Any time we deal with transmitter site issues we deal with them and more. A recent Miami transmitter move required 24 permits and took over 24 months to approve due to hearings and administrative delays.
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Any time we deal with transmitter site issues we deal with them and more. A recent Miami transmitter move required 24 permits and took over 24 months to approve due to hearings and administrative delays.
What are you talking about? I've worked in other businesses, so I know how regulations make things tough. But this board is called Radio Discussions, and we are specifically talking about AM radio, and I'm responding to your comment about radio managers. So as far as I know, this discussion is about radio, not all businesses, and personally, I don't care about anyone else's problems. There are particular unique things about radio that other businesses don't have to deal with, such as ownership limits and obscenity laws. Also the threat that the government can take away or deny your license. Yes, that may apply to truckers, but they have to commit a crime, and they can re-apply at some point. Not so for broadcasters.
But as I said earlier, the key thing in the context of this discussion about AM radio is the fact that the government has restricted the bandwidth these stations can operate under, and has approved a technology known as IBOC which causes interference with other AM stations. Both of those rules have affected the quality of the sound of AM radio stations, and there's absolutely nothing owners can do about it. I know owners who have complained to the FCC about both of these issues, and their complaints have been ignored. It's central to why AM stations have suffered audience loss in the last 40 years, and the government has done absolutely nothing to restore the quality of these frequencies to what they once were.
My point for mentioning this is not to get sympathy, or prove any undue hardship that radio managers have over anyone else, but to point out the SPECIFIC items affecting their business that they have no control over. Sure, lots of other businesses have to put up with other government rules. But in this discussion, you have chosen to pick out radio managers, and I'm just bringing up one small thing in their defense. Whether you agree or not is not my concern. Just that I've had the opportunity to express myself.
As I said in post #119, there once was better, more compelling and entertaining content on AM, but listeners abandoned it for the same content on FM. So creating content isn't the issue. Listeners want to hear their compelling and entertaining content in full fidelity and stereo.
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Programming can be a guessing game. Something that sounds good on paper might not work in the real world. Example we have 2 amazing talents, let's put them together. Sounds good but it might not work, there might not be any cohesion between them, listeners of one person might not be fans of another....there are so many intangibles in regards to programming that it can be hard to come up with a solution to a station's problems. Couple that with other entertainment options. As much as I am not a "suit person"...I understand that those in management don't make decisions lightly. They work with what they have. When something doesn't work a change has to be made. I doubt there's a single person who isn't trying every thing they can to be the "dominant player" in the market.
K
K.M. Richards
Guest
Let's not start that discussion again. I had enough of that kind of reasoning in the KRTH thread.
There are plenty of stations whose programming appeals to enough listeners for them to be successful. Just because that programming does not appeal to you does not give you the right to make a sweeping statement like that.
You do not speak for the majority of listeners. Your opinions, compared to the ratings of the stations you have criticized, prove that.
Besides, this thread was supposed to be about the increasing difficulty in getting people to listen to AM. Far more of that problem is technically-based, rather than programming- or management-based. AM has always been more prone to electrical interference; that is a limitation of the transmission mode, and it is the reason Major Armstrong turned his attention to developing FM. You could have the ultimate universal-appeal format, with the absolute best managers in this or any industry, and the listeners will leave the first time a fluorescent light creates a buzzing in their radio.
You want to save AM, you're going to have to kill off FM. Good luck.
Thanks for reminding me to never buy a radio station.
I think I could make a profit with a station. I just wouldn't want to do it. Too much trouble.
A
Avid Listener
Guest
Now just hold it right there. This is what this thread is about. This is the launch post of this thread.
This thread is about the fact that AM radio is declining. It's not about the transition of AM (and FM) to alternate platforms. It's about the impending death of Amplitude Modulated, Over-The-Air broadcasting of radio programming.
