With Clear Channel divesting in alot of it's small and medium market stations, what is the chance that a lot of these clusters will fall back to small or local operators? Could they revive small market local radio?
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Is It Too Late???
- Thread starter leethalweapon
- Start date
Lee Anderson said:
It's not too late. I certainly hope not since my partners and myself are getting back into radio just to buy up 20-30 of the medium market and down radio clusters that are available! (and not just thru CC) We have purchased one in Memphis and are in negotiations for another 6-8 right now. We have re-formed our old Legacy Broadcasting, now called Legacy Media Holdings, LLC and are extremely excited about the future of LIVE, LOCAL, COMMUNITY INVOLVED Radio stations. In fact, if anyone is aware of some good small market radio stations for sale I would love to hear about them.
Thanks
Joe Pedicino
VP/Chief Marketing Officer
Legacy Media Holdings, LLC
[email protected]
L
lash
Guest
Joe...glad to hear there are other broadcasters out there, who still care about solid local radio. Welcome back to our club. There are good stations for sale all over the place. Good luck in your search.
lash said:
Agreed. It's way past time for radio stations to not only have local involvement, but a local commitment. That's something that has been missing for the last decade plus.
Lee Anderson said:
Not yet. The "big" operators haven't killed enough to satisfy their bloodlust. When their wicked ways drive most of the listeners to sat radio they will turn their dollars and interests to sat radio to kill it. While the trend is trickling, it is not complete. Give it another couple of years and then us folks in Podunk will have radio stations that play what WE want to hear, not what some idiot in New York or LA THINKS we want to here.
Gotta admire the "little people" who sold out in their local markets and made a pile of cash. They'll buy the stations back at a fraction of what they sold them for and make big bucks again. Write it down.
Guys, think this through. Why would these ee-vil big operators want to purposely kill their industry. It would seem that they'd be stuck with a lot of properties they couldn't sell to anyone else if 100% of the people are listening exclusively to their personla iPod. As for stations in Podunk playing what "we" want to hear, who is "we"? Of course no one would do any research because research (asking your listeners) is evil and we know better.
Thinking It Through
The problem is that too many ee-vil big operators decided that they could operate "more efficiently" by cutting local content and cutting costs. What they failed to think through is the fact that people listened in the first place because of the local content.
Spot prices got raised, which put radio out of reach for a lot of smaller advertisers. Since the stations had "excess inventory", bigger advertisers got "bonus spots", which effectively dropped the rate for those who could afford to get into the game in the first place. Syndicated and/or voice-tracked content came with barter spots, which added clutter without adding revenue. So, revenue stopped growing, or grew at a pace slower than inflation.
Add to that the fact that too many ee-vil big operators paid too much money for stations in small markets, which raised their debt service. Add the fact that listeners would rather hear a local guy than a slick big-city voice-tracker. That's why Clear Channel, and others, have found that small stations aren't the money-printing plants that they'd planned on. Cutting costs also slowed or stopped revenue growth, and increased debt service ate up any savings.
Now you know why Clear Channel wants out of 400+ markets.
gr8oldies said:
The problem is that too many ee-vil big operators decided that they could operate "more efficiently" by cutting local content and cutting costs. What they failed to think through is the fact that people listened in the first place because of the local content.
Spot prices got raised, which put radio out of reach for a lot of smaller advertisers. Since the stations had "excess inventory", bigger advertisers got "bonus spots", which effectively dropped the rate for those who could afford to get into the game in the first place. Syndicated and/or voice-tracked content came with barter spots, which added clutter without adding revenue. So, revenue stopped growing, or grew at a pace slower than inflation.
Add to that the fact that too many ee-vil big operators paid too much money for stations in small markets, which raised their debt service. Add the fact that listeners would rather hear a local guy than a slick big-city voice-tracker. That's why Clear Channel, and others, have found that small stations aren't the money-printing plants that they'd planned on. Cutting costs also slowed or stopped revenue growth, and increased debt service ate up any savings.
Now you know why Clear Channel wants out of 400+ markets.
