Limbaugh losing ground in key demos on WBEN

[tbolt909]

Great. Using a 1919 baseball analogy to defend corporate blunders.
If the data suggested that younger demos don't listen to News Talk, why
did so many companies add FM simulcasts a few years back?

They were desperate and had no other strategy.
Why are some radio folks so sensitive about criticism?
That's part of being in the biz as I know well.

If the formats that skew older can still create revenue, then all is well.
Lots of older people use radio.
I get the impression that everything is not so rosy...

 

[semoochie]

Orlando and New Jersey, which are somewhat the model for a modernized talk format, are also Sabo creations. I was across the street from KLSX, also doing talk, at the time so I paid a lot of attention to the format. The recognition that younger FM demos did not want all Bosnia all the Time simply failed to recognize that the younger FM demos, for the most part, did not want talk at all.



They were FM. In central NJ, there was no AM that really covered anything to speak of, so it had to be FM. In Orlando, there was really only one AM with close to full metro coverage, and it was already a traditional talker. In both cases, the stations got on the air on FM decades ago when they could pick up folks at the fringe of the demographic barrier below which there is really no interest in talk and convert... and keep them. But both of those stations are aging just like the rest; WKXW has the vast bulk of its audience over 50. WTKS does better under 50, but not as well as a decade or so ago.

The problem is that those under 40 have no interest in any kind of long form talk, and that non-talk group is expanding each year as the population that grew up on the Internet and with new media ages.



Or, simply proof that there is no news/talk format for "younger people". The mistake was to consider Stern a talk show and to try to build a format out of what was a narrowly niched morning show.



Even if you find the hosts for this, you are left with trying to talk about "newsy" subjects to a demo that does not want that sort of content. There are many reasons, ranging from the attention span of young adults to the way news is consumed today to the lack of life experience by younger persons, but you can put on younger, hipper people but they won't get much of an audience.



LA, Portland, Seattle, Miami, LA... all had good to great signals and did as poorly as the lesser signals and the odd smaller market stations like WKIZ that joined the network.

At the time, AM was cuming in the millions every week in the top 10 markets, and was getting cume ratings as high as 35 or 40 in most of the rest of the top 100 markets. But nobody stopped when they pressed scan and heard an Air America station... they just tuned by or tuned out. It did not stick.

You can't blame the good signal stations for keeping their format. It was winning at the time. So Air America went to mostly second tier signals. But if any of the good signal stations had been a great success, we would have seen major changes in other markets. We didn't. (Yes, AA was badly run but it was on long enough to know that its particular flavor was even less appealing than conservative talk)



To the contrary, it showed that it was too late to use AM for any kind of younger talk except sports. It showed that a different focus did not work. And the fact that "real radio" and its later CBS variants could not pull 25-34's or even 25-44's into any kind of talk in great numbers.

Actually Portland did pretty well before the PPM, but was on a decline even before that. It's now one of four Sports stations, lucky to get a one share, despite having the Blazers and the best groundwave signal in town.

 

[TheBigA]

Why are some radio folks so sensitive about criticism?
That's part of being in the biz as I know well.

Because you clearly are making criticism without any actual knowledge. Non-constructive criticism falls into the category of making an attack, so we respond in kind.

Doing radio is not as easy as sitting around attacking it. As you demonstrate. Once again, if it bothers you so much, don't listen. But also, don't attack the people who's job it is to do what you dislike so much. That's not a constructive activity. Understand?

 

[davideduardo]

Great. Using a 1919 baseball analogy to defend corporate blunders.
If the data suggested that younger demos don't listen to News Talk, why
did so many companies add FM simulcasts a few years back?

I used the analogy because it is timeless, easy to relate to and with an historically known outcome. You still did not get it.

Business, and baseball is a business too, "plays" for the moment. You can not build a model for the future without also optimizing the model for today. That's because today's model will sustain you into the future until such time as a transition to a new model is required.

And it is not a "corporate blunder" to maximize the return on an asset during its useful life. We can apply, in this case, "useful life" to both the talk format and to AM where most talkers reside.

Many stations added FM simulcasts to improve the 45-54 listening. In the last decade or so, those entering the 45-54 demo have all been "raised on FM" post-boomers, and they have not affinity with AM. And then too, some AM talkers added FMs to supplement a defective AM signal; Cox did this in Dayton and Jacksonville to name two examples.

