Less stations, better business?

[SirRoxalot]

A Question of Balance

If you don't think that the Internet and cell phones aren't interested in offering "broadcast" services like music and information, you're not paying attention.

What does that have to do with licenses and serving the public interest? They're offering broadcast services on non-regulated platforms.

It has everything to do with increased competition for existing OTA licensees, with the potential for reducing the value of their properties and their product if they continue with their current programming. It has definite impact on the value of those licenses.

Increased competition will either bring about better programming from the current owner, or transfer the license to new owners.

You're putting the FCC in a position of making subjective programming decisions. That is not now, nor has it ever been their role. You don't want the federal government getting into the content business. That opens the door for propaganda. It's why the law prohibits the US gov't from owning domestic radio licenses.

Not at all. I'm putting the FCC in a position of determining the finances of a company, which have to be filed with the federal government anyway. The criteria is "are they making money", not "HOW are they making money". Lose money for more than half of your license term, put yourself in significant danger of losing your license.

Throw in increased competition from other media, and the "cost cutters" will be looking to get out.

So what you're saying is regulation is unnecessary, since they current owners will be selling anyway.

Hey, you're the one who said in the "Weasels In the Hen House" thread:

I have said very clearly in THIS thread that radio is a device of the past, that radio companies are investing in new media (as CBS Radio announced today), and that young people are flocking to these new applications.

Since radio is "a device of the past", why are you suddenly in favor of promoting its propagation?

I'd rather have the marketplace determine the viability of signals than have the government reallocate frequencies. The fly in the ointment is consolidation, which decreased competition and insulated underperforming signals from the marketplace.

In other words, in some places, fewer stations would be better for the business as a whole, and in other locations, more stations would be better for the business as a whole. The question is how to achieve the correct balance.

 

[TheBigA]

Re: A Question of Balance

It has everything to do with increased competition for existing OTA licensees, with the potential for reducing the value of their properties and their product if they continue with their current programming. It has definite impact on the value of those licenses.

If the government was concerned about the value of the licenses, they wouldn't dillute the value by over licensing the spectrum. If internet and cell phones are the competition, perhaps the public prefers the unhosted content available there to the DJ approach available on air. Which approach is gaining in popularity?

I'm putting the FCC in a position of determining the finances of a company, which have to be filed with the federal government anyway. The criteria is "are they making money", not "HOW are they making money". Lose money for more than half of your license term, put yourself in significant danger of losing your license.

But you're equating "making money" with quality. I think we have lots of examples where that's not true. And you're determining the qualifications of a licensee based on profit, not service. I have no reason to believe the government will do that.

Also, the SEC and the FCC are very different agencies.

Since radio is "a device of the past", why are you suddenly in favor of promoting its propagation?

Huh? Where have I said that? My posts are specifically directed at your proposals. I have made none of my own here.

I'd rather have the marketplace determine the viability of signals than have the government reallocate frequencies. The fly in the ointment is consolidation, which decreased competition and insulated underperforming signals from the marketplace.

In other words, in some places, fewer stations would be better for the business as a whole, and in other locations, more stations would be better for the business as a whole. The question is how to achieve the correct balance.

That's why companies are moving stations from the suburbs to the cities. A small percentage of a big pie is often better than 100% of a very small pie. It's why a lot of fringe music formats are not done. A station would make more money as the third place AC than as the only bluegrass station in town.

By the way, move-ins increase competition. Or at least that's the government's view. More voices mean more competition. Keep in mind, that's how radio was founded: A few big powerful stations operating from big cities. Not thousands of small gnats interfering with each other.

 

[SirRoxalot]

Re: A Question of Balance

It has everything to do with increased competition for existing OTA licensees, with the potential for reducing the value of their properties and their product if they continue with their current programming. It has definite impact on the value of those licenses.

If the government was concerned about the value of the licenses, they wouldn't dillute the value by over licensing the spectrum. If internet and cell phones are the competition, perhaps the public prefers the unhosted content available there to the DJ approach available on air. Which approach is gaining in popularity?