Amplitude Modulated, Over-The-Air broadcasting of radio programming is declining. One might even use the word "dying", as the anonymous instigator of this thread did. It is declining for a number of reasons. It is being assaulted by competition. The competition has better content, and that better content is on a better sounding signal. It doesn't matter why things reached the point they're at now, because we cannot go back in time and unring the bell. We might want to learn a lesson from the past to apply to some future broadcasting medium, but we cannot use the lessons of the past to turn around the fate of Amplitude Modulated, Over-The-Air broadcasting of radio programming.
That includes laws passed in the past. That includes regulations promulgated in the past. That includes everything that happened in the past. We cannot use that information to change anything. If the information cannot be used as a lesson on how to change the current direction Amplitude Modulated, Over-The-Air broadcasting of radio programming is headed, then it is irrelevant information.
Now, if there is something that could be done in the future to minimize any of the factors that have combined to give the death blow to Amplitude Modulated, Over-The-Air broadcasting of radio programming, great. I'd like to hear it. But the whining of those who work in radio that "it's too hard" or "but we're regulated" is just so much bullshit. The Government might have several 1,000 page books of rules and regulations, but none of them forbid any AM station from addressing the first factor, a lack of entertaining, compelling programming. As for the technical issues that make Amplitude Modulated, Over-The-Air broadcasting of radio programming sound like crap, that is what it is. It simply means that the entertaining, compelling programming needs to be content that can overcome a second-rate audio signal. It's hard to compete for an audience that wants to hear music with second rate sound quality. On the other hand, spoken word programming can be very entertaining even if the audio fidelity is less than optimal.
First, I don't even know what the KRTH thread is. I assume it's a thread about a local station in a market where I don't live, and never have lived.
But this isn't about the survival or thriving of individual AM stations. It's about the overall fate of the entire frequency band dedicated to Amplitude Modulated, Over-The-Air broadcasting of radio programming.
Wax cylinder recordings are, for all practical intents and purposes, dead. However, hobbyists still make and sell brand new ones to play on old Edison recorders. The same goes for 78 rpm platters for Victrolas. For all practical intents and purposes 45 RPM records are dead, though there are a handful of audiophiles who still by 33 1/3 RPM vinyl recordings. Cassettes and 8-tracks are pretty much gone. I believe that AM radio will join those technologies.
However, there is still an infrastructure in place for AM radio. I believe that the death of AM might be delayed with better content, especially content that is more immune to the fundamental technical shortcomings of AM. I don't really give a damn if anyone does what needs done to save AM, mostly because I know no one will do it.
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Except you never say what that is. Because as some of us have pointed out, just about everything you can imagine has been tried at some point on some AM station in some part of this country. Had it been successful, you'd see a bunch of copycats.
Wrong, and oh-so-wrong again. The principal reason for the decline of AM began to be felt in the late 50's and early 60's as the effects of post-W.W. II urban sprawl saw cities grow out of the coverage areas of the majority of their radios stations.
It was not until the very late 60's and early 70's that FM began to offer new formats and, later, better versions of traditional formats. When these FMs maximized their signals, they offered listeners strong signals, even in the suburbs.
By that time, of course, the rising noise levels on AM were actually reducing the effective coverage of stations, making the deficiencies of may all the more apparent.
And, as Arbitron rolled out nationally, markets were defined to generally be larger geographic areas made up of multiple counties. So the technically poor AMs could not cover their whole market. Using Arbitron market definitions, there are only about 170 AMs nationally that cover at least 80% of their market day and night with a usable signal
And here is where your argument fails. In most markets, there are only enough good signals for a talk station and a sports station. The rest of the stations can't compete, no matter how entertaining or innovative their programming is. Since sports and talk (and news in some of the top 10 to 15 markets) is proven to be viable and profitable, those few good signals have grabbed those opportunities. No matter what the rest do, they are mostly restricted to serving groups unattended by the FMs and the few big AM signals.
You can't expect innovation and the highest cost programming on stations that only reach a portion of a market.
