I was just thinking that if we hadn't gone from the 7-7-7 rule, through various levels and finally to the 1996 decision, how would that affect AM stations now? It used to be that if a major station slipped too much, they were on to another format and that would happen regularly, on the high side of a three share or more. Any suggestion of falling below a two share was completely out of the question! In my city, the latest ratings showed the #1 AM station at a 1.6 and that's 50KW clear channel. I can't imagine what would have happened to these stations if we were still under 7-7-7!
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Effect of Consolidation on AM Radio
- Thread starter semoochie
- Start date
I believe consolidation is just part of a "perfect storm" that's sinking AM radio.
Over the past two decades AM reception has degenerated due to lack of facilities maintenance, interference from CFL & LED lighting and all kinds of other interference-producing devices. Plus AM, when available, is an afterthought in most devices so the receiver quality stinks.
Then there's competition from digital sources. The under-25 crowd carries smartphones everywhere, not transistor radios. AM technology must seem to them like "DC current" did to folks growing up in the '50s and '60. It still existed in places like NYC but was being phased out because it was yesterday's technology. In the '50s and '60's you could buy electrical equipment labeled, "AC/DC" but DC, like AM today, was pretty much irrelevant.
As for programming, we tend to remember the "highlights" from years gone by. AM radio wasn't filled with Dan Ingrams and Bob Grants -- they were few and far between. There were plenty of local shows that were awful. So to say that consolidation ruined programming and therefore AM radio isn't the whole story.
So as AM radio continues to bleed listeners and revenue, facilities will continue to deteriorate, local interference will continue to get worse, AM receivers will continue to disappear from the marketplace (radios in general, BTW, are becoming scarce) and what's left of AM programming will migrate to FM and digital.
We're witnessing a paradigm shift -- what we haven't seen quite yet is the inflection point.
Over the past two decades AM reception has degenerated due to lack of facilities maintenance, interference from CFL & LED lighting and all kinds of other interference-producing devices. Plus AM, when available, is an afterthought in most devices so the receiver quality stinks.
Then there's competition from digital sources. The under-25 crowd carries smartphones everywhere, not transistor radios. AM technology must seem to them like "DC current" did to folks growing up in the '50s and '60. It still existed in places like NYC but was being phased out because it was yesterday's technology. In the '50s and '60's you could buy electrical equipment labeled, "AC/DC" but DC, like AM today, was pretty much irrelevant.
As for programming, we tend to remember the "highlights" from years gone by. AM radio wasn't filled with Dan Ingrams and Bob Grants -- they were few and far between. There were plenty of local shows that were awful. So to say that consolidation ruined programming and therefore AM radio isn't the whole story.
So as AM radio continues to bleed listeners and revenue, facilities will continue to deteriorate, local interference will continue to get worse, AM receivers will continue to disappear from the marketplace (radios in general, BTW, are becoming scarce) and what's left of AM programming will migrate to FM and digital.
We're witnessing a paradigm shift -- what we haven't seen quite yet is the inflection point.
Consolidation was approved by the FCC and Congress because AM was in dire straits in the early 1990s. Listenership had already begun to shift to FM. Music on AM was already done. Over-licensing the spectrum by Docket 80-90 in the early 1980s had hurt the profitability of radio to the point where heritage owners like NBC, GE, and others had already sold their stations. So unless the government did something quickly, AM radio was going to disappear. That's why consolidation was approved. So the fact is that consolidation prolonged the existence of AM radio for another 25 years, and the fact is that the only successful AM stations today are the ones owned by major media companies. They are keeping AM alive. The only solution for AM at this point is another governmental action to fix the audio quality issue. There will be no further investment in AM until that happens.
I think consolidation actually helped AM. From my memory I recall reading several articles about the huge number of AM stations that were losing money annually. Since the late 1970s, when FM topped AM in listening, AM has been taking its lumps, not that radio in general had taken plenty of lumps itself. If anything consolidation let marginal stations exist. Even so, I enjoyed the days before consolidation more.
The way AM and simply marginal stations benefit from consolidation is by sharing expenses. You can put several stations under one roof and share talent. Before consolidation you had stations having to maintain their own real estate and staff. If 4 stations could share a facility and people at one instead of 4 locations, you had enough money saved to allow the marginal station to exist and it gave an opportunity for a losing station to have a shot at becoming all it could be.
The flip side is how difficult it became for a local owner with one or two stations to compete. I know of markets with one local station trying to compete with two group owners that own all the other stations. As you might suspect, the local owner has it rough not only in programming but sales. If the local guy does too well, one of those marginal group owned stations might try his format. And in sales, you offer only one audience at a price while the group owner offers a good cross-section of the city to the potential advertiser. The staff at the local station is paid out through one station while the group owner can amortize their employees over several stations and several sources of income.
I am not hopeful for the future of AM but being the optimist I am, I think radio will find ways to change that trend or evolve it. I agree, fixing the AM interference is essential and that lies with the FCC. With all the technology we have today, the over the air signal might become less and less important but based on fee structures for online listening, it might just be the asset that saves money. I think of over the air TV and must carry rules for cable/satellite providers. If that local station handed in their license would they fail to exist because of the must carry rule or might that license work to assure reaching a market even though over the air TV viewing is minimal?
The way AM and simply marginal stations benefit from consolidation is by sharing expenses. You can put several stations under one roof and share talent. Before consolidation you had stations having to maintain their own real estate and staff. If 4 stations could share a facility and people at one instead of 4 locations, you had enough money saved to allow the marginal station to exist and it gave an opportunity for a losing station to have a shot at becoming all it could be.
