens to own the car dealership, is writing his own pink slip.

 

[FredLeonard]

Local is not necessarily - not even usually - bashing.

But its focus must be on the local people who listen (or could listen). Radio should be programmed for people who listen to radio, not for people who want to be on the radio.

The "public" in "public interest, convenience and necessity" is not local politicians and bureaucrats, not the local owner's or manager's local buddies from the country club or chamber of commerce, not local preachers, not local do-gooder groups and causes. And it doesn't mean local to the exclusion of anything else.

Sometimes people here like to say managers make decisions based on business considerations. Raven is correct: Ego trumps business any time.

How about this: If a station can not show a profit in at least two years of the term of its license and can't get an AQH equal to one-half of what would be an equal share for each station in the market (25 stations - less than a two share) the FCC does not renew.

 

[Ravens]

Local is not necessarily - not even usually - bashing.

True, but it often becomes that. Especially when there really is no controversy and the host thinks there should be. And to use my earlier example, "what's your favorite pizza joint" or "what do you think of the new dog license rules" is just awful radio.

But its focus must be on the local people who listen (or could listen). Radio should be programmed for people who listen to radio, not for people who want to be on the radio.

Too many of these "caller driven" stations are doing just that. Programming for people who want to be on the radio. New York City or Chicago have enough of a population to be able to fill 20 hours a week with good callers. Podunk, Kentucky doesn't.

How about this: If a station can not show a profit in at least two years of the term of its license and can't get an AQH equal to one-half of what would be an equal share for each station in the market (25 stations - less than a two share) the FCC does not renew.

Don't like that idea, though. The FCC isn't in the business of making sure everyone makes money. And let's be honest, whomever took over the loser signals probably wouldn't do any better. There are enough stations in this country for everyone that wants one and can afford one to buy a station if they want.

 

[FredLeonard]

Don't like that idea, though. The FCC isn't in the business of making sure everyone makes money. And let's be honest, whomever took over the loser signals probably wouldn't do any better. There are enough stations in this country for everyone that wants one and can afford one to buy a station if they want.

Not suggesting anyone take those loser stations over - especially on AM. Take back the license and shut it down. One of AM radio's problems is too many AM stations (as David mentioned above). Clear out the dead wood.

Bad radio is bad for radio. One reason so many people don't even consider checking out the AM band is that in so many parts of the country there is nothing there. Foreign language. Preachers. Brokered shows/infomercials. And right-wing talk and sports talk. Still means way over nine out of ten listeners aren't going to find something they can tolerate - let alone like.

 

[davideduardo]

How about this: If a station can not show a profit in at least two years of the term of its license and can't get an AQH equal to one-half of what would be an equal share for each station in the market (25 stations - less than a two share) the FCC does not renew.

Here's why I think that is a wretched idea:

First, not all cities and towns are not rated.* So many stations can't be evaluated on ratings alone.

The majority of US radio stations do not subscribe to ratings, so use of ratings data would be either impossible or in violation of copyrights.

Low rated stations get numbers in Nielsen that are highly subject to wobble and variation. Basing a decision on them is not prudent.

Many stations in rated market areas are actually ultra suburban stations at the fringe of a market that don't try to serve the central city at all. They often don't show in ratings.

In PPM markets, a station must encode to be rated. Some stations in markets as large as New York City choose not to encode. It's their choice. Some stations in the fringe areas of ratings that don't qualify for free encoders would have to pay for them.

Many ethnic stations don't get into the ratings because of language issues, yet they may be highly profitable.

The share requirement would make licensees afraid of serving small niche audiences whereby those audiences would go unserved by what might be a profitable format but not one that gets ratings.

New York City has 80 commercial stations and 21 non-coms licensed to some city within the limits of the MSA. So the criteria would be 0.5 share points. In the last book there were 32 stations that had over a 0.5, including non-coms. So 69 stations would lose their license! That sounds like something that the old Soviet Union would apply to Tractor Factory #37 if they did not meet production quotas... do we shoot the licensee also?

* I know Nielsen has a national circulation study covering every US County, but the samples for small areas and small stations are not reliable enough to base a life-or-death decision on.

 

[davideduardo]

Not suggesting anyone take those loser stations over - especially on AM. Take back the license and shut it down. One of AM radio's problems is too many AM stations (as David mentioned above). Clear out the dead wood.

Bad radio is bad for radio. One reason so many people don't even consider checking out the AM band is that in so many parts of the country there is nothing there. Foreign language. Preachers. Brokered shows/infomercials. And right-wing talk and sports talk. Still means way over nine out of ten listeners aren't going to find something they can tolerate - let alone like.

All you are going to do by shutting down low performing stations is to clear out the lesser signaled facilities. That is still not going to increase the ability of the remaining stations to improve signals because most protection requirements on the better signals date back to the 30's and 40's and a power / allocation system that affords the heritage stations signal protection.

Not to mention that the religious groups, ethnic groups and such would be screaming all the way to the Hill about discrimination and unfair treatment.

