Cutback in Radio

[wcozBoston]

With all of the cutbacks that we have been reading about in radio, begs to ask a simple question: Did radio companies pay too much for these radio properties since the mid 1990s? Are radio companies in a difficult position where their operating costs are high, with possible debt to creditors, coupled with the drop in overall advertising revenue at the same time. To meet their budgets and stay in business, are these big conglomerates forced to drop expensive personalities in order to pay other bills to continue to own and operate these all of the stations in the end?

 

[DanStrassberg]

Did radio companies pay too much for these radio properties since the mid 1990s?

What in incredibly perceptive question! Amazing that this never dawned on anybody else. (Sarcasm Mode: OFF)

 

[JIBGUY]

Yes, for the most part.... They paid way too much, they borrowed way too much to get even bigger (uncontrolled greed), and the simple fact is the consolidators could not pay the massive debt for two reasons: 1) advertising on radio started slipping once many advertisers realized that there were new avenues to advertise in; this before the recession, and 2)- the recession! - They lived too close to the edge with perhaps a 2% profit margin over the debt a couple years ago.... but then there was no more profit margin and shortly after income was down by 25% or more (now). That not only ate up their 2% profit margin, but also brought them to 23% negative territory. - All of this is not unique to radio... it was in many businesses, courtesy of a government (2000-2008) that encouraged high risk behavior by saying "we won't bother you for your lust for greed... in fact we'll help you out by ordering an 8-year nap for the SEC and the FTC. And we'll just ignore those pesky little anti-trust laws... Go ahead have fun". --- Percentage numbers used above are theoretical but likely accurate for many consolidator-broadcasters