To make an example, iHeart has a 5 station cluster in Bakersfield, CA. Connoisseur recently sold a 3 station cluster in Bakersfield for $1 (plus a 25% cut of any future profits for 5 years). Connoisseur's cluster included a couple of successful music stations and a dying AM. I think it is safe to assume the cluster was unprofitable under Alpha/Connoisseur given that sales contract, so there's a fair chance that $1 is all they ever see.
What Connoisseur has been keeping and what it’s been dumping has confounded me. I don’t think much of anyone expected it to keep stations in rural Iowa, Missouri, Minnesota, and South Dakota, but it’s odd to me that it dumped Bakersfield and Topeka while keeping Lincoln and Columbus, NE. I'll grant that Topeka has always been a tough place to make money, but Lincoln is, by pretty much all measures, much tougher. Even if it gets the waiver to buy all but one of the commercial licenses in Lincoln, it will barely get half the listening in that market. At least since FM took off, Omaha gets 40-55% of listening there, and almost nobody in Omaha listens to Lincoln stations. I don’t see how it raises rates as advertisers in Lincoln have generally been aware of that and pay radio accordingly. Topeka has a similar problem with Kansas City getting a disproportionate share of listening, but it’s nowhere near 40%.
That's another reason the smaller iHeart clusters would be hard to sell without the large markets. iHeart has spent 25 years cutting away at staffing, especially in the smaller markets. If you bought the iHeart cluster in Springfield, MO or Tupelo, MS or Davenport, IA, what are you really buying?
It wasn’t iHeart (it was actually Alpha), but a friend of mine looked at buying some stations. Alpha had a higher price than Connoisseur, but he ran into the problem that buying the stations meant he got licenses with no tangible assets. Alpha sold its towers, much like most every other major broadcaster, and the stations' building was leased, too. Rent on towers and the building would've run close to $250,000 a year. Seems like he concluded that about one out of every three dollars he made would go straight to rent and debt service. Needless to say, he didn’t go any farther before deciding to bail on that idea!
I'd guess a brand and a long-term tower lease with Vertical Bridge -- but no programming expertise, no respected local talent, and possibly no sales structure either, as iHeart has been eliminating local sales roles in certain markets.
Cumulus has also been reducing sales staff, or so I've been told. They’re always advertising marketing consultant positions, but a friend of mine who buys radio local said he stopped buying Cumulus after the sales staff got decimated. I was also told that, at one point, the receptionist position was eliminated, and sales staff was told to spend one hour per week at the reception desk and make cold calls.
No. The Internet can't reach everyone in the sense that an advertising agency can buy "the Internet" and be able to sell to everybody. As pointed out in another thread about the future of streaming, there are thousands of different streams of both radio broadcasters and Internet-only radio stations throughout both the U.S. and the rest of the world. If advertising agencies think they can negotiate with one (or a few) Internet streamers and that they will therefore get the national audience they sought with national radio buys, then they're only fooling themselves.
You’re not wrong that some people either don’t have or can’t afford to pay for internet service. The latter aren’t a concern to advertisers as they don’t usually have enough discretionary income to be customers. What you’re forgetting, however, is that internet streamers, or at least the major ones, contract with national agencies. TargetSpot handles (or at least used to handle) national ad buys for Audacy, AccuRadio, Slacker, and several other large streamers. iHeart has Katz, which represents more than just iHeart, and Townsquare Ignite provides its services to companies like SummitMedia and Steel City Media. Townsquare also partnered with TargetSpot at one point and may still. National advertisers at least used to work with agencies and distributors like TargetSpot rather than with individual streamers. It doesn’t get everybody, but it gets the largest ones.
Yes. The Internet does offer an advantage over broadcast radio but it is not getting the entire Internet audience in one shot; in fact, it's the opposite. Because of the myriad of streams and formats available, advertising agencies and their clients can really target their ads to the most likely buyers of their products in ways that could never be done through radio--the technology just wasn't there. I know that
@davideduardo likes to talk about national advertising agencies wanting to only negotiate with one or a few buyers to get everybody, but that is not, and will never be, the case with the Internet.
The smaller internet streamers that don’t or can’t work with agencies and services don’t move the meter enough to be important. Not sure if it’s still the case, but even ShoutCast and Live365 used to offer service tiers that provided ads through TargetSpot. In other words, getting access to those services isn’t, or at least wasn’t, difficult.
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