They were desperate and had no other strategy.

No, they saw that the traditional talk format structure depended on 45-54 year olds, and attempted to make listening more inviting. In some places it worked (WSB and KSL being great examples) and in some it did not.

There is no strategy possible if the under-45 crowd has no interest in all talk long-form radio. But there is a strategy to get the maximum return possible today from a format that, while declining, has enormous billing in most markets. Do you really think KLBJ in Austin or WBEN in Buffalo or KFBK in Sacramento are going to dump the format or even seriously change it today because maybe 5 years from now the revenue and audience will have declined?

This is no different than what happened to smooth jazz as a format. As long as it produced revenues and profits, even if slowly declining, stations stuck with it. But eventually, the strings were cut and formats changed because the existing one could not be saved.

Why are some radio folks so sensitive about criticism?
That's part of being in the biz as I know well.

Many of us pay a lot of money to get criticism and commentary from real listeners. And we heed the issues that are shown to be matters where there is a consensus because they are based on views of real listeners. What we have here is more like armchair coaching but with no skin in the game.

If the formats that skew older can still create revenue, then all is well.

As long as talk and news talk formats are generating revenue, that is true.

Take WBEN... it is #2 in gross revenues in the market, only about 13% behind WYRK. It's revenues are flat going back 8 years, but so is the whole Buffalo market. If they control costs, they are going to be profitable for a while still.

Lots of older people use radio.
I get the impression that everything is not so rosy...

In what way?

 

[boombox4]

As long as talk and news talk formats are generating revenue, that is true.

Take WBEN... it is #2 in gross revenues in the market, only about 13% behind WYRK. It's revenues are flat going back 8 years, but so is the whole Buffalo market. If they control costs, they are going to be profitable for a while still.

Is this high gross revenues / low ratings thing common with conservative oriented talk stations? Or just the one in Buffalo (WBEN) discussed in this thread?

 

[SirRoxalot]

OK, I have to make a few observations here:

First, WBEN just had its best book in a while. Limbaugh may be fading, but they're still #2 in the market. They're also #2 in gross revenues, so at least some advertisers out there must feel that the 55+ demo is working for them. You wouldn't continually get that kind of money through the door if the advertisers didn't get results. These are simple facts. It in no way refutes the idea that the programming on WBEN is considered lame by 90% of the listeners. Conservative talk works well enough, and will likely survive a while longer.

Second, Buffalo has a fine example of a younger-focused talk program working very nicely. In the same article cited in the first post on this thread, Shredd and Ragan were just signed to a new 4-year agreement, and are second 25-54 to sports talk in a sports-mad town. What they do is a long ways from the typical "morning zoo" program. They're topical, fresh, fast moving, and really a talk show, not music hosts. They cover a wide range of topics, and provide a template for what may work with millennials. Cumulus - being Cume-less - recognizes success, but not how to duplicate it, and is content to cheap out the rest of the day with music programming that is all over the road, from Led Zeppelin to Highly Suspect. They infringe on 97-Rock's Classic Rock territory one minute, and sound like a pure Active Rock station the next. In a lot of ways, Shredd and Ragan ARE "The Edge", and will be the eventual go-to when Norton & Co. finally pack it in, and the Classic Rock format evolves.

"The Big A" and "David Eduardo" are correct in their observation that corporate will ride any horse that's turning a profit until it collapses on the track, probably from starvation because the owners continue to cut, cut, cut. Cutting talent is bad enough, but the latest round has been to cut SALES - the guys who bring money through the door. Oh, yeah, "programmatic buying" will take their place. After all, as Farid said, "Radio sells itself. All we really need are order takers." Relationship selling is out. Transactional selling is in. Oh, wait, that sounds like a lot of radio programming coming out of corporate, doesn't it?

The variance in listening habits between under 40s and over 40s has something to do with the media they've grown up with, but it has a lot more to do with the rest of their lifestyle. People with kids, jobs, and a lot on their plate are lucky to get enough time to sleep, let alone spend hours cruising the Internet lining up podcasts or perusing news sites. More likely, they get their initial exposure to what's going on from Facebook or Twitter, then go to more mainstream media if they want more info. The more serious ones may watch the news at dinnertime (local and network). The alternative is "The Daily Show" (on DVR), or late night TV (Fallon, Kimmel, and maybe someday Colbert). Too many remain woefully uninformed - and simply don't care.

