Are some stations permanent victims of consolidation?

[TheBigA]

he Internet will not kill radio, TV was supposed to do that decades ago. It's the creation of content or entertainment that will keep any form of media alive.

The internet is killing broadcast TV. It's happening right in front of you, and you can't see it. But it's happening. Audiences are shifting from broadcast and cable to streaming. Why? Because they feel it's cheaper and they have more control. Shows on Netflix are attracting larger numbers than any show on broadcast TV. When the NFL was on Netflix, it delivered comparable audience to what the NFL gets on broadcast. At some point, all streaming TV will be bigger than broadcast. The thing about those big streamers is they don't do any local news. None. They don't have to. There are no government regulations for streaming TV. But sure. Keep telling yourself that broadcasters are shooting themselves, and the internet isn't the reason.

When radio began in the 1920s, stations were owned by technology companies. Westinghouse, General Electric, RCA were the technology companies of their day. Today, those technology companies are Google, Apple, and Amazon. They own TV streaming, but no broadcasting. Ask yourself why. It's not because of the money. They are trillion dollar companies. No debt would be involved. But they have chosen to ignore broadcasting. Why?

 

[davideduardo]

When radio began in the 1920s, stations were owned by technology companies. Westinghouse, General Electric, RCA were the technology companies of their day.

Some were owned by technology companies. A larger number were owned by newspapers, and lots owned by insurance companies. A bunch were owned by retailers ranging from Sears to Earle C. Anthony. Then there were a lot of agricultural suppliers, colleges and other owners.

Take a look at the ownership listing in the White´s Radio Log from 1929 at Archive-Radio-Logbooks/White's-Air-Line-Radio-Log-1927-Issue.pdf Relatively few stations were owned by electronics companies.

 

[TheBigA]

Some were owned by technology companies. A larger number were owned by newspapers, and lots owned by insurance companies. A bunch were owned by retailers ranging from Sears to Earle C. Anthony. Then there were a lot of agricultural suppliers, colleges and other owners.

How many of those categories still own radio today? How many are still in business today?

My sense is the OP thinks if consolidation hadn't happened, radio station values would have stayed where they were in the 90s. I don't agree.

 

[davideduardo]

How many of those categories still own radio today? How many are still in business today?

Very few, but that is partly because radio has ceased to be an easily profitable business A lot of group owners left radio in the 60's and 70's because they could not grow... 7/7/7 made the business too small as industries consolidated.

My sense is the OP thinks if consolidation hadn't happened, radio station values would have stayed where they were in the 90s. I don't agree.

When FM began to be successful around 1969-1970, that more than tripled the viable stations in most markets... with no increase in ad dollars being spent. That was when a lot of groups got out of radio... ones like Storz and Storer and many others. By the late 80's or very early 90's, the great radio operators like Susquehanna and Plough were out of radio entirely... well before consolidation.

 

[BostonRadioListener]

How many of those categories still own radio today? How many are still in business today?

My sense is the OP thinks if consolidation hadn't happened, radio station values would have stayed where they were in the 90s. I don't agree.

No, sorry if I gave that impression. Consolidation is almost a byproduct of the secular decline that has occurred and station values would have plummeted regardless of ownership group totals post internet. I know it sounds like a chicken or egg thing but, and hindsight is 20-20, consolidation came as the industry almost saw what was coming economically. I don’t think it was causal other than being “early” —not “wrong”. I know station employees absolutely did not see it that way when it was happening. To put it mildly. It was devastating to employment.

I just wonder within that reality —and I don’t have the answer I just ask truly out of curiosity— have the remaining individual independent stations, lacking the scale of being part of those large groups—become even less competitive. Collectively. And far less attractive to potential buyers—buyers other than, yes, those mega group owners. Almost orphans in many cases.

 

[davideduardo]

I just wonder within that reality —and I don’t have the answer I just ask truly out of curiosity— have the remaining individual independent stations, lacking the scale of being part of those large groups—become even less competitive. Collectively. And far less attractive to potential buyers—buyers other than, yes, those mega group owners. Almost orphans in many cases.

More to the problem: radio revenue in inflation adjusted dollars is off by about 75% since Y2K. Ad buys are not as deep, and expenses are up as well. So there just is not "stray money" to filter down to the unrated or low rated stations.

 

[TheBigA]

To put it mildly. It was devastating to employment.

The history of radio is filled with decisions that were devastating to employment. The use of recorded music put thousands of local musicians out of work. The advent of automation and automated formats in the 1950s put thousands of people out of work. The replacement of physical music with digital files made the "disc jockey" obsolete. Changes in FCC engineering regulations in the 70s and 80s put engineers out of work. I could go on. There are no guaranteed jobs in radio. Radio companies aren't in the job creation business.

I just wonder within that reality —and I don’t have the answer I just ask truly out of curiosity— have the remaining individual independent stations, lacking the scale of being part of those large groups—become even less competitive. Collectively. And far less attractive to potential buyers—buyers other than, yes, those mega group owners. Almost orphans in many cases.

That's a problem in any business. A friend of mine is in the restaurant business. He owns a group of fast food franchises. There is no limit to the number of fast food places in a town. The competition drives down the prices and therefore dives down the value. But his customers want cheap food, and often make their decision based on price. So the competition is good for the consumer. They get cheap hamburger. In the radio business, you get cheap music. You don't have to pay for a music subscription. You just turn on the radio and listen.

Owning radio stations may have been better in the 1930s. That was before TV. Owning and operating radio stations was expensive. But the cost of ownership limited the number of owners and stations. There may have been only 5-7 radio stations in Boston. They were all on AM. Each station was guaranteed a share of the business. Then the FCC added more stations, ownership became cheaper, FM drove down shares and then the internet made it possible to run a radio station from your laptop. All of those things and more contributed to falling station values.

But there's no reason a single person couldn't buy all of the "orphans" and create another group. That's what some religious broadcasters are doing. They may only own one station per town. But they own hundreds of them across the country. That's why you're seeing companies selling stations to religious groups. They're paying top dollar for orphans. Unfortunately that's bad for consumers because it limits their choices for free music. That's what happened to WAAF. It's an orphan, but it's still in business. Just not doing anything that people want to hear.