I never said that the government was concerned about the value of licenses. People - especially young people - are searching for better content than many OTA radio stations are providing. If you're outside the "money demos" of 25-54, there's precious little programming targeted at you. Cell phone and/or Internet content are not necessarily "unhosted". In fact, some Internet content is the equivalent of microcasting to very small areas and very specific audiences. Some content is "interactive", some is not. Mostly, it's a lot more varied than OTA offerings, and the cost of getting into the game is MUCH lower.

But you're equating "making money" with quality. I think we have lots of examples where that's not true. And you're determining the qualifications of a licensee based on profit, not service. I have no reason to believe the government will do that.

Also, the SEC and the FCC are very different agencies.

Nope. I'm equating "making a profit" with serving the public interest. It has nothing to do with quality, although higher quality programming generally draws bigger audiences.

Since radio is "a device of the past", why are you suddenly in favor of promoting its propagation?

Huh? Where have I said that? My posts are specifically directed at your proposals. I have made none of my own here.

How soon you forget your own statements...

I have said very clearly in THIS thread that radio is a device of the past, that radio companies are investing in new media (as CBS Radio announced today), and that young people are flocking to these new applications.

How about:

The reality everyone has reached is that the air signal will not be a source for growth moving forward. The radio companies know it, the advertisers know it, the FCC knows it, Wall Street knows it, and the listeners know it.

Does that sound like you're "big" on radio as an industry?

I'd rather have the marketplace determine the viability of signals than have the government reallocate frequencies. The fly in the ointment is consolidation, which decreased competition and insulated underperforming signals from the marketplace.

In other words, in some places, fewer stations would be better for the business as a whole, and in other locations, more stations would be better for the business as a whole. The question is how to achieve the correct balance.

That's why companies are moving stations from the suburbs to the cities. A small percentage of a big pie is often better than 100% of a very small pie. It's why a lot of fringe music formats are not done. A station would make more money as the third place AC than as the only bluegrass station in town.

By the way, move-ins increase competition. Or at least that's the government's view. More voices mean more competition. Keep in mind, that's how radio was founded: A few big powerful stations operating from big cities. Not thousands of small gnats interfering with each other.

More voices would mean more competition IF the voices came from different owners. Too many stations are being used to prevent alternative programming from becoming really competitive (flankers), or in an attempt to steal a share or two from a dominant station so a groups "big" station can slip upward a notch or two in the overall ratings (spoiler). In both cases, the "flanker" or "spoiler" is not economically viable on its own, and isn't really programmed to serve anybody except the corporation.

"Move-ins" have generally been spectacularly unsuccessful on their own, and have been relegated to the role of "flanker" or "spoiler". In fact, many of those stations were doing fine serving a smaller market, but ownership succumbed to the lure of big money offered by big corporations who thought that they'd be able to make a lot more money by stealing that signal and rim-shotting a larger market. Usually, the big corporation ended up with more debt than the station could support, and the station became a liability that wasn't viable in EITHER market. That's why there are so many companies in so much trouble right now, and why some companies (i.e. Clear Channel) have been getting out of smaller markets and taking a loss to do it.

 

[TheBigA]

Re: A Question of Balance

People - especially young people - are searching for better content than many OTA radio stations are providing.

Nope..."better" is not their motivation. DIFFERENT is more what what they seek. More personalized to what they as individuals want. In fact, in most cases, they are seeking and enjoying obviously INFERIOR content that just happens to be more personalized.

Cell phone and/or Internet content are not necessarily "unhosted".

The most popular is, and radio is about reaching the most people.

Does that sound like you're "big" on radio as an industry?

I know what I said before. Where am I "promoting its propagation?"

More voices would mean more competition IF the voices came from different owners.

That only makes sense if the owners are in fact on the air, which they aren't. They don't even hire the people who hire the people who hire the people who are on the air. Lots of voices between the owners and the front lines.

We are a country of many different voices and very different opinions. Yet we're still one country with one leader. Companies are no different.

In both cases, the "flanker" or "spoiler" is not economically viable on its own, and isn't really programmed to serve anybody except the corporation.

