Connoisseur Media acquires Bonneville’s San Francisco Cluster

[Kent]

Both of these statements race to the same question: Are we as a country going to be better off if we allow the same few companies to monopolize those frequencies that are available or if we keep the same monopoly rules in place and allow radio broadcasting to ultimately fail, if that is where this is headed. If this is the choice we now face, then I would vote for the latter alternative. Why? Because (as @davideduardo has theorized given his Latin American background and experience), if all radio frequencies become only the home of national networks owned by either one or a small handful of companies, then if things turn around, there would be absolutely no room for newer and smaller players to enter the fray.

I'll give you that your position is consistent and attempts to acknowledge reality in ways that those who want to return to 7-7-7 don't.

Allow me, however, to point out a major flaw. In the event "things turn around," what makes you think newer and smaller players will be the ones to enter the fray? History, and even the present, don't suggest that will happen. Connoisseur, for example, is not a new player. It has been around since the mid-to-late 90's and was slowly getting back into the business and building an empire after selling its stations to Cumulus around 25 years ago. It's now one of the four biggest operators and is not seemingly content with being a bit player where it operates. Most every market also lacks at least one of the big five broadcasting companies. If radio does turn around, do you think those companies won't want to expand where they're not presently operating? They almost certainly will.

Even if new players enter, enticed by an increasing stream of revenue, they're unlikely to be content remaining small. If the past is any indication, the smaller operators currently buying stations, like the company buying Connoisseur's Bakersfield stations, will be the first to cash out. When the Telecommunications Act of 1996 passed, we didn't see mom and pop operators go on nationwide buying sprees and building large clusters.

I don't like the idea of network radio much more than you do, and I'm not big on allowing a second major wave of consolidation either. I'd rather any such wave be managed slowly and gradually. The idea, however, that radio will somehow become a haven for new and innovative small businesses is rooted in Fantasyland.

 

[TheBigA]

Cellular is not broadcast radio, and radio is not cellular.

No one said it was. The subject was monopoly.

The two paradigms are in different galaxies and really shouldn't be compared.

Once again, all we're talking about is if something is a monopoly. I maintain that broadcasting is not a monopoly.

It doesn't change the fact that a large percentage of people today use their cell phones as radios.

The only place the two models really overlap is in the public safety aspect.

That's not really true. If you do a comparative study of the way the FCC and the federal government view the two businesses, specifically as laid out in the Communications Act, there are more similarities. When you go back to Marconi, he specifically described his invention of radio as "wireless telephony." But I wasn't discussing that in my post.

 

[Mark Roberts]

Did/Does Bonneville own their own building(s) for these stations or were/are they renting office space?

Cumulus announced earlier this year that it was going to sublease space from Bonneville in Daly City: Bonneville & Cumulus Moving In Together In San Francisco

The way things are going, the next stop for radio may be in Colma.

 

[TheBigA]

InsideRadio provided this quote from the Connoisseur application. It is relevant to our discussion about the purchase price and market revenues:

“They cannot be expected to serve the public at the same level as in the past in the face of declining revenues,” the company filing says, adding, “Only by increasing scale can they maintain their service to the public.”

I think that says it all.

 

[Mark Roberts]

Meanwhile, the FCC keeps talking about broadcasting using "scarce public frequencies," as though scarcity creates value. What we're seeing is that it doesn't. The demand for these frequencies simply isn't what it used to be, and demand is what sets market values.

The scarcity argument is the entire justification for the FCC and its regulatory framework. Changing that would require changes in the law to either find a different functional fundamental justification for the FCC and its regulations, which could be done, or to eliminate the FCC altogether.

Edit: My mind wanted to write "fundamental" but my fingers had other ideas. Now corrected immediately above.

 

[TheBigA]

or to eliminate the FCC altogether.

That's exactly what I've been calling for. It's no longer needed. Delete, delete, delete the whole thing.

The FCC is now looking for ways to insert itself into private business deals between stations and networks. This is completely antithetical to traditional conservative politics. This is socialism in full force.

 

[cc333]

When you go back to Marconi, he specifically described his invention of radio as "wireless telephony."

The entertainment value of radio wasn't really discovered until the audio era (I doubt that there was any entertainment programs in the spark gap era ).

The way things are going, the next stop for radio may be in Colma.

I drove through there for the first time back in September or so, and it was kind of creepy seeing wall-to-wall cemeteries and mortuaries.

The FCC is now looking for ways to insert itself into private business deals between stations and networks.

This has a lot to do with the people in charge, I think.

c

 

[Mark Roberts]

At the rate this is going, Warshaw is going to have traded a few stations in Bakersfield and around 20 in unrated markets in Missouri for a San Francisco cluster! No doubt he's a good dealmaker, and this deal also undoubtedly carries risk due to the high costs of operating in the Bay Area. Still, Warshaw would seem to have outdone himself on this one.