 

[Ravens]

Not suggesting anyone take those loser stations over - especially on AM. Take back the license and shut it down. One of AM radio's problems is too many AM stations (as David mentioned above). Clear out the dead wood.

Bad radio is bad for radio. One reason so many people don't even consider checking out the AM band is that in so many parts of the country there is nothing there. Foreign language. Preachers. Brokered shows/infomercials. And right-wing talk and sports talk. Still means way over nine out of ten listeners aren't going to find something they can tolerate - let alone like.

I think your solution is to a perceived problem that doesn't really exist. The only people who think there are too many stations are radio people. The average person doesn't care if there are a lot of bad stations because those stations don't even exist in the minds of the average non-radio person.

 

[K.M. Richards]

Not suggesting anyone take those loser stations over - especially on AM. Take back the license and shut it down. One of AM radio's problems is too many AM stations (as David mentioned above). Clear out the dead wood.

And then what? Start applying similar rules of thumb to every business in the country? As David alludes above, it starts to sound like Communist Russia after you think about it for a while.

I'll even give you an example which is in the realm of probability. Joe McDoakes* has a small donut shop in Podunk, Iowa. Although he is a sole proprietor and is the only employee, he turns a small profit because a segment of Podunk's population prefers his donuts to that of Dunkin' Donuts and Yum Yum Donuts. However, those two franchised chain stores make many times over his profits, by staying open 24 hours a day (compared to Joe opening around 5:00am, after he's spent two hours making that day's inventory, and closing before noon, when he's sold out for the day), attracting customers who know the national brand name and who aren't savvy to how Joe's donuts are tastier, and automating the donut-making process so their slightly-above minimum wage employees can create inventory around the clock (as opposed to Joe's more traditional process with the old-fashioned donut making equipment).

At some point, the "Fred Leonard" law applying to regulation of donut shops is applied to Podunk, and because Joe cannot get the requisite market share of donut sales compared to his competitors, the City of Podunk has to deny him a business license when it comes up for renewal. Joe loses his livelihood, the customers who preferred his donuts are stuck with the mass-produced versions at the surviving stores, and the only ones happy are the franchisees of the national chains who get to stay in business.

Substitute "local station" and "local station owner" for Joe and his donut shop. Substitute iHeart Media and Cumulus for the donut shop franchise operations. Substitute the small but loyal listeners to the marginal AMs for Joe's small but loyal group of customers.

But, hey! At least we cleared out the "dead wood" among the donut shops in Podunk!


(*-With apologies to Warner Bros.' character from the 63 comedy "So You Want ..." shorts produced between 1942 and 1956, portrayed by the late George O'Hanlon ... who was also the voice of George Jetson.)

 

[MarioMania]

I think more AM's are coming on

Soon we going to have Graveyard Frequ. on every channel

 

[Ravens]

There are too many of them and the dead wood needs to be cleared.

No one that isn't a radio snob thinks that.

Face it, the only reason you want AM stations to shutter is because they're not airing stuff YOU like.

 

[davideduardo]

K.M. To quote Bill Gates, that's one of the dumbest things I ever heard.

In this discussion, K.M.'s analogy is quite appropriate. You suggested that the lowest rated and / or least profitable stations be eliminated. The small donut shop is an example of a profitable but "low share" business. It provides a valuable service, pays rent and taxes, and helps the economy.

But were it a radio station, you would have it shut down.

Radio stations are licensed users of the public airwaves.

Just as truckers are licensed users of highways. In this case, you are applying profit and ratings metrics to a business, and that has nothing to do with licensing, which is basically intended to keep the spectrum in order and the operations from interfering with each other.

Not anybody can start up an AM radio station. There are too many of them and the dead wood needs to be cleared.

Why does it need to be cleared by the government? Unprofitable stations will fail, and be sold. If they can't be turned around, eventually they will turn in the license. In the mean time, they do no harm.

The rule-makers made a huge mistake when they allowed licensees to have near automatic renewal and to sell their licenses.

Licenses have always been transferrable. And even in the paperwork-intensive 60's and 70's, if you did not make any horrible mistakes, you got renewed... and killed several trees to do so.

Funny how you right-wingers like to keep trotting out the bogeyman of COMMUNISM. You people are obsessed with it, even though you don't know the name of the country. Just shows special ed didn't do its job.

I was the one who made the comparison to the Soviet Union with my somewhat whimsical comparison with a tractor plant. I was reminded of such a plant I saw near Bucharest in the 60's and which had been closed because it's production was sub-standard when compared with other USSR tractor plants. Recalling that situation, I thought it applied nicely to your idea of having the government determine which business is deserving of being permitted to continue being allowed to operate.

Funny thing, greedy stupid people in various industries push for de-regulation and when they get it, everything goes to pot. De-regulation ruined the airline industry and it's almost finished doing the same to radio.

That's a fairly blanket statement. Many, to the contrary, believe that consolidation saved the industry from greater decline in the immediate wake of Docket 80-90 and the unfortunate overpopulating of the radio dial beyond most markets' abilities to sustain so many stations.

