Let's go back, way back..... Would radio be in the predicament it is in today if: Beancounters hadn't become involved? If corporations hadn't been allowed to become behemoths by buying up a huge amount of stations? If the FCC hadn't become the rollover pets of said corporations? If they had stayed "relevant" [for lack of a better word] if internet/digital/satellite hadn't taken place because radio still did it all? If consultants hadn't been invented [yeah, I know some on here are consultants]? If all the various presidents/politicians didn't pass the Telecommunications act of 1996 or other various bills related to radio? [Did I miss anything?] This is more of a hypothetical, alternate universe type query so don't go crazy on me. Radio today, is what it is, as we can see taking place in other countries so it's not endemic to the U.S.A.
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Hypothetical questions
- Thread starter Yabadabado1
- Start date
Short answer, Yes. Except that the internet did happen, and from that moment on it was only a question of when it would severely damage radio as we knew it, not if.
It would have been worse. When the FCC opened up ownership limits, it was because half of all station were not profitable. Many were cutting services and staff... due to both increased costs and the profusion of new stations and move ins in most markets.
No, because stations were not prospering when deregulation occurred.
But in many countries where consolidation has long permitted total national networks of dozens to hundreds of stations and repeaters, radio is doing much better than in the United States. Such national consolidation makes it easy for advertisers to buy and gives top quality listening even in tiny markets.
That's what journalists call a leading question. There is no connection between the start of the internet and programming on the radio.
The birth of the internet goes back to the 70s, at a time when broadcast radio was at its height. Before deregulation and consolidation.
The internet is a fact. There is nothing radio can do that will cause people to stop using the internet, and instead use radio. People are in love with their smart phones. You can't pry them away from people.
Just like radio, the public Internet isn't just one thing. And back in the early 90's when I was on a dial up modem checking out BBSs on Compuserve or AOL, there was no talk of streaming becoming a competitor for radio. Nor were there predictions that mobile phones would be powered by what amounts to super-computers that would fit into our pocket.
This whole what-if hindsight from boomers who grew up with radio expecting consumer media consumption to stay the same as their youth is silly and a waste of neuron power.
As I've always said; if you know so much about the predicting future, what are you doing wasting time with typing silly hypotheticals on some radio discussion board?
80-90 allowed many "new" stations. I don't know what percentage of these station were financially successful but they most likely sliced the "revenue pie" a little thinner for the existing stations. Urban Legion has a quote that the goal was to make radio stations as common as "gas station's" where if one closes it's no big deal.
There are many different views on consolation and clusters but IMHO somehow the economics and cost cutting that have resulted in over leveraged operators has turned many music stations into jukeboxes that opens them up to completion from lower cost streamers. I get radio is a business but it is in the entertainment business. We have forgotten the entertainment part of the equation. It seems most of the creativity comes from the web, not radio.
Wall Street got involved. There is a large number of investors who only look a quarter or two ahead. I never was a fan of Clear Channel but what Bain did to them was wrong.
I did some thinking and after Audacy gets out on Bankruptcy, the leveraging has to be taken out of radio. A FCC license should never be used as collateral for a loan. I think if an operator goes bankrupt, they either sell the station in one year or turn the license into the FCC.
There are many different views on consolation and clusters but IMHO somehow the economics and cost cutting that have resulted in over leveraged operators has turned many music stations into jukeboxes that opens them up to completion from lower cost streamers. I get radio is a business but it is in the entertainment business. We have forgotten the entertainment part of the equation. It seems most of the creativity comes from the web, not radio.
Wall Street got involved. There is a large number of investors who only look a quarter or two ahead. I never was a fan of Clear Channel but what Bain did to them was wrong.
I did some thinking and after Audacy gets out on Bankruptcy, the leveraging has to be taken out of radio. A FCC license should never be used as collateral for a loan. I think if an operator goes bankrupt, they either sell the station in one year or turn the license into the FCC.
Because I was in the future, saw your question, grew bored and came back. And you won't believe what happens when Barron Trump becomes president.
The company I was managing bought an AM/FM in Lake City, FL, as a trial for mainland expansion. We were making a good return on investment in a little market with one other AM and just our FM and one FM from a nearby town. Docket 80-90 tripled the number of local signals on FM, and we ended up with no profit and having to cut our three local news blocks (two hours in the morning along with national net news and features, an hour at noon and an hour at 5 PM) out entirely and automate everything for satellite programming.
We heard the same story from many other smaller market broadcasters at the state association meeting.
And we had an AM and FM in Tallahasse... the FM was the originating station for the Seminoles sports network but we got as many new and moved FMs as there had been when we bought it. While we remained #1 in the book, we were prevented from raising rates and had to fight the cheap new competitors for every buy.
There is one fact... most people under 40 don't want "personality jocks". They don't want "friends on the radio". They have lots of friends on social media, and they chat with them incessantly. On radio, it is "shut up and play only songs I like".
Bain wanted out of the deal when the recession hit. The courts forced them to close, and they hated it. So they decided to minimize the losses by cutting expenses rather than investing in the product.