Radio can be a purveyor of infotainment for those folks too busy to pursue other venues because it's EASY. Turn it on, pick a channel. IF radio is timely, engaging, and properly targeted, it still works. It's too bad that fewer and fewer statons are following that simple formula - and selling it effectively. Then again, look at radio management. iHeart has put its money into an on-line model. Cumulus is run by small market operators who think that they can handle big-market competition. CBS is in retrenchment mode, bringing in a hatchet-man to cut their way to prosperity. You'd think that somebody would have noticed how well that worked for iHeart (massive debt) or the late, unlamented Citadel (bankruptcy).

Considering the cuts to promotion, talent (both sales and programming), and infrastructure maintenance in the industry, it's amazing that radio has survived as well as it has. I'm sure that a lot of guys who sold out in the 90s because a corporation offered them so much money that they could make more off the interest than they could by operating are simply shaking their heads.

 

[TheBigA]

"The Big A" and "David Eduardo" are correct in their observation that corporate will ride any horse that's turning a profit until it collapses on the track, probably from starvation because the owners continue to cut, cut, cut. Cutting talent is bad enough, but the latest round has been to cut SALES - the guys who bring money through the door.

Has anyone in Buffalo been cut? No. So leave it alone. The sales cuts were at CBS, and they own no stations in the upstate. A lot of the same cuts were EVPs of sales, not actual sellers. Cumulus has been HIRING sales people. Lots of them. Every week I see another hire in the trades. No shortage of salesmen at Cumulus. But still they're down 8% in revenues. So the shortages aren't for lack of employees. But if all those salesmen don't turn it around soon, the future doesn't bode well for anyone, including the suits.

Radio can be a purveyor of infotainment for those folks too busy to pursue other venues because it's EASY. Turn it on, pick a channel. IF radio is timely, engaging, and properly targeted, it still works. It's too bad that fewer and fewer statons are following that simple formula - and selling it effectively.

Once again, where in Buffalo is that happening? The programming is there. The audience is there. The salespeople are there. The advertisers are trying other things. The reason iHeart and Townsquare are doing so well right now is because they're selling other things besides on-air. That's a compelling argument for advertisers. They can see what their customers want. So if a radio company like Townsquare can combine on-air with on-line and a branded festival, that makes it harder for other companies with just the air signal to compete.

We are at a point right now where radio is operating from a point of strength in terms of content and audience, but they still can't turn it into money. No surprise, because other content companies like newspapers and record labels are having the same problem. My point is it's not for lack of spending money on staff.

 

[davideduardo]

Is this high gross revenues / low ratings thing common with conservative oriented talk stations? Or just the one in Buffalo (WBEN) discussed in this thread?

WBEN has just had one of its better books in a long time... since Spring of 2013 to be exact.

Buffalo is dependent for 78% of its revenue on local sales. And local tends to be less transactional and more based on everything from station heritage to seller relationships. So that is why WBEN is able to get the nearly 1.3 power ratio it commands.

 

[davideduardo]

Second, Buffalo has a fine example of a younger-focused talk program working very nicely. In the same article cited in the first post on this thread, Shredd and Ragan were just signed to a new 4-year agreement, and are second 25-54 to sports talk in a sports-mad town.

You are making the same mistake all the stations and operators who tried to do "hot talk" from '95 into the new Millennium did... confusing a morning show with a talk format. Talk shows have worked back to Don McNeil and the others from the 40's and 50s' who did network morning talk. But just because younger adult males liked Stern. Imus, The Greaseman, O&A and the rest did not mean that this was an all day format.

On the other hand, you mention sports talkers. Many of those... the good ones like Andy Bloom's WIP... are guy talk stations and they often replace any other kind of talk attraction for those with a big interest in the core sports topics.

"The Big A" and "David Eduardo" are correct in their observation that corporate will ride any horse that's turning a profit until it collapses on the track, probably from starvation because the owners continue to cut, cut, cut. Cutting talent is bad enough, but the latest round has been to cut SALES - the guys who bring money through the door. Oh, yeah, "programmatic buying" will take their place.