It's just another way of dealing with the fact that there are way way way too many radio stations. So some of them provide drone functions. We have markets with 50,000 residents that have 50 radio stations in their metro area. Not every one of those stations will be able to exist and make money. No matter what time in history you wish to study, there were stations that were active and market leaders, and some that hung near the basement. The ownership didn't matter. These days, owners of bottom dwellers would go out of business (unless you're Bloomberg, and radio simply promotes your other businesses). But if you can combine a couple losers with a winner, you can finance some fringe formats that might not get on the air if all 50 stations, or even if 25, were owned by the same company. So the public is served by giving them minority options, rather than having 15 stations all competing with the same format. And as studies have shown, even from opponants of consolidation, its led to many more formats today than just 15 years ago. This is why serving the public means more than covering school board elections.

 

[SirRoxalot]

I think that I'll just let your last answer stand on its own merits. It's really not worth responding to. Anybody who knows anything about media will be able to determine how much of a handle you have on radio by simply reading that response.

 

[jackandcoke]

Rox, there's no winning an argument with the Big A.H. because he/she/it knows everything about everything. Have you noticed how he/she/it takes exception to nearly anything anyone says?

Some people are like that. Fortunately, in real life we can often avoid them.

It gets tiresome. Hopefully Santa will bring him/her/it a hobby in a few weeks. Otherwise, the radio-info board participation will just drift off from boredom...

 

[SirRoxalot]

I decided to get off the merry-go-round when I realized that he couldn't keep his own posts straight in his mind.

 

[Goat Rodeo Cowboy]

Rox, there's no winning an argument with the Big A.H. because he/she/it knows everything about everything. Have you noticed how he/she/it takes exception to nearly anything anyone says?

Some people are like that. Fortunately, in real life we can often avoid them.

In fairness we may need to observe that there are a number of people who post on Radio-Info who get into "death-grip" debates. I work at trying to expand conversation but when someone challenges me head-on in the style of TheBigA vs SirRoxalot, I catch myself going for the "death grip debate" at times.

My observation after watching each party at work in more than one topic, may I be so bold as to suggest that TheBigA and SirRoxalot are a "matched set" when it comes to digging in their heels. Sometimes I try to turn the conversation and logic in a new direction. Sometimes that works, sometimes I become roadkill on the information highway.


The current topic is "Less stations, better business?" There is a word for that: CARTEL. My wife worked for a pharmaceutical company that was originated in the Midwest, and later acquired by a similar European firm. After the acquisition they published an employee handbook in which they were very up-front in describing the business conditions in Europe for the first 100 years in Europe: The six or so European companies would meet annually, decide how much "drugs" the market needed for the coming year, and agree on a division of the need broken up amongst the companies. They felt the system worked very well, thank you. Then there came this little event called World War II and as the Americans took charge of rebuilding Europe, they "jammed free-market, free-enterprise" down their throat, like it or not. Then the employee handbook went on the say nice things about current market practices under the new system.

Can you say OPEC?

It would be very difficult to ever in this country get political power together to implement a scheme to reduced the number of stations so that the survivors could be healthy. But it needs to happen somehow. We will probably go through a Darwinian process. Survival of the fittest. Death to the incompetent. Unfortunately, the process of weeding out the weak, the incompetent, will be less than even handed and fair to the public. But it is our system.

 

[TheBigA]

Obviously, some people don't understand what "discussion" means.

The point is not to "win an arguement." But to have a discussion. That means all sides of an issue. You don't want to discuss? Don't respond. Simple.

 

[Goat Rodeo Cowboy]

Re: A Question of Balance

People - especially young people - are searching for better content than many OTA radio stations are providing.

Nope..."better" is not their motivation. DIFFERENT is more what what they seek. More personalized to what they as individuals want. In fact, in most cases, they are seeking and enjoying obviously INFERIOR content that just happens to be more personalized.

Tell me where this takes us over a period of time. The major part of radio today functions where audience studies drive sales of advertising, and how to interpret those audience studies can be said to be primarily Ad Agency driven.

I hear you saying that radio in order to compete with Internet, broadcast wireless streaming and whatever else comes up against us has to deal with specialized niche audiences. Whether we can identify all the little trends or not, that is what is happening today. To be a surviving, thriving radio station you may have to go for a niche audience, but to sell today it has to be the biggest possible niche audience.

