Re: Let's Keep This Simple
SirRoxalot said:
Both the past, and future, of radio is in localization. Clear Channel and other large shareholder-based companies have tried to create economies of scale by acquiring large numbers of radio stations in general, and sizable clusters in each market when possible. In many cases, they've paid a lot of money trying to create de facto monopolies in those markets.
I think the biggest failed attempt was Clear's idea of creating regional markets such as Ohio and the Northern Rockies. They seem not to have been able to monetize these, despite even getting Arbitron to create special regional reports. I guss I admire the attempt, but it means, in the aftermath, that there are a lot of staitons that no longer fit a strategy.
Servicing the debt on those purchases has required a reduction in expenses to keep shareholders happy. The reduction in expenses has resulted in a reduction in the quality of programming to the listeners. The listeners have responded by "voting with their feet", or in this case, "voting with their ears". Listeners have abandoned syndicated, cookie-cutter programming in favor of iPods, the Internet, and satellite radio that provide more compelling (if generic) content or conveniently-packaged pre-recorded content on demand.
I think that the tighter expense controls have to do with wall Street's fever for growth, not debt.
Most of the major acquisitons were paid for with equity (new stock or convertible debt) or merger. Those that were not are long ago paid for. Clear Channel radio has a lower debt to equity ratio than General Electric, for example.
The pressures are performance based, not due to high debts (which really applies to only a couple of the larger companies, like Radio One and SBS).
Local radio is still viable when it adds value to the content available from other sources. Whether it's local news, a local spin on national topics, or information about local happenings of interest to listeners, local content is the key to attracting and maintaining listeners. The immediacy of live broadcasts allows a talented jock to create a subtle but powerful bond with listeners that brings them back day after day. Lose that bond, and you lose the audience. That bond is hard to create or maintain when you're using voice tracking and/or syndicated content.
I agree on voice tracking in most cases. But good syndicated shows will beat bad local shows, always. That is why local TV's don't put local talk shows up against Leno or Oprah. There is room for a mix of content from different sources. Localization can be done even to syndicated fare via service elements, etc.
If Clear Channel is abandoning smaller markets it's because they're not getting the "economies of scale" that they anticipated. If listeners aren't available to advertisers because they've abandoned VT'd & syndicated programming, CC - and other corporate players - can't make the money they need to service the debt & keep stockholders happy.
What happened is that advertisers lyawned at regional cluster sales. And since smaller markets generally have smaller profit margins, there is little incentive to stay in these markets. They drag down the key indicators, like margins and revenue growth. over 30% of all radio ad money goes to just the top 10 markets.
Let's hope that those stations will revert to the hands of owners who have a stake in the community, and can bring back programming that will attract an audience that sponsors are willing to pay for.
Without giving an opinion, I think many will go to regional groups, as they have the ability to finance growth. I don't think CCU is going to wait around while someoen in casper, WY, messes around with the SBA to get a loan. They would sure make points in the industry if they did, though.