Yet, still, here are some percentages of the local commercial share that go to AM:
San Francisco 18%
Los Angeles 14%
Beckley, WV 9%
Spokane 15%
Springfield, MA 9%
Baton Rouge 7%
Sarasota 3%
Omaha 15%
Hartford 10%
Winston Salem 4%
Chicago 17%
New York 14%
Washington, DC 3%
Note that the shares are very low in the markets with no viable AMs, like Washington DC and Winston Salem. Where there are several viable AMs, like San Francisco and Chicago, the shares are higher. And since most of the listening goes to those good signals, such stations will be competitive for many years. The others either find a niche they cover and serve or do the frequent-trading dance.
A
Avid Listener
Guest
You're the radio "expert". You tell me what is entertaining, compelling programming. I'm not a suit in the radio business. You are. I don't pretend to know what to put on the air, I only recognize that what is currently being put on the air must suck pretty bad, or else lots of AM stations would be doing well, not a small (and declining) percentage of them.
But, if you don't know what would be entertaining, compelling programming, what the hell are you doing working in radio?
Like I said, I don't give a damn about when or why AM started to decline. I'm only concerned about what might be done to turn it around. Now, you claim to be the highly experienced expert who knows everything about radio. You claim to have had some success with individual stations. Suppose you tell us, from your years of experience, what can be done in 2015 to turn AM's descent into irrelevancy around. Or, admit that the anonymous poster who started this thread was right, and AM is dying.
You're real good at correcting picayune details, or throwing out irrelevant bits of history. But if you're really the radio expert you seem to want everyone to think you are, demonstrate it by describing what you, with all your experience and expertise, could put on the AM band to save the entire band.
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You're the audience. You're the listener. You're the one who brought up "entertaining, compelling programming." So as one who listens, define what you mean. Be specific and give examples, so we can understand.
I know what *I* think is entertaining and compelling, but I have said twice in this thread that I don't see the problem with AM to be a programming issue. You can build a beautiful house in the middle of a burned out ghetto, and I wouldn't care how beautiful the house was.
So what I'm asking you to do is show me a way to overlook the neighborhood and get me to buy this house. Especially when I can buy the exact same house in three much nicer neighborhoods.
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Until I talk with a listener group I'd like to target, I have no certainty of what would be compelling entertainment to the people in the group.
I may have ideas about what I think would be entertaining, but I'd want to have actual potential listeners tell me if I am right or wrong. Or, as we did in the distant past, I'd put the idea on the air and wait anxiously for the ratings and then fine tune the format.
You can't "turn around" the fact that markets have outgrown most AM signals.
You can't "turn around" the fact that noise levels have made hearing the better signals harder.
What I did say is that the very good signals are doing very well. Still. And will for some time.
I never have said I know everything. In fact, I have often posted that for every programming challenge, there will be a number of different but equally valid solutions. But my experience is a matter of record.
Not claims. Facts. And with groups and clusters, too. And in nearly 20 countries. My resume is linked below. Where's yours?
First, that's a "tell me why you beat your wife" question. I believe that the big signal AMs are not irrelevant. They are making good money, and save for the badly managed ones, getting good ratings.
Smaller market AMs are often quite relevant if the owners put some effort into them. You see this in plenty of smaller towns and agricultural markets.
And in many larger markets, options such as ethnic and religious programming can be profitable and useful to smaller listener groups. Profits are not "irrelevant".
AM is declining, as it has been doing since the late 60's when FM came on strongly with new formats and upgraded facilities. What we see today is just a point on a very gradual downward slope. Heck, even our Sun is dying... with an even slower downward slope of depletion.
Remember what Santayana said about history.
I'd do exactly what the thousands of successful operators of AM stations are doing today. If I had a big signal, I would do some form of spoken word. If had a bad signal... as 90% of major market are... I would look for an underserved niche or a profitable niche and go for it. If I had a good signal in a small local market, I'd try to do all I could in the community, from birth and death notices to swap shop. Like I said, what the profitable stations are already doing.
A
Avid Listener
Guest
If I were to tell you what I find "entertaining and compelling", your come back would be the usual "but that's just one listener's opinion", or worse. You're the expert. You tell the rest of us what, in your professional opinion as an experienced expert in what appeals to the public what could go on the air to provide entertainment so entertaining that people would be willing to tune in an AM station to hear it.