 

[davideduardo]

I think more AM's are coming on

Soon we going to have Graveyard Frequ. on every channel

The total number of AMs is slowly declining. It is very likely that, even with a few new stations, the number will continue to drop.

 

[brettbutlerisok]

De-regulation ruined the airline industry and it's almost finished doing the same to radio.

Now that I can agree with. In my opinion De-regulation has ruined nearly every thing it has been applied to. It is not as nice to fly as it used to be, (in my opinion), radio. . . all stations are not as fun to listen to as they used to be (in my opinion).

The world would a better place, (in my opinion) if one person or company could own one AM and one FM per market. While we are at it every station should be manned, automation wouldn't have to be against the law, but it would be pointless as each station would need at least a board op anyway. I might have a job in radio now. Well no not me. . . it wouldn't pay enough, but at least radio would be the way that I want it; with jocks and people who answer the studio line and on talk stations with syndicated programs saying, "it's 10pm and 78 degrees in Fresno's tower district, stay tuned for more When Radio Was. . . only on KMJ."

However, I'm not so sure making the world just the way I like it would actually make it a better place. Other people count too.

Oh and for the person asking about what I always just knew as "tradio" on 50,000 watt stations, one just stopped it last week.

Link. http://www.fresnobee.com/2014/12/03/4265307/radio-tradio-dialing-up-new-home.html

 

[ContinuousWave]

I think more AM's are coming on

Soon we going to have Graveyard Frequ. on every channel

HUH??? No NEW AMs are coming on (only those currently licensed can move or upgrade/downgrade but without a filing window for NEW stations, you are totally wrong) and Class C "graveyards" are limited to certain channels...

Care to rethink that post??

 

[K6JHU]

An example of why AM is dying. I have a friend who likes to listen to Monday Night Football (compelling programming). He wants to listen on 610 AM (not a graveyard) with some power (5 kW and not in a null). He is about 5 miles from the transmitter (not a DXe'r for sure). He tells me that as long as he has the incandescent lights on, things are fine. As soon as he goes to the fluorescent lights, the signal becomes unlistenable. So those who think that AM is not dying, how about some ideas on what we are going to do in this circumstance for AM. BTW, I told him to stream the game on his smart phone

 

[Goat Rodeo Cowboy]

An example of why AM is dying. I have a friend who likes to listen to Monday Night Football (compelling programming). He wants to listen on 610 AM (not a graveyard) with some power (5 kW and not in a null). He is about 5 miles from the transmitter (not a DXe'r for sure). He tells me that as long as he has the incandescent lights on, things are fine. As soon as he goes to the fluorescent lights, the signal becomes unlistenable.

AM radio always had some "problems" but it really was a great concept 60, 70, 80 years ago. As a nation a lot more of us lived in farm country and small towns back then. Right after WWII a number of AM operators put an FM antenna up on the AM tower and tried operating an FM license also. In that era, it didn't work very well for the "thin population" areas.

If you live in a 'core urban area' in NYC, Atlanta, Los Angeles or Chicago you as a listener may have different expectations than a listener in Talking Rock GA, Peter Pender AR, Dateland AZ or Belfry KY.

There are a number of AM stations that exist simply because a consulting engineer discovered that one more station could be squeezed into the crowd at this location. Did the location need a station? Who knows. Did the investor ask that question before making the application and building the station? Who knows. But a number of AM stations exist simply because it could be done... technically and legally... and now they are useless and we could probably euthanize Grandma with less furor that shutting down a useless AM station. And the useless station that should lever have been is blocking the opportunity for some unserved community or audience in some nearby geography that could maybe make good use of a station.... even an AM station... in this era.

But, going back to the post I quoted from: Maybe this isn't a broadcast problem. Maybe your friend needs to junk some aging, poorly chosen fluorescent fixtures on his end of the transaction. That isn't the responsibility of the broadcaster. Maybe he could sit in a darkened room on the nights he wants to hear Monday night football.

 

[FredLeonard]

Sorry GRC. Today's world is full of interference causing devices. That is the AM broadcaster's problem.

Hanging onto AM radio is like hanging onto incandescent lights.

When incandescent lights came along along, a lot of people talked about the end of gas light the way people here talk about the end AM radio, all terrestrial radio and the broadcast model.

Same for trains ("getting there is half the fun")
And natural ice refrigeration ("cold alone is not enough" - and some housewives liked the idea of a guy muscular enough to carry a big block of ice coming into their kitchen every week).

 

[Kent]

The world would a better place, (in my opinion) if one person or company could own one AM and one FM per market.

This was the law prior to August 1, 1992. The FCC relaxed that rule to allow 2 AM/2 FM per market. Part of the reason for allowing "duopoly" was that commercial radio, as a whole, was losing money. The theory was that it would be better try to keep those struggling stations alive than just let them go away.

While we are at it every station should be manned, automation wouldn't have to be against the law, but it would be pointless as each station would need at least a board op anyway.

This was the law prior to sometime in 1995. Automation actually expanded during the later years of the policy, and station owners found ways to outsource the "licensed operator" during non-peak and automated hours.