There were any number of stations running satellite networks and not being "all local all the time". Most people could care less if there's a DJ at all on most formats let alone preferring a local 19 year old kid sitting in a building somewhere in town to a more experienced personality. What about the folks who just want to hear music and could care less about "local content'? Everybody's not into all the minutae of a city council meeting or wants to listen to it all the time.
Again, the accusation was that big operators wannt to purposely destroy their industry, and I can't imagine what the advantage of that would be.
Again, the accusation was that big operators wannt to purposely destroy their industry, and I can't imagine what the advantage of that would be.
gr8oldies said:
Perhaps you missed the junior high English class on hyperbole. As far as the rest is concerned, not all small-market jocks were 19 years old, and not all local news was town board meeting minutes. Folks who just want to hear music have been playing their own records/tapes/cassettes/8-tracks/CDs/iPods for as long as they've been available. What CC and others forgot about is "radio as a companion".
The expectation used to be that radio would bring me music I liked, and introduce me to new music I might like. Radio would also let me know if there was anything really important going on around me - weather warnings, breaking news, big events, traffic tie-ups, even big sales. That doesn't happen with voicetracking and syndicated content.
I'm not saying that there isn't a place for syndicated shows, or even voicetracking. I am saying that it has been taken to an extreme in order to cut costs, and quality has suffered. Radio is no longer the source for new music or the latest information. The immediacy of radio is gone.
You can argue that the Internet has replaced radio as a source of information. That's largely because radio gave away that audience. Radio is - still - much more portable than the Internet, and doesn't require active participation to find information. Too many big operators slashed local news and dropped local talent as a short-term solution to raising revenue. The long-term effect is that people have turned to other sources for content that radio used to provide. THAT is not good for radio.
Re: Thinking It Through
I still just don't get this "local content" issue. Radio, as any entertainmment form, is either perceived as being god or bad. Jay Leno, Johnny Carson, Steve Allen were and are not local, but they related to local residents across the US. The country is far more homogeneous than it is fragmented, so a well done national or regional offering will generally win over a "local" and less compelling offering.
In even the biggest cities, there is not a constant flow of breaking local news; listeners are not always in the mood for that kind of content, either.
Rates based on cost per thousand (which allows the comparison of a station in Ishpeming, MI with one in LA, have risen below the rate of inflation over the last 25 years. Stations have not priced themselves out of reach... there is no difference between the accessability of rates of the 60's and rates of today.
The reason radio rates have not kept up with inflation has to do with greater numbers of stations in most markets, and greater competition from other media alternatives.
"Bonus spots" are usually given in dayparts that are hard to sell (7 PM-Midnight, for example) and are given to improve the CPP (Cost Per Point) to get a station to be competitive in the target demo of a specific campaign that has a "make or break" CPP goal.
Voice trackg is just using a voice in recorded form instead of live form. There is no barter associated with voice tracking.
Syndicated product, going back to American Top 40, has used barter. There is nothing new there. All barter does is improve cash flow: you pay for a program in spots instead of cash, but you still pay for it. One way or another, you have to use inventory to pay the cost of the show.
What is the difference in giving $1000 cash or $1000 in barter? It's the same amount of money, and about the same number of spots.
Actually, radio has kept pace with or grwon a bit above inflation for the last 10 years. The growth, however, has come from selling better and improved inventory management.
As explained before, this is due to more stations and more media offerings. It is not due to voice tracking, rate increases, or syndication. It is due to the current business climate.
As stations are being sold off, like the CCU sales in the Dakotas and Wyoming show, the prices are greater than what was paid. The idea that stations were bought for more than they were worth is wrong in 95% of the cases; the exceptions are in cases where indivisual stations have lost market share due to changed competitive factors, and are worth less based on declining BCF (the CBS stations in San Antonio are an example). But in general, station values are up and the sales by CBS in the below-Top-100 markets has amply demonstrated this.
Again: most of the big deals in 1996-2000 were done by merger or equity exchange and there is zero debt service on the companies. As also mentioned, Clear Channel has a better debt to equity ratio than General Electric!