Your analogy about "the neighborhood" is a cop out, unless you're admitting that AM radio is doomed and it's just a matter of time before it disappears. Is that what you're saying?
I found this little gem of a post, from Radio-Talk. I believe this will sum up the truth about running a radio station. Thanks to bturner for these insightful thoughts.
Dan <><
P.S. To Mr. David, I still enjoy your posts. Been learning so much from them. They've been a big help, to this new LPFM radio station owner.
You might have a part 15 or a LPFM or a 50,000 watt AM blowtorch or 100,000 watt FM, it doesn't matter. It takes money and money makes it a business because when dollars are required, the plan for gaining those dollars is the business.
I recently was asked why the AM daytime only radio station I manage did not drop my 'waste of a frequency' format and go to an oldies format. The went on about all the great former top 40 talent that would (likely) jump at the chance to do a board shift and how the older demographic could spell success with advertisers.
That all really sounds nice. Since I manage the station, I have to create a way to get enough income to pay the bills, make some profit and keep the operation to a point I can live with it. For me that means selling to a client at a price that permits a minimal staff and overhead. It keeps the operation simple and stress levels low enough to smile.
Let's say I opt for the oldies plan. First I need the music library and a way to originate programming. Considering our current studio, we need to start from scratch. Next, I need to locate salespeople. I know I won't have the ratings or demographics to get the agency buys so I must concentrate on the small businesses that cannot afford an agency, say the ones that can spend under $500 a month with about $300 being more common.
Let me stop here and explain it still takes about 5 to 8 calls on a business to sell them a $3,000 or a $300 package, so the amount of work involved getting a small business on the air is the same as the big business except the big business will not buy because you are not pulling the demographics and ratings (cost per point) the agency that handles their advertising demands. This is a major metro, so you are not going to make a huge number of calls a day since most of your time is spent getting from point A to point B. While 15 to 20 clients a day in a small town is reasonable but about 8 to 10 in a big city is working hard. No matter how you slice it, for the work involved, you need to pay extremely well (percentage of commission) to make it worth it for the salesperson. And, no matter how you slice it, a seasoned professional wouldn't be interested so you're talking a newbie to selling advertising so you're out lots of time coaching and hand holding in hopes they'll stick around.
Now, my experience was the small business we got on during an earlier incarnation of this very station revealed that very few advertisers were repeat buyers. So, you might have thousands of listeners but only dozens, if that, in the primary trade area of the mom and pop business with a single location. The result was after I paid gas and wear and tear on my car, I might break even and with the 'repeat' ratio, the station spent as many dollars selling as it brought in. We had a nice commercial load and lots of red ink. Welcome to reality.
Now I need jocks on the air. Have you ever dealt with jocks that have a name? I'm not saying they're jerks, they're usually not but they do not need to do a board shift to pay the bills these days. In other words, they moved on. So, bringing them back to the board shift or voicetracking gig means they, just like me, might have some demands above and beyond the jock hoping for a break in a top 10 market. But you say, why not hire unknown jocks. I could but if they don't know the format the listener can tell.
Now, let's look at things: I would need an investment in a facility that could handle a sizable sales staff, studio, production and such, associated support staff and those expenses that crop up when you start marketing. And you have to market or you remain a well kept secret!
Let's run the costs: I figure I'd need at least half a dozen sales people to cover the area my station reaches. I need to give them at least a salary or base that pays their basic living expenses. So, now, I have 6 employees. Maybe I can get one that will manage that staff by paying well above the basic draw.
Now, I need a new facility. Where do I rent or build? Let's just say I can rent for $5,000 a month in a fairly centralized location my employees are not scared to come to and I spend another $75,000 on building studio, production, buying furnishings and so forth.
I'll start with no jocks but if we meet our first hurdle, I'll add a morning jock and then at another goal, an afternoon drive jock. As more income goals are reached the air staff increases.