Programmatic buys will become more and more prevalent among the transactional business sources. That means regional and national agency buys, which are significantly based on numbers anyway. But it will not affect markets like Buffalo much. But because it makes buying smaller markets much easier, it might bring in new revenue.

The variance in listening habits between under 40s and over 40s has something to do with the media they've grown up with, but it has a lot more to do with the rest of their lifestyle.

People under 40 or 45 in their vast majority have never found long--form talk very appealing. What has changed is the ability to get the information anyone needs instantly from new media, making the oldest of the old electronic media, AM radio, nearly irrelevant.

Then again, look at radio management. iHeart has put its money into an on-line model. Cumulus is run by small market operators who think that they can handle big-market competition. CBS is in retrenchment mode, bringing in a hatchet-man to cut their way to prosperity. You'd think that somebody would have noticed how well that worked for iHeart (massive debt) or the late, unlamented Citadel (bankruptcy).

iHeart's model is working... a huge increase in revenue in the last quarter, while Cumulus, which mostly has a traditional model, lost ground.

 

[tbolt909]

According to the posted numbers in the article that began this
thread, WBEN is in 11th place Persons 25-54.
If that's one of their "best" books, then they have lowered their
expectations considerably...

 

[davideduardo]

According to the posted numbers in the article that began this
thread, WBEN is in 11th place Persons 25-54.
If that's one of their "best" books, then they have lowered their
expectations considerably...

In my previous post I mentioned that only about 20% of Buffalo revenue is out of market agency driven. The rest is local, where ratings are not the biggest factor and where tradition, heritage and relationships are.

WBEN is in the top couple of stations in 35-54 quite consistently. If that group makes the cash register ring... then that's all the ratings they need.

 

[SirRoxalot]

Been at 50 James E. Casey Drive lately, "A"? Lots of empty cubicles. They haven't cut sales people lately because they've already "consolidated" themselves into a corner, and are having a hard time finding bodies to fill the positions opening up due to turnover. Same story at Townsquare. Entercom has the deepest and most experienced sales team, which is why they're either #1 or in the running for #1 with arguably the worse set of signals in the market.

Both The Edge and 97-Rock have more than their share of tie-ins with local concerts and festivals. No, they're not the promoter, but they also don't have much risk, and they sell packages around those events. They also benef from cross-promotion. They've done concerts in the past, and still do a few, but they've scaled back under Cumulus because of corporate policy.

Shredd and Ragan have done well in their target demo with primarily talk in both morning and afternoon drive. In fact, they returned to mornings after a failed Opie & Anthony foray by previous corporate dictate. Luckily, local management at that time argued successfully to keep them and move them to PM drive, where they actually expanded their audience. So, what they're doing has worked irrespective of daypart.

Radio's inability to monetize its reach is a direct result of poor management that starts at the top. Using iHeart as an example of good management ignores their multi-billion dollar debt bubble due in 2018, and their ongoing losses:

"Consolidated net loss fell from $172 million to $47 million, which reflects a $99 million gain on the sale of radio towers and a $48 million loss on extinguishment of debt incurred in the second quarter of 2014, partially offset by higher lease expense and higher income tax expense." - See more at: http://www.allaccess.com/net-news/a...enues-rise-net-loss-narr#sthash.p16oT2Cm.dpuf

So, they sold off 350 towers and still lost $50-million dollars. And lease expenses will continue to rise. Yeah, there's some serious management for you.

 

[davideduardo]

Radio's inability to monetize its reach is a direct result of poor management that starts at the top. Using iHeart as an example of good management ignores their multi-billion dollar debt bubble due in 2018, and their ongoing losses:
]

Radio has quite a good ability to monetize. Pricing is set by a complicated set of variables that include uncontrolabiles such as the economy and competition to ratings and the quality of the sales staff. But pricing tends to follow the national range for CPP set for national buys whether we like it or not.

As to your constant harping on the debt issue: nobody in radio anticipated the recession. It came out of the financial sector and was deeply rooted in mortgage lending and banking procedures.

As an example of how not just Clear Channel but some of the best and brightest got caught in the recession and its aftermath, let's look to WDVR in Philadelphia in the early 60's. Jerry Lee and his partner bought the station and managed to make FM profitable when everyone else in the market was losing money. They adapted to the change from "good music" to "Beautiful Music" and then from that format to AC and then to every change in the blend of the AC format. They consistently billed a¡in the top 2 or 3 stations all those years.