I think there are more shoes to drop. First, we don't know yet how much Warshaw is getting for the Bakersfield and Missouri properties. We also don't know how those purchases are being financed. There are also more tiny-market properties that, based on the Missouri sales, it's easy to imagine Warshaw disposing of. One could even keep a close eye on the Chicago-area suburban properties. If Warshaw can't pull off a San Francisco-style urban core-suburban consolidation there, and it would be tough to do, then those might also be stations that don't fit into the operating model.

As I said previously, there has to be more to the story.

 

[Michael Rivers Kramer]

The way things are going, the next stop for radio may be in Colma.

Ah yes, the lovely town that took in all of the burried individuals that were expelled from the City and County of San Francisco. Colma- Population 1,500 living and 1,500,000 deceased. Also Colma is a stones throw away from Serramonte Center.

 

[luperm]

I think there are more shoes to drop. First, we don't know yet how much Warshaw is getting for the Bakersfield and Missouri properties. We also don't know how those purchases are being financed. There are also more tiny-market properties that, based on the Missouri sales, it's easy to imagine Warshaw disposing of. One could even keep a close eye on the Chicago-area suburban properties. If Warshaw can't pull off a San Francisco-style urban core-suburban consolidation there, and it would be tough to do, then those might also be stations that don't fit into the operating model.

As I said previously, there has to be more to the story.

For Bakersfield they're getting $1 plus a cut (25%) of the cash flow through 2030. That's nuts.
A form of non-recourse seller financing, I suppose.

(source: RadioInsight)

 

[cc333]

Ah yes, the lovely town that took in all of the burried individuals that were expelled from the City and County of San Francisco. Colma- Population 1,500 living and 1,500,000 deceased. Also Colma is a stones throw away from Serramonte Center.

Plus it happens to be one of the most affordable places to live in the Bay Area, especially on the peninsula.

It also happens to be among the quietest, for obvious reasons.

c

 

[Mark Roberts]

The FCC is now looking for ways to insert itself into private business deals between stations and networks. This is completely antithetical to traditional conservative politics. This is socialism in full force.

I would say it's more like corporatism.

From corporatism — definition, examples, related words and more at Wordnik :

Political / Economic system in which power is exercised through large organizations (businesses, trade unions, their associated lobbying efforts, etc.) working in concert or conflict with each other; usually with the goal of influencing or subsuming the direction of the state and generally only to benefit their own socioeconomic agendas at the expense of the will of the people, and to the detriment of the common good.

While most associated with Italian Fascism, corporatist elements can exist in a democratic or quasi-democratic political system as well.

 

[TheBigA]

Now that Bonneville has left San Francisco, the very first thing they did was combine their five sports stations into one sales platform:

Bonneville Sports Network Unifies Five Markets Under One Ad Platform.

Bonneville International is combining its top sports brands into a single multi-market advertising platform with the launch of Bonneville Sports Network. The new offering links “Arizona Sports,” “Seattle Sports,” “Denver

www.insideradio.com

Why? Because sports appeals to national sponsors, and these five stations have a sellable number. They didn't own a sports or talk station in San Francisco, so that made the market expendable to them. Individual markets aren't as sellable anymore, because fewer people are listening. Radio companies need to combine markets to attract advertisers.

 

[cc333]

How is this going to affect the former Bonneville stations' formats?

c

 

[TheBigA]

How is this going to affect the former Bonneville stations' formats?

Not at all. Just giving context to why they became expendable to Bonneville. And also why Connoisseur needs to get the waiver from ownership limits.

I would guess the formats will all stay the same. Although they may change frequencies.

Perhaps had Bonneville been able to buy KNBR from Cumulus, they might have stayed.

 

[cc333]

Hmm, OK.

I can't imagine they would change KOIT's frequency, given how closely tied to the brand it is/was. It's been at 96.5 for over 40 years!

Of course, with the prevalence of streaming, this might not matter so much anymore.

c

 

[ted chittenden]

I'll give you that your position is consistent and attempts to acknowledge reality in ways that those who want to return to 7-7-7 don't.

Allow me, however, to point out a major flaw. In the event "things turn around," what makes you think newer and smaller players will be the ones to enter the fray? History, and even the present, don't suggest that will happen. Connoisseur, for example, is not a new player. It has been around since the mid-to-late 90's and was slowly getting back into the business and building an empire after selling its stations to Cumulus around 25 years ago. It's now one of the four biggest operators and is not seemingly content with being a bit player where it operates. Most every market also lacks at least one of the big five broadcasting companies. If radio does turn around, do you think those companies won't want to expand where they're not presently operating? They almost certainly will.