So, let's look at expenses: I have my normal operating expenses plus a new facility and a dozen salespeople I'll need to pay about $2,500 a month gross if I make them use their vehicles and not reimburse gas/wear and tear on vehicle. Let's not include the matching social security, workers comp and all the other 'Federal' requirements, with the rent on the new place and the sales staff, I have at least another $22,000 to come up with each month and I have nothing but a computer in a closet. That's on top of my monthly operating expenses already. I easily now need $600,000 a year in income or about 2,000 of those $300 a month buys from mom and pop businesses.
Sounds easy, huh? How many months must I operate before I place 6 sales people on the streets and what percentage of them will work out and stick around? 25% sounds about average. So, how long must I go with these monthly expenses until I get half a dozen salespeople to service the community and stick around? Is that a year? If so, how much of that $600,000 I need going to be a loss?
Year two rolls around and now I have 4 fulltime jocks and other expenses like advertising campaigns (you can't trade it all). Now I need $900,000 a year to break even. How much of that $900,000 do I lose in year two. Now let's add that to year one's loss. What is that figure? My best guess is at least half a million or more...maybe closer to a million dollars.
At this point, my good fulltime jocks and solid sales staff are making inroads. We are popping up in the ratings. We have some water cooler talk. It is year 3 and we are starting to minimize our monthly losses. This year, year 3, we might only lose about $150,000 and by year 5 we should be okay.
The big boy with the fulltime signal, compared to my daytime only signal, sees what I'm doing, hires my sales manager and steals my morning jock, opting for the same format. Simply put, they make the change in November when my sign off is 5:30, the peak of rush hour. I lose all the ratings I had. The staff loss is like a bullet to the heart of all the staff. We put on a successful face but we all know we're on a sinking ship. The big boy is promoting right and left, leaving us in the dust. Sure, I had employees sign a non-compete but the big boy paid their salary until the non-compete ended or got them administrative position that didn't violate the non-compete.
Year 4 rolls around. We have a tiny staff, little income and big losses. Maybe we need to look at another format. We sure can't keep this one. So, we roll the format wheel and start from scratch nearly a million bucks behind the day we switched to oldies. Maybe we try syndicated talk. We do, lower expenses, hire sales people and take our best shot. The folks we have on the air are beginning to make a splash. Once again, a big boys goes to the syndicator and says they need our best performing syndicated show and remind the syndicator they clear the show in 60 other markets on their stations. The syndicator is hard pressed to find a way to drop our station and they do. One by one our saving grace talk shows go to the big boy competitors and once again we are left with more losses. The owner thinks he needs a new manager and might put the station up for sale. The owner orders the whole staff laid off and we vacate the offices. My engineer and I are the survivors at the moment.
Then, out of the blue, this foreign language broadcaster calls. I had heard of them. They have been in the market a number of years and on the same station. They had to be a good risk. And my station has better market coverage for their market. We strike a deal, not the best of deals since we still lose a few thousand a month but we will be at breakeven in 6 months when the rate increases. They have their own studios and staff. They will get their feed to our transmitter. We just make sure they are on the air. I take it to my owner who calculates how many years it is going to take just to pay off our toying with radio formats and let's just say his kids or maybe their kids will see that money made back. That assumes there are no more bumps in the road.
So, here we are: a daytime only with good market coverage for an AM station. It's your baby. You are told to not lose and if possible, make money. What would you do? Would you sign up that programmer that pays 10% over your costs to operate or do you try for a radio format that will, for all certainty, be stolen away by a full time AM signal if it becomes successful. Where would you put your job security?
Oh yes, programmers do go under and do change stations. And yes, if you sell time, you are known and there are just as many programmers looking for a better station that fold up. You have that risk but it likely won't take a really long time before the next programmer steps up. Quite frankly, I could go a year with no income and still lose less than I would in 4 months of doing a format like the oldies format described. So, from my owner's perspective, the most minimal loss and greatest potential at long-term positive cash flow comes from selling airtime to programmers. You can have a skeletal staff and have much less stress than any other option.