Then Jerry had to buy out his partner's share or have his estate sell to one of the "big guys". So Jerry, who had nearly half a century correctly predicting the Philadelphia market, paid at the prevalent multiples the valuation for half of WBEB. Then the recession hit. Jerry had stagnant billings... as did the whole market... and a big debt to service. He has had to take in one of the lenders as a partner and they have begun looking for a buyer. Everyone will take a haircut.

Jerry did just about everything right operationally. He developed was to show clients the effectiveness of spots. He spent more than anyone advertising and promoting. He had really good sellers, locally and nationally.

Without the recession, the Clear Channel model would have worked. Only the major screw-ups would have failed... and in every industry there is a Farid or a Tenaglia.

 

[SirRoxalot]

If Clear Channel and other consolidators hadn't pumped the market up to unreasonable multiples, Jerry wouldn't have had to put himself in financial jeopardy to buy out his former partner's share. Once again, they drove the price up to an unsustainable number. Add their effect on rates - dropping their pants to hurt the competition try to create a virtual monopoly in certain demographics - and guys like Jerry get caught in the squeeze. Clear Channel could target a guy like Jerry, and make up the difference by pushing rates in a different genre - or even a different market - where they had less competition.

The Clear Channel model is what's driven too many radio groups into bankruptcy already. What Clear Channel didn't understand is that radio is still mostly a local media, and many markets weren't really excited by plugging "big name talent" into local markets, and losing that local connection. Radio's lost its mojo, not because of the technology, but because they gave up that relatability that local talent had with listeners in too many markets, and too many dayparts.

 

[TheBigA]

Been at 50 James E. Casey Drive lately, "A"? Lots of empty cubicles.

Ancient history. You bring it up as though the CBS cuts affected Buffalo. They didn't. Maybe it's time to sell off the ancient edifices to the past and move into more efficient utilization of space. Those empty cubicles are square footage that aren't producing revenue. Time to downsize.

Both The Edge and 97-Rock have more than their share of tie-ins with local concerts and festivals. No, they're not the promoter, but they also don't have much risk, and they sell packages around those events.

Not sharing in the risk means you're not sharing in the profit. The "packages" you describe are small potatoes, because they can't sell what they don't own. On-air is not a growth area. Hasn't been for a long time. In order to keep up with costs, radio needs new revenue streams. Digital can be one, but streaming costs eat up most of the revenue. Townsquare and IHeart have discovered new revenue streams. If that means scaling back on-air to redirect investment money to those new streams, so be it. It's the cost of doing business.

Radio's inability to monetize its reach is a direct result of poor management that starts at the top. Using iHeart as an example of good management ignores their multi-billion dollar debt bubble due in 2018, and their ongoing losses:

As I said, iHeart doesn't own stations in Buffalo, so why bring it up? My view is they've diversified their revenue stream, so that keeps the wolves at bay. At some point, the ballgame will have to change. Perhaps the gov't will need to change their laws about foreign investment or actually do something about AM. I don't understand why you insist on bringing up 15 year old news that was done by managers who are no longer around. It's like blaming the current government for debts created by previous administrations. It's not constructive. The station multiples are much lower now, and it hasn't made it easier for companies like iHeart or Cumulus to sell off their money-losing stations. So why bring it up?

Here's the truth: Radio will never be able to monetize it's reach at the same rate it did 25 years ago because the entire advertising marketplace has changed. While radio has a great reach, it's competing for a pool of money that's being diluted by lots of other similar things. That's simply the way things are. The smart way to deal with that is diversify, and combine radio's reach with other similar platforms. The companies that are doing that are seeing revenue increases. The ones that aren't are not.

The thing you don't understand is that if the rules had remained the same, if station ownership was still what it was 25 years ago, but everything else was allowed to changed, that radio would be worse off than it is now. Because the new players aren't constrained by the past. Radio for the most part is still the local medium it was 25 years ago. Cumulus could easily replace the local talent with national talent from Denver or Dallas. But they don't. Why? Because it would loose that local side of the business. Look around Buffalo. It's still mostly local talent in a world that's changed with national retail business. Those national chains are not allowed by their corporate owners to buy local media. Why should radio be forced to operate like that hasn't happened? That has changed the marketplace where radio operates, and makes a certain amount of national reach important just to keep up with other similar platforms that aren't encumbered by the past.