Even if new players enter, enticed by an increasing stream of revenue, they're unlikely to be content remaining small. If the past is any indication, the smaller operators currently buying stations, like the company buying Connoisseur's Bakersfield stations, will be the first to cash out. When the Telecommunications Act of 1996 passed, we didn't see mom and pop operators go on nationwide buying sprees and building large clusters.

I don't like the idea of network radio much more than you do, and I'm not big on allowing a second major wave of consolidation either. I'd rather any such wave be managed slowly and gradually. The idea, however, that radio will somehow become a haven for new and innovative small businesses is rooted in Fantasyland.

The U.S. has laws on the books, the Sherman and Clayton Antitrust Acts, that are supposed to be used by the Federal government to keep businesses, no matter what industry they are in, from becoming monopolies in that industry. The fact that we don't enforce these laws in the areas of radio and television (as well as a whole host of other industries) says more about our own lack of interest in limiting the size of corporate growththan it does anything else. While I do agree that the 7, 7, 7 rule is probably no longer applicable, limiting the total number of radio and television stations that a single corporation can own in a specific market is. I am not as concerned about the lack of musical formats this would create as I am about the lack of diversity in the veiwpoints expressed by political talk show hosts that we are now seeing in radio. These hosts argue for something that doesn't exist; namely, that available resources are limitless and therefore there should be no need for the regulation of business activities. While many people indulge in this belief, the fact is that the resources currently available to all of us are the resources available on the planet Earth. And, since the size of the planet is limited (we can measure Earth's size), that means that all available resources must be limited as well. Believing otherwise is definitely living in a fantasyland.

 

[ted chittenden]

InsideRadio provided this quote from the Connoisseur application. It is relevant to our discussion about the purchase price and market revenues:



I think that says it all.

And I think this is the lie that large corporations wish you to believe; namely, that large privately-held corporations whose primary interest is creating profits for their executives are providing a public service through economies of scale. The money that most of these corporations earn from selling advertising time and other business decisions primarily goes to the stockholders (through dividends) and to the corporate executives (through both executive pay and stock options). In the world of communications, we are giving people what they want to hear and not necessarily what they need to hear.

 

[ted chittenden]

That's exactly what I've been calling for. It's no longer needed. Delete, delete, delete the whole thing.

The FCC is now looking for ways to insert itself into private business deals between stations and networks. This is completely antithetical to traditional conservative politics. This is socialism in full force.

The FCC was created because radio stations could not manage frequency allocations and powers on their own. If you took away the agency, you would (eventually) see radio stations stepping all over each other trying to get prime frequency space.

The culprit, of course, is human greed. All of us have it to some extent but it needs to be regulated because of the limitation of available resources we have.

With regard to the FCC's current actions, this is all in response to a corrupt and Fascistic leader whose primary purpose seems to be to make his perceived enemies pay him retribution rather than helping both the country and planet be a better place to live.

 

[TheBigA]

And I think this is the lie that large corporations wish you to believe; namely, that large privately-held corporations whose primary interest is creating profits for their executives are providing a public service through economies of scale.

There is no lie. Commercial radio's only source of revenue is advertising. Advertisers want media that can reach the most people. Format radio is reaching smaller and smaller groups of people because of splintered tastes in content. You see that in the ratings, where a 5 share is good enough to be #1. A 5 share is too small to satisfy advertisers. The only way radio can reach the same number of people is to own more stations that would allow them to offer more formats with less duplication. Meanwhile, there are no limits on the number of stations on the internet. People want more choices, and the only way to give people more choices is to allow companies to own more stations.

The idea that radio companies are creating massive profits for executives is fiction. Compare radio executive salaries with those in other industries. All the big radio companies have gone bankrupt. They can't attract investors because none of them make any money. The theory 100 years ago was the government would allow radio to make money in exchange for providing public service. The problem is the ownership rules haven't changed in almost 30 years, and the advertising environment has changed. Radio companies don't make enough money to keep staff, much less provide the public service. That's why they say they need the rules to modernize to the current situation so they can continue to provide the same service they did 20 years ago.

The FCC was created because radio stations could not manage frequency allocations and powers on their own. If you took away the agency, you would (eventually) see radio stations stepping all over each other trying to get prime frequency space.

You're talking about over 100 years ago. The problem at the time was the amateurs. There were no rules. Anyone could start a radio station. Amateur radio was basically wireless telephony. People carrying on private conversations on the public airwaves. The big corporations said the amateurs were bad for business, Herbert Hoover was secretary of commerce, so he formed the FRC to control the amateurs. To Hoover, greed was good. He wanted radio to succeed. He was on the side of the big corporations like RCA and AT&T. He won, and the amateurs lost.

The only similarity today is pirate radio. The FCC tries to control it. They passed a lot of laws, but it's still a problem. The FCC seems powerless to stop it. More laws have been passed empowering local police rather than the FCC. Pirate radio is covered by private property laws in some states.