There was a time in our lifetimes when "gut intuition" of the advertiser had more input. If you were operating a station in farm country in Iowa, Nebraska, Illinois, Indiana and similar states, when it came time to sell advertising to the tractor dealer or the fertilizer dealer or the seed dealer, it didn't matter whether you had a bigger audience that the other station. If YOU had the FARMERS in your audience, or the advertiser from experience believed you had the farmers, you could have 20% of the audience the rock and roll station had, but YOU got the order. And sometimes that business came through an agency which understood that dynamic. Sports broadcasting can work the same way.

O.K. Back to current time: We can create very sophisticated computer analysis today that we used to not have. Will the time come when a station that has narrowed down to the personalized taste of a niche audience be able to sell, in the metro markets, a small audience that is the RIGHT audience? For the most part current and recent surveys give us age, sex of the audience, maybe income level can be factored in. Let's assume we have three stations zeroing in on teen-age girls. They have equal audience size. But if we can identify and document it, we might find that one is ideal for advertising prom gowns, another is ideal for advertising sports clothing and shoes, and the other is good at advertising movie tickets and concert tickets.

Or will it continue to be brawn and beef only. Biggest audience wins all the poker chips.

 

[amfmxm]

Re: A Question of Balance

People - especially young people - are searching for better content than many OTA radio stations are providing.

Nope..."better" is not their motivation. DIFFERENT is more what what they seek. More personalized to what they as individuals want. In fact, in most cases, they are seeking and enjoying obviously INFERIOR content that just happens to be more personalized.

Tell me where this takes us over a period of time. The major part of radio today functions where audience studies drive sales of advertising, and how to interpret those audience studies can be said to be primarily Ad Agency driven.

I hear you saying that radio in order to compete with Internet, broadcast wireless streaming and whatever else comes up against us has to deal with specialized niche audiences. Whether we can identify all the little trends or not, that is what is happening today. To be a surviving, thriving radio station you may have to go for a niche audience, but to sell today it has to be the biggest possible niche audience.

There was a time in our lifetimes when "gut intuition" of the advertiser had more input. If you were operating a station in farm country in Iowa, Nebraska, Illinois, Indiana and similar states, when it came time to sell advertising to the tractor dealer or the fertilizer dealer or the seed dealer, it didn't matter whether you had a bigger audience that the other station. If YOU had the FARMERS in your audience, or the advertiser from experience believed you had the farmers, you could have 20% of the audience the rock and roll station had, but YOU got the order. And sometimes that business came through an agency which understood that dynamic. Sports broadcasting can work the same way.

O.K. Back to current time: We can create very sophisticated computer analysis today that we used to not have. Will the time come when a station that has narrowed down to the personalized taste of a niche audience be able to sell, in the metro markets, a small audience that is the RIGHT audience? For the most part current and recent surveys give us age, sex of the audience, maybe income level can be factored in. Let's assume we have three stations zeroing in on teen-age girls. They have equal audience size. But if we can identify and document it, we might find that one is ideal for advertising prom gowns, another is ideal for advertising sports clothing and shoes, and the other is good at advertising movie tickets and concert tickets.

Or will it continue to be brawn and beef only. Biggest audience wins all the poker chips.

Different advertisers respond to different pitches/opportunities, and logic plays only one of the roles in the buying process. Many ad buys are still made on emotion. And the smaller the market, the more often this happens. Out there in midstate Nebraska, farm-formatted 880/KRVN still gets the big seed & feed buys even though Arbitron says CHR KQKY has five times their (Grand Island/Kearney) audience.

Regarding your prior comment on cartels, we're not quite there yet, but the 1996 Telecom bill has turned radio into an industry of oligopoly--control by a few. Though thousands of companies still participate in ownership, the majority of revenue generated from radio goes to a handful of players.

As far as there being too many radio stations, I would not have said this even five years ago, but now I wouldn't be shocked to see the FCC follow Canada's lead and provide some sort of method to move all commercial radio service to FM, and either leave AM for non-profits & community broadcasters--as an alternative to LPFM--or to protect only the hallowed "1-A Clears" and give the rest of the AM stations a deadline (10 years?) to shut down. Otherwise, the "survival of the fittest" model will drag on another hundred years...