Getting back to the subject of this thread, when Rush Limbaugh came on the scene, radio stations were still operating under old ownership rules. But AM radio was already in a downward spiral, and stations were looking for cheap content. Rush gave AM another 20 years of life. He inspired stations to hire lots of similar LOCAL hosts who did the same act. That was a good thing, but now it's coming to an end. From where I'm sitting, there are no national replacements to Rush. Lots have tried and failed. So whoever replaces Rush will likely be local, not national, programming. Is that a good thing or a bad thing? We'll all find out soon.

 

[TheBigA]

Radio's lost its mojo, not because of the technology, but because they gave up that relatability that local talent had with listeners in too many markets, and too many dayparts.

Once again, using Buffalo as an example, that simply isn't true. Lots of local talent in Buffalo. None of the stations have given up local talent, and yet the revenue has remained flat while costs have increased. That's just Buffalo. If retaining local talent and retaining "relatability" doesn't translate to revenue, what difference does it make?

Back to Rush, when he started over 25 years ago, stations never would have considered giving up 12 to 3PM to syndication. Yet they did, and it paid off for them. Why was that OK in 1990 and not OK now?

 

[SirRoxalot]

Let's talk about Buffalo. The current Cumulus - formerly Citadel - has reduced talent on several stations, but they're still putting up strong numbers thanks to their legacy positions. Thanks to changes in management and strategy - starting under the Farid regime at Citadel, and continuing with Cumulus - they've slipped from the #1 or #2 money-maker in the market to a perennial #3. As you say, they haven't made sales cuts recently, mostly because there wasn't much left to cut. They have a handful of professionals who perform despite the new "systems" approach from Cumulus, and a revolving door of newbies who come and go as they find out what they were promised isn't always matched by what's delivered.

Talent that fled - in some cases to Entercom, in some cases to Townsquare, then Entercom - continue to thrive. Nobody I know is looking to return to a Cumulus-run station. Too many strings attached, too much busy-work, not enough support. So, Cumulus is likely to languish in the #3 position for some time to come. So, in this case, retaining "relatability" isn't the problem, retaining sales talent is. Programming is performing pretty well doing more with less, but sales hasn't been able to overcome the talent drain. That's a direct reflection on management.

Meanwhile, iHeart is "diversifying" by taking more and more out of radio, and putting it into other ventures. Radio's till the cash cow, but they're not investing in the product. They keep kicking the debt bomb down the road by refinancing at exhorbitant rates that prevent any real buy-down of debt. Their devaluation of radio affect the entire business because they are the biggest operator. Add their control of Katz media, which gives iHeart first crack at national buys, and you see an entire industry affected by their view of the future. There's a real possibility that they may be wrong, but they certainly have the ability to skew the results in the direction that they choose.

 

[davideduardo]

If Clear Channel and other consolidators hadn't pumped the market up to unreasonable multiples, Jerry wouldn't have had to put himself in financial jeopardy to buy out his former partner's share. Once again, they drove the price up to an unsustainable number. Add their effect on rates - dropping their pants to hurt the competition try to create a virtual monopoly in certain demographics - and guys like Jerry get caught in the squeeze. Clear Channel could target a guy like Jerry, and make up the difference by pushing rates in a different genre - or even a different market - where they had less competition.

This whole premise fails when actual facts are looked at.

Before the first stage of consolidation (when first the market cap and the total number of stations was relaxed earlier in the 90's) we saw the late 80's multiples at around 11 to 12 times Broadcast Cash Flow. Some prime real estate was going for around 14 times BCF.

These multiples were fueled by solid demand and relatively thin inventory levels.

As a buyer in that era, what became the most notable thing was that there were so many stations with no cash flow. It seemed that the market was flooded with money-losing stations. And when Docket 80-90 took effect, it seemed for a while that everything on the market in a medium to small size rated market was a loser.