There are so many cases of stations going into bankruptcy that I can't possibly count them. Since the later 50's, half of all stations have not been profitable. Many if not most bankruptcies are the kind that allows reorganization and negotiation of outstanding debts. Some recover, some don't and are sold. The ones that sell see the proceeds mostly going to the creditors and most of the capital is lost.
And there are cases where stations were profitable but the "big mill in town" closes and suddenly you have a mini-depression and nobody advertises. Or the FCC license a couple of new stations, as they did under Docket 80-90 and nobody makes any money. It is not always the operator's fault, and the FCC correctly lets market forces decide who keeps or sells a station.
That's why the debt should be taken out of the equation as much as possible. If lenders knew that if the station(s) don't make it: either they are in the radio business thru foreclosure, or the station is sold most likely at fire sale prices, or they loose out completely when the license goes back to the FCC. I doubt there would be very much lending to stations and the prices would come down to where a station(s) can sustain itself financially without huge debt.
Radio stations are not that expensive to run compared to a lot of businesses. You have an electric bill, modern RF equipment is a lot more reliable now that 40 years ago so an "engineering service" should keep you on the air, tower rent, music lisences and sales commission. Thanks to the PC based automation and Voice Tracking the studio is only really needed for commercial production unless you are doing local news talk and you will need a place for guests.
IMHO The idea that a license from the FCC is a permanent bankable thing is incorrect. The FCC license is to provide a SERVICE for a specific piece of the RF spectrum at and a specific location. If you can make a few bucks OK. If you can't then find someone who thinks they can.
Operators should only have to concentrate on sales and programming that generates sales not paying huge legacy debts. All consolidation did was to scale up groups of stations to a big enough size that attract Wall Street speculators who loaded up the industry with debt, took the money and ran.
If that was the intention, all stations would be non-commercial, and all owners would be non-profit. But in the 1920s, radio was overseen by the Department of Commerce, and they hoped owners would get rich and pay a lot of taxes.
I didn't mean non profit only. There are some things for profit organizations can do better. Except for a "local" public affairs program at 5 or 6 AM on Sunday and fillers for a syndicated show (if the station can't sell the time) there is no "public service" on most commercial stations unless it benefits the station's brand. If your programming can fill a "need" that folks listen to any can monetize without taxpayers funding you have served some loose definition of service.
I know current station owners will hate this:
IMHO the industry would be better off stations were sold with little or no outside debt.
If the current owner wants to finance cool. A good tax advisor can make this a good deal IF the station makes it payments. If a corporation can get financing with one year sale rule (if they default or the debt holders are will to become operators with or without bankruptcy in a year), cool. Just like a convenience/gas station. If it fails then someone who thinks they can do better takes over with his own funds. Not this insanity that the same failed financial structure is refinanced over and over like Financial Zombies who only exist to pay debt.
I know current station owners will hate this:
IMHO the industry would be better off stations were sold with little or no outside debt.
If the current owner wants to finance cool. A good tax advisor can make this a good deal IF the station makes it payments. If a corporation can get financing with one year sale rule (if they default or the debt holders are will to become operators with or without bankruptcy in a year), cool. Just like a convenience/gas station. If it fails then someone who thinks they can do better takes over with his own funds. Not this insanity that the same failed financial structure is refinanced over and over like Financial Zombies who only exist to pay debt.
But that's the basic problem. The ad-supported model is broken. Radio needs a different revenue stream. Listeners are getting tired of commercials, and they're the only source of revenue radio has. So they can't cut the spots, and listeners leave to find the same content ad-free.
That's kind of where we are now, and as you can see, the only people who can buy stations without debt are religious. Is that OK?
The companies with lots of cash on hand, such as Apple, Google, Amazon, and Netflix, aren't buying transmitters & towers, and are instead investing their money in content that they deliver on their owned streaming services. Everybody else is in debt.
And it's the refusal of most people over 40 to face this fact that keeps this discussion topic spinning its wheels in whichever forum it pops up.
No bank is going to give financing to someone/a corporation who wants to buy a radio station.
IMHO that the way it should have been for a long time. If you look at EBITDA radio isn't the worst business you could be in. The 64 dollar question is how much further billings will decrease verses inflation. If I am putting my own money into a business I should expect 3 or 4 times a return than safe bank CD or well run stock fund just for the risk.
A lot of investors got blindsided by the internet. When Pandora destroyed a lot of equity that should have been a wakeup to media investors that the Internet is not an automatic pathway to riches either. There is two types of media consumer. One will pay not to have commercials, and folks like me that will tolerate commercials for "free" content.
Ad blockers on the web browser are a thing, however. Some of us go great lengths to avoid Internet advertising.
As a former certified web master, depending on the client, you can make you turn off ad blockers if you want a ALL the the content.
Everything has to be paid for. Either subscription or commercials.
Everything has to be paid for. Either subscription or commercials.
Yep. Seen that happen. So I just don't go to those websites ever again.
This is not to say that people under 40 don't want to be entertained. It's just that they want to hear "personalities" when and where they choose, often in the universe of podcasts, and not wait in real time through songs and commercials to hear someone say something clever.
It also doesn't mean no one likes personality radio anymore. It's simply a matter of sustaining a business. How many people still buy a printed newspaper? How does a business survive with a smaller number of customers?
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