The fact is that, like national contests, long distance voice tracking was tried but mostly discarded. It had little efficiency in most cases. Today, voikce tracking is often done by a person in the market who does multiple functions, just as folks have always done in smaller markets.
Actually, Clear tried Randy's idea of forming regional clusters, getting Arbitron to do regional ratings, and selling a zone and not a metro. Advertisers met this with extrem disinterest, despite the fact that it would have made radio easier to buy (the biggest reason radio gets a small part of the ad pie is that it is hard and inefficient to buy). So, Clear is selling off the smaller stations.
These stations are profitable. But since 30% of all radio revenue is in the top 10 markets, you can imagine that less than 10% of Clear's revenue was in markets 100+. Yet it takes a lot of management time to supervise markets that contribute little. With no regional synergy, there was no reason to keep these stations.
Yeah, the chance to get a billin or so in capital back and reduce revenue by very little. A perfect move when going private.
SirRoxalot said:
I still just don't get this "local content" issue. Radio, as any entertainmment form, is either perceived as being god or bad. Jay Leno, Johnny Carson, Steve Allen were and are not local, but they related to local residents across the US. The country is far more homogeneous than it is fragmented, so a well done national or regional offering will generally win over a "local" and less compelling offering.
In even the biggest cities, there is not a constant flow of breaking local news; listeners are not always in the mood for that kind of content, either.
Rates based on cost per thousand (which allows the comparison of a station in Ishpeming, MI with one in LA, have risen below the rate of inflation over the last 25 years. Stations have not priced themselves out of reach... there is no difference between the accessability of rates of the 60's and rates of today.
The reason radio rates have not kept up with inflation has to do with greater numbers of stations in most markets, and greater competition from other media alternatives.
"Bonus spots" are usually given in dayparts that are hard to sell (7 PM-Midnight, for example) and are given to improve the CPP (Cost Per Point) to get a station to be competitive in the target demo of a specific campaign that has a "make or break" CPP goal.
Voice trackg is just using a voice in recorded form instead of live form. There is no barter associated with voice tracking.
Syndicated product, going back to American Top 40, has used barter. There is nothing new there. All barter does is improve cash flow: you pay for a program in spots instead of cash, but you still pay for it. One way or another, you have to use inventory to pay the cost of the show.
What is the difference in giving $1000 cash or $1000 in barter? It's the same amount of money, and about the same number of spots.
Actually, radio has kept pace with or grwon a bit above inflation for the last 10 years. The growth, however, has come from selling better and improved inventory management.
As explained before, this is due to more stations and more media offerings. It is not due to voice tracking, rate increases, or syndication. It is due to the current business climate.
As stations are being sold off, like the CCU sales in the Dakotas and Wyoming show, the prices are greater than what was paid. The idea that stations were bought for more than they were worth is wrong in 95% of the cases; the exceptions are in cases where indivisual stations have lost market share due to changed competitive factors, and are worth less based on declining BCF (the CBS stations in San Antonio are an example). But in general, station values are up and the sales by CBS in the below-Top-100 markets has amply demonstrated this.
Again: most of the big deals in 1996-2000 were done by merger or equity exchange and there is zero debt service on the companies. As also mentioned, Clear Channel has a better debt to equity ratio than General Electric!
The fact is that, like national contests, long distance voice tracking was tried but mostly discarded. It had little efficiency in most cases. Today, voikce tracking is often done by a person in the market who does multiple functions, just as folks have always done in smaller markets.
Actually, Clear tried Randy's idea of forming regional clusters, getting Arbitron to do regional ratings, and selling a zone and not a metro. Advertisers met this with extrem disinterest, despite the fact that it would have made radio easier to buy (the biggest reason radio gets a small part of the ad pie is that it is hard and inefficient to buy). So, Clear is selling off the smaller stations.
These stations are profitable. But since 30% of all radio revenue is in the top 10 markets, you can imagine that less than 10% of Clear's revenue was in markets 100+. Yet it takes a lot of management time to supervise markets that contribute little. With no regional synergy, there was no reason to keep these stations.