Then came consolidation. All the companies that wanted to grow went into buying mode... not just Clear Channel and CBS but Ingstad and Lotus. The inventories remained the same, so operators sweetened the pot, understanding that the economy was pretty good and that consolidation offered certain economies of scale that made up for higher multiples. So we got 14 to 16 times BCF, with occasional sweet properties commanding more. And we found that the marginal signals and the money losers in the rated markets suddenly had greater stick value as they could be teamed up with other, better signals, in clusters.

In an analysis pricing, this is no different from buying a home. In a tight market, prices go up and stay firm with little wiggle room. A tight market is caused by low inventory levels or high demand, a good economy and other factors independent of the value of each home individually. High tides float all ships.

So, whether he paid 16 times cash flow or 14 times cash flow on WBEB's "other 50%", Jerry Lee was going to have to pay somewhere close to $85 million whether it was 1990 or 1996 or 2006.

And, more important, based on 2006 revenues Jerry was not putting himself in jeopardy. He was paying an amount that could be nicely covered by BCF and the loan could have been retired without much sacrifice. The wild card was the recession. That was the problem, not consolidation.

 

[davideduardo]

Let's talk about Buffalo. The current Cumulus - formerly Citadel - has reduced talent on several stations, but they're still putting up strong numbers thanks to their legacy positions.

I'd argue that legacy has nothing to do with it. Perhaps the reason is that in certain dayparts, today's listen does not really want or care about whether the jock is local... they just want them to shut up and play the hits.

Add their control of Katz media, which gives iHeart first crack at national buys, and you see an entire industry affected by their view of the future.

The individual divisions of Katz are pretty nicely sealed from each other. And national buys give everyone a chance to submit rates and the actual orders are based on CPP and other transactional evaluations where iHeart has no particular advantage except for having quite a few high-rated stations and clusters such as LA and New York.

 

[TheBigA]

Let's talk about Buffalo. The current Cumulus - formerly Citadel - has reduced talent on several stations, but they're still putting up strong numbers thanks to their legacy positions.

When did they reduce the talent, and how much revenue was that daypart bringing in when they had live/local talent in that position? Was the daypart growing or declining with the local talent? That's the question you need to ask. In market after market, what I have seen is that certain dayparts were starting to lose money even though we were sticking with local staff. What are you supposed to do? Keep losing money? The public decides what they want to do, and you can't force them to do something else in order to retain staff. So tell me what a station is supposed to do when revenue for a local host drops? Ask him to take a cut in pay? Only so long he'll accept that.

You said radio "gave up relatability that local talent had with listeners." Now you're backpeddling from that statement because you know it's not true. Every station in Buffalo has a large live & local element, and yet you claim they've lost "relatability." The fact is they haven't. The fact is that there's only so much money in a market. That's not only the case for radio, but also for things like local sports teams. Look at the battle Buffalo is having trying to keep the Sabres and the Bills. It's the exact same problem local radio has, and it has nothing to do with staffing. So please try to deal with the present, and stop lecturing me about the past.

Meanwhile, iHeart is "diversifying" by taking more and more out of radio, and putting it into other ventures. Radio's till the cash cow, but they're not investing in the product. They keep kicking the debt bomb down the road by refinancing at exhorbitant rates that prevent any real buy-down of debt.

Yet at the end of the day, they saw a 4% revenue increase. If it had been a drop, you'd be harping about that, but it was an increase, so you can't. It doesn't matter how they get an increase. What matters is they do. The debt is no different from the federal debt, and no one's worried about the United States going out of business. The fact is that iHeart has created NEW MONEY with their digital and concert businesses, which have increased the VALUE of the company beyond their heritage businesses. There is no amount of money they can spend on radio that will deliver the VALUE they've seen in the new business. Increasing value makes the company better positioned if and when it comes time to deal with the debt. If that's 3 years down the road, so be it. I have lots of friends there, and none of them worry about the debt. They all get their paychecks every week, they all get their medical benefits, and they're all living very well. None of them are looking for work some place else.

Townsquare is a smart operator. They have lots of debt too. Take a look at WYRK. They put a syndicated show 7 to midnight, but it's not from a competitor. They could have picked up a show from Cumulus or iHeart, but instead the company invested in their own show. They have a show they own, with a talent who also writes articles for their national web site. That's smart. This is why Townsquare is making money, and Cumulus is losing. This is the model companies need to follow if they want to survive.