The flip side is how difficult it became for a local owner with one or two stations to compete. I know of markets with one local station trying to compete with two group owners that own all the other stations. As you might suspect, the local owner has it rough not only in programming but sales. If the local guy does too well, one of those marginal group owned stations might try his format. And in sales, you offer only one audience at a price while the group owner offers a good cross-section of the city to the potential advertiser. The staff at the local station is paid out through one station while the group owner can amortize their employees over several stations and several sources of income.
I am not hopeful for the future of AM but being the optimist I am, I think radio will find ways to change that trend or evolve it. I agree, fixing the AM interference is essential and that lies with the FCC. With all the technology we have today, the over the air signal might become less and less important but based on fee structures for online listening, it might just be the asset that saves money. I think of over the air TV and must carry rules for cable/satellite providers. If that local station handed in their license would they fail to exist because of the must carry rule or might that license work to assure reaching a market even though over the air TV viewing is minimal?
But was it consolidation that prolonged the existence of AM radio for another 25 years or was it the shift in programming to all-news, news-talk, sports and other spoken word formats? Had that not changed would consolidation have saved the day, or could AM radio have thrived without consolidation? I honestly don't know but I have a feeling the combination of syndicated talk and local ownership could have worked. I'm open to other opinion on this.
But Amplitude Modulation is ancient 100+ year old technology with many inherent problems. While fixing it may or may not be possible, that would be like fixing steam engine trains to compete with modern technology. At some point you just need to let some things go extinct.
They both occurred at the same time. Consolidation made it possible to pay the salaries it took for all of those talkers. Take a look at WCBS and WINS. Could a small owner support those stations? You tell me. It takes a lot of money.
You know that car you drive with the gas engine? 100+ year old technology. Still works, right? The problem with AM is the owner of the spectrum, namely the government, hasn't done anything to it in 30 years, and before that, they made bad decisions that need to be undone.
TheBigA answered it well so just let me add that it is a common misconception that it is the just the "under 25 crowd" carrying smartphones. It's less a function of age than it is of education and income.
Very true, and that will tell you the future of AM.
True, but they're at the cutting edge of smartphone usage and they largely reject OTA radio.
As smartphone usage spreads and becomes more relied upon by older demos for more than just phone calls and email, OTA will be less of a factor for them as well.
When it comes to OTA, AM radio is at the cutting edge of obsolescence.
The highest penetration of smartphones in the US is among Hispanics of all ages. How does that align with your "education and income" statement?
How many people younger than 70 don't have a smartphone in 2015? Few, other than people that have medical reasons why they can't use one (dexterity issues, etc.). The flip phones with the big buttons are what they use if they have one at all.
I'm 60, of average means (recently retired) and an Associate's degree, and have had a smartphone for almost 6 years. I'm into my 3rd one, as a matter of fact. I listen to AM only when the programming I want to listen to (sports) is there. I moved to FM for music listening 40 years ago, and high speed internet 15 years ago when I first got it.
It's hard to imagine any white collar job where the worker doesn't have a smart phone no matter how old he or she is. I've met a lot of young blue-collar workers whose knowledge of anything online is rudimentary. Whether or not this contributes to AM radio's decline I don't know. I can see how it could because it's another option but I'm not sure if it does.
Not all Hispanics are uneducated and low income.
According to Pew Research, 71% of U.S. Adults own smartphones but 74% of Hispanics. But also, 78% of College Graduates. 72% of those with incomes between $50,000 and $74,999 own smartphones but 84% of those with incomes of $75,000 and up.
There is some correlation between age and smartphone ownership, but it's not independent of other factors.
Per http://www.statista.com/statistics/...in-the-united-states-by-race-or-ethnic-group/
Hispanics have a median annual household income that is about 30% lower than non-Hispanic whites.
However, if you dig into the Pew Cellular survey for 2015, Hispanics have a very high incidence of smartphone dependence than other groups as they have lower connectivity via other means.
So you disagree with my point that age as a determinant of smartphone ownership is overstated and that income and education play a larger role because of high Hispanic smartphone ownership? We're talking about 17% of the U.S. population. http://quickfacts.census.gov/qfd/states/00000.html
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I disagree with the oversimplification. While it is true that seniors, as a group, are less likely to have smartphones than Millenials, there are other groups such as Hispanics who were never part of the landline and cable culture and thus, in all age groups, tend to have more smartphones.
Another group that brings down the non-Hispanic white index is rural residents in areas with deficient cellular coverage. In the deep south, that would also affect African American smartphone ownership.
The real issue here is that in a comparison with OTA radio, smartphone use in 18-49 and 18-54 is much higher than the national average. That's an important consideration as radio stations market to advertisers who seek those demographics or portions of them.
As a sidebar, one of the reasons why first generation Hispanics have such a high usage of smartphones is that they, first, have no history of using landlines or traditional communications (landlines used to take eons to get installed in Mexico and Latin America) and they use texting and other services such as Skype to communicate with family members "back home" which is a major savings.
Fair enough. I disagree with overcomplicating my statement. Here is the context of the original statement I responded to, which had nothing to do with Hispanics. I can understand your inserting it given your particular specialty.
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Except for the fact that it wasn't only AM's that could be gobbled up with reckless abandon. If it was about "saving AM", then the Act should've only loosened ownership of AM's.
Consolidation was the aftereffect of Docket 80-90 and excessive licensing. Half of all stations were losing money, and since over 60% of stations then were FM, it means plenty of them were bleeding. The idea was that clusters would operate more efficiently.
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