Yeah, the chance to get a billin or so in capital back and reduce revenue by very little. A perfect move when going private.
I still just don't get this "local content" issue. Radio, as any entertainmment form, is either perceived as being god or bad. Jay Leno, Johnny Carson, Steve Allen were and are not local, but they related to local residents across the US. The country is far more homogeneous than it is fragmented, so a well done national or regional offering will generally win over a "local" and less compelling offering.
In even the biggest cities, there is not a constant flow of breaking local news; listeners are not always in the mood for that kind of content, either.
David, Your comments are right on.... as long as you are talking about markets large enough to ONLY be sold by numbers and cost per thousand. I think that's why you don't get the "local content" issue. We are not talking about filling a station with "a constant flow of brealing local news"... you are correct there is not enough. But we are talking about the on air "personality" being just that... a local personality. People see them at the local high schools, grand openings, charity events, heck, even the local grocery stores! When they are on air the are not talking ONLY about what Britney did... but what the LOCAL people are doing. They put the LOCAL people/events right up there on the same level as the national ones. Because to the LOCAL LISTENERS they are just as important.
We had a horrific traffic situation in my market recently. Interstate closed both ways... main street into and out of town closed. Traffic was the worst we had had in decades... it was a real mess. And the only mention of this six hour traffic jam on our "local" station was the traffic report out of a nearby big city mentioned it a few times during the mess. May once or twice during the hour. Why you ask? Because the pm drive show is voice tracked by the mid day guy on a company station 50 miles away. He was all cheery and bright all afternoon while his listeners were mad and changing channels trying to find someone who could tell them what was going on and how long it will last. If they had a live pm drive show that's all they would have been talking about! That's what I mean by "LOCAL".
Nearby town had team going to WORLD Finals in sporting event last summer. All you could hear around that town was about that team. Unless you listened to the syndicated morning drive show on their "local" station. You know the host only mentioned the team one time during the two weeks prior to them WINNING the world title. Then they made fun of them. Wonder how much good will the station could have gotten if they had made a really big deal of THEIR team winning the world title? That's what I mean by "LOCAL"!
Would this work in large or even medium market? Nope... they have to be different... but if I chose to live in a small town... then I want to know what MY life is like... not someone living a hundred miles away.
Rates based on cost per thousand (which allows the comparison of a station in Ishpeming, MI with one in LA, have risen below the rate of inflation over the last 25 years. Stations have not priced themselves out of reach... there is no difference between the accessability of rates of the 60's and rates of today.
The reason radio rates have not kept up with inflation has to do with greater numbers of stations in most markets, and greater competition from other media alternatives.
Again... the local grocery store doesn't really care about cost per thousand.... only if he is getting good service, prices, and results! He loves it when he goes to Church and his friends tell them they heard him "on the radio"!
Thanks
OIC
OICUR12 said:
I think we agree even on the small markets, too.
The things you describe, irrespective of market size, are bad radio. Stations that do not have a way of knowing when an important news event has happenened or have no way of becoming infolved (to the extent of the format) in major local happenings will be screwed, whether in New York, NY, or New Albany, MS.
Even stations that "farm out" news to Metro or similar can get alerts on breaking news. If they are not forsighted enough to specify getting alerts for breaking news, it is the station's fault. Same goes for the local team... whether it is H.S. football in McAllester, OK or NFL in a major market, a station that does not have a way of localizing key dayparts is simply asking to be whupped by someone who knows better.
I will say that Docket 80-90 made it harder to provide all-day local service in many or even most smaller markets, but there are plenty of ways of getting information on what is going on that are not expensive and are very effective. Technology now permits many things to be done from off-site, and seamlessley... not taking advantage of them is what is dumb.
There certainly is a change in public perceptiuon of radio and radio personalities. The jock on the rocker of the 60's who had a 30 share is long gone, and in a group of 100 people, chances are that less than 10 or 15 will know any one personality... thus the impact of appearances and such is changed forever.
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