I'd love to do oldies too. That's the DJ in me. I know the songs and loved the high energy delivery of top 40 radio. But radio is a business and I'm told my job is to make money if I can and at least not lose money. So what I opt for, in order to keep getting my paycheck, is the easiest, most stress free and cheapest operation cost option. I don't have to worry about how many listeners I have or worry about jocks and salespeople. Literally I could care less if my programmer has 1 or a million listeners and as long as their monthly check cashes without problems, we're all okay.
One critic says I'm not serving the public doing this. I disagree. He says I have no listeners. He's dead wrong. First, my programmer is providing a service to the community that many times is unserved without their programming. And they do have listeners and enough of them to fund the operation, paying their operating expenses and my fees for airtime. You can fool a few people for a little while if you have few listening but you never get the critical mass number needed to fund an operation like that of a typical programmer unless you really produce for the advertiser. So, on both counts the critic is wrong. My programmer is serving the community and does have listeners and lots of them.
My critic thinks the way I once did before I learned what all I learned from managing a station and seeing radio from a place outside the on air studio. My critic says oldies will reach many more people. I agree. So, why would I not make it while a programmer would? This is an easy question to answer. Many programmers are foreign language or are exclusive groups and reaching them requires my programmer's venue, so they get the sales an oldies format doesn't get. The big car dealer says they reach the oldies listener in other ways and doesn't need me but my programmer serving his group of 60,000 doesn't get reached except by advertising with my programmer. For my programmer's audience, there is a town of 60,000 people and one radio station. Everybody listens. And if somebody reaches out to ask for the business they are seen as a friend to that group of 60,000 people. The oldies listener is not thinking this way. That is why my programmer can get the sales an oldies format cannot get.
I'm not trying to sound negative, but the harsh reality is radio happens only when the dollars can keep it going. I have many times compared radio to an automobile. Until there is gas in the engine, you can't start and to keep running, you always need more gas. When your job is to be sure there's always gas in the engine, what you want and what you need become different things.
Dan <><
P.S. To Mr. David, I still enjoy your posts. Been learning so much from them. They've been a big help, to this new LPFM radio station owner.
You might have a part 15 or a LPFM or a 50,000 watt AM blowtorch or 100,000 watt FM, it doesn't matter. It takes money and money makes it a business because when dollars are required, the plan for gaining those dollars is the business.
I recently was asked why the AM daytime only radio station I manage did not drop my 'waste of a frequency' format and go to an oldies format. The went on about all the great former top 40 talent that would (likely) jump at the chance to do a board shift and how the older demographic could spell success with advertisers.
That all really sounds nice. Since I manage the station, I have to create a way to get enough income to pay the bills, make some profit and keep the operation to a point I can live with it. For me that means selling to a client at a price that permits a minimal staff and overhead. It keeps the operation simple and stress levels low enough to smile.
Let's say I opt for the oldies plan. First I need the music library and a way to originate programming. Considering our current studio, we need to start from scratch. Next, I need to locate salespeople. I know I won't have the ratings or demographics to get the agency buys so I must concentrate on the small businesses that cannot afford an agency, say the ones that can spend under $500 a month with about $300 being more common.
Let me stop here and explain it still takes about 5 to 8 calls on a business to sell them a $3,000 or a $300 package, so the amount of work involved getting a small business on the air is the same as the big business except the big business will not buy because you are not pulling the demographics and ratings (cost per point) the agency that handles their advertising demands. This is a major metro, so you are not going to make a huge number of calls a day since most of your time is spent getting from point A to point B. While 15 to 20 clients a day in a small town is reasonable but about 8 to 10 in a big city is working hard. No matter how you slice it, for the work involved, you need to pay extremely well (percentage of commission) to make it worth it for the salesperson. And, no matter how you slice it, a seasoned professional wouldn't be interested so you're talking a newbie to selling advertising so you're out lots of time coaching and hand holding in hopes they'll stick around.
Now, my experience was the small business we got on during an earlier incarnation of this very station revealed that very few advertisers were repeat buyers. So, you might have thousands of listeners but only dozens, if that, in the primary trade area of the mom and pop business with a single location. The result was after I paid gas and wear and tear on my car, I might break even and with the 'repeat' ratio, the station spent as many dollars selling as it brought in. We had a nice commercial load and lots of red ink. Welcome to reality.
Now I need jocks on the air. Have you ever dealt with jocks that have a name? I'm not saying they're jerks, they're usually not but they do not need to do a board shift to pay the bills these days. In other words, they moved on. So, bringing them back to the board shift or voicetracking gig means they, just like me, might have some demands above and beyond the jock hoping for a break in a top 10 market. But you say, why not hire unknown jocks. I could but if they don't know the format the listener can tell.
Now, let's look at things: I would need an investment in a facility that could handle a sizable sales staff, studio, production and such, associated support staff and those expenses that crop up when you start marketing. And you have to market or you remain a well kept secret!
Let's run the costs: I figure I'd need at least half a dozen sales people to cover the area my station reaches. I need to give them at least a salary or base that pays their basic living expenses. So, now, I have 6 employees. Maybe I can get one that will manage that staff by paying well above the basic draw.
Now, I need a new facility. Where do I rent or build? Let's just say I can rent for $5,000 a month in a fairly centralized location my employees are not scared to come to and I spend another $75,000 on building studio, production, buying furnishings and so forth.
I'll start with no jocks but if we meet our first hurdle, I'll add a morning jock and then at another goal, an afternoon drive jock. As more income goals are reached the air staff increases.
So, let's look at expenses: I have my normal operating expenses plus a new facility and a dozen salespeople I'll need to pay about $2,500 a month gross if I make them use their vehicles and not reimburse gas/wear and tear on vehicle. Let's not include the matching social security, workers comp and all the other 'Federal' requirements, with the rent on the new place and the sales staff, I have at least another $22,000 to come up with each month and I have nothing but a computer in a closet. That's on top of my monthly operating expenses already. I easily now need $600,000 a year in income or about 2,000 of those $300 a month buys from mom and pop businesses.
Sounds easy, huh? How many months must I operate before I place 6 sales people on the streets and what percentage of them will work out and stick around? 25% sounds about average. So, how long must I go with these monthly expenses until I get half a dozen salespeople to service the community and stick around? Is that a year? If so, how much of that $600,000 I need going to be a loss?
Year two rolls around and now I have 4 fulltime jocks and other expenses like advertising campaigns (you can't trade it all). Now I need $900,000 a year to break even. How much of that $900,000 do I lose in year two. Now let's add that to year one's loss. What is that figure? My best guess is at least half a million or more...maybe closer to a million dollars.
At this point, my good fulltime jocks and solid sales staff are making inroads. We are popping up in the ratings. We have some water cooler talk. It is year 3 and we are starting to minimize our monthly losses. This year, year 3, we might only lose about $150,000 and by year 5 we should be okay.
The big boy with the fulltime signal, compared to my daytime only signal, sees what I'm doing, hires my sales manager and steals my morning jock, opting for the same format. Simply put, they make the change in November when my sign off is 5:30, the peak of rush hour. I lose all the ratings I had. The staff loss is like a bullet to the heart of all the staff. We put on a successful face but we all know we're on a sinking ship. The big boy is promoting right and left, leaving us in the dust. Sure, I had employees sign a non-compete but the big boy paid their salary until the non-compete ended or got them administrative position that didn't violate the non-compete.
Year 4 rolls around. We have a tiny staff, little income and big losses. Maybe we need to look at another format. We sure can't keep this one. So, we roll the format wheel and start from scratch nearly a million bucks behind the day we switched to oldies. Maybe we try syndicated talk. We do, lower expenses, hire sales people and take our best shot. The folks we have on the air are beginning to make a splash. Once again, a big boys goes to the syndicator and says they need our best performing syndicated show and remind the syndicator they clear the show in 60 other markets on their stations. The syndicator is hard pressed to find a way to drop our station and they do. One by one our saving grace talk shows go to the big boy competitors and once again we are left with more losses. The owner thinks he needs a new manager and might put the station up for sale. The owner orders the whole staff laid off and we vacate the offices. My engineer and I are the survivors at the moment.
Then, out of the blue, this foreign language broadcaster calls. I had heard of them. They have been in the market a number of years and on the same station. They had to be a good risk. And my station has better market coverage for their market. We strike a deal, not the best of deals since we still lose a few thousand a month but we will be at breakeven in 6 months when the rate increases. They have their own studios and staff. They will get their feed to our transmitter. We just make sure they are on the air. I take it to my owner who calculates how many years it is going to take just to pay off our toying with radio formats and let's just say his kids or maybe their kids will see that money made back. That assumes there are no more bumps in the road.
So, here we are: a daytime only with good market coverage for an AM station. It's your baby. You are told to not lose and if possible, make money. What would you do? Would you sign up that programmer that pays 10% over your costs to operate or do you try for a radio format that will, for all certainty, be stolen away by a full time AM signal if it becomes successful. Where would you put your job security?
Oh yes, programmers do go under and do change stations. And yes, if you sell time, you are known and there are just as many programmers looking for a better station that fold up. You have that risk but it likely won't take a really long time before the next programmer steps up. Quite frankly, I could go a year with no income and still lose less than I would in 4 months of doing a format like the oldies format described. So, from my owner's perspective, the most minimal loss and greatest potential at long-term positive cash flow comes from selling airtime to programmers. You can have a skeletal staff and have much less stress than any other option.
I'd love to do oldies too. That's the DJ in me. I know the songs and loved the high energy delivery of top 40 radio. But radio is a business and I'm told my job is to make money if I can and at least not lose money. So what I opt for, in order to keep getting my paycheck, is the easiest, most stress free and cheapest operation cost option. I don't have to worry about how many listeners I have or worry about jocks and salespeople. Literally I could care less if my programmer has 1 or a million listeners and as long as their monthly check cashes without problems, we're all okay.
One critic says I'm not serving the public doing this. I disagree. He says I have no listeners. He's dead wrong. First, my programmer is providing a service to the community that many times is unserved without their programming. And they do have listeners and enough of them to fund the operation, paying their operating expenses and my fees for airtime. You can fool a few people for a little while if you have few listening but you never get the critical mass number needed to fund an operation like that of a typical programmer unless you really produce for the advertiser. So, on both counts the critic is wrong. My programmer is serving the community and does have listeners and lots of them.
My critic thinks the way I once did before I learned what all I learned from managing a station and seeing radio from a place outside the on air studio. My critic says oldies will reach many more people. I agree. So, why would I not make it while a programmer would? This is an easy question to answer. Many programmers are foreign language or are exclusive groups and reaching them requires my programmer's venue, so they get the sales an oldies format doesn't get. The big car dealer says they reach the oldies listener in other ways and doesn't need me but my programmer serving his group of 60,000 doesn't get reached except by advertising with my programmer. For my programmer's audience, there is a town of 60,000 people and one radio station. Everybody listens. And if somebody reaches out to ask for the business they are seen as a friend to that group of 60,000 people. The oldies listener is not thinking this way. That is why my programmer can get the sales an oldies format cannot get.
I'm not trying to sound negative, but the harsh reality is radio happens only when the dollars can keep it going. I have many times compared radio to an automobile. Until there is gas in the engine, you can't start and to keep running, you always need more gas. When your job is to be sure there's always gas in the engine, what you want and what you need become different things.
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K.M. Richards
Guest
I never said you were a participant in that thread, but as at least two other participants in this thread were also involved in that one, I added a "touchpoint" to avoid repeating too much of what has been previously said.
Haven't you been reading anything in this thread? What's the subject line?
Nearly any manifestation of technology is ultimately doomed, from the steam locomotive to the i7 CPU. It's just a question of how long.
AM radio will be around a while longer. It is less significant than it was before drama, comedy and much of news programming moved to TV. It is less significant than it was before most music programming moved to FM. And it is less significant than it was before RFI, Urban Sprawl and Docket 80-90.
Yet most AM stations have found a way to be profitable, or there would not be about 4,700 of them still on the air.
Doomsday predictions did not work out for Harold Camping, either. That's lesson to be learned before revving up the crystal ball and going into the predictions business.
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