 

[Radknowski]

Radio choked on its own vomit of greed, getting so big and cumbersome that, like a a 400 pound man attempting to play basketball, couldn't maneuver up and down the court.

I once thought (as was the FCC theoretical outline) the Docket 80-90 stations would provide localism and communities, moving the programming of small town AM's to FM, but that went down the drain as the 80-90's (1) couldn't compete, (2) became jukeboxes and (3) were santched up by the behemoths only to become the red-haired step children of their clusters.

Now we have 50kW AMs that run on the same life support that supports those 80-90's in the clusters. The great recession has already and will continue to do some very ugly things to the business of broadcasting as we know or knew it. It's not 1975 any more; hell, it's not even 2005 any more.

 

[radionut925]

Radio choked on its own vomit of greed, getting so big and cumbersome that, like a a 400 pound man attempting to play basketball, couldn't maneuver up and down the court.

I once thought (as was the FCC theoretical outline) the Docket 80-90 stations would provide localism and communities, moving the programming of small town AM's to FM, but that went down the drain as the 80-90's (1) couldn't compete, (2) became jukeboxes and (3) were santched up by the behemoths only to become the red-haired step children of their clusters.

Now we have 50kW AMs that run on the same life support that supports those 80-90's in the clusters. The great recession has already and will continue to do some very ugly things to the business of broadcasting as we know or knew it. It's not 1975 any more; hell, it's not even 2005 any more.

You got that right. Don't be surprised to see quite a few stations, especially those on the AM dial, disappear from the airwaves in the months--and years--to come. The way the economy is these days, it's anyone's guess how things might turn out.

 

[Goat Rodeo Cowboy]

You got that right. Don't be surprised to see quite a few stations, especially those on the AM dial, disappear from the airwaves in the months--and years--to come. The way the economy is these days, it's anyone's guess how things might turn out.

You may be right. There are many lines of business where we all could agree with your prediction. To many entries into the market. Times get tough. The market does it's thing and "thins the herd".

However. This IS radio. We have no idea how many people out there once upon a time in early life "played radio" and found it fun, but left to pursue money and made their fortune elsewhere. If the price get right, how many of them might return to buy themselves a "play purty"?

 

[amfmxm]

A lot of radio companies have been holding onto no-billing/low-billing AM licenses for years betting that the commission would one day move everything--AM & FM--into a new digital band, an idea that seemed to have gotten lost in the rush to do HD and its promise to give us all more channels than we can count.

A couple weeks ago Clear Channel pulled the plug on a perfectly good little AM facility in Winchester, VA. The land it was sitting on became (much) more valuable than the station. Didn't even try to shop the license--just sent it back to DC and turned off the lights.

We'll see a lot more of that in 2009. GRC is right--there may be some diletantes who will snag some as toys. But, hell, we've always had some of those! My hunch is, though, that this time it could be a flood of AM sticks going dark--and even the rich kids who want to play radio won't be able to keep up.

And, yeah, that could actually be something good for AM--and even radio in general.

 

[davideduardo]

A couple weeks ago Clear Channel pulled the plug on a perfectly good little AM facility in Winchester, VA. The land it was sitting on became (much) more valuable than the station. Didn't even try to shop the license--just sent it back to DC and turned off the lights.

It was more than just the land value. It was the near impossibility of getting reasonably priced replacement land that would work with the restrictive night DA, the NIMBY factor and legal costs, getting zoning and permits, etc., etc.

 

[johnbasalla]

I wonder how many owners have kept losing stations, particularly small AMs, on-the-air due to the idea that if they shut them down, they won't be able to sell them for the kind of price they'd like or sell them before the FCC steps in. A station that's off-the-air seems to become a rather dangerous thing to own the longer it is off, particularly if you want to profit from its sale. However the longer this economy stays in the tank, the less financially viable it may become to keep losers on-the-air.

 

[TheBigA]

A station that's off-the-air seems to become a rather dangerous thing to own the longer it is off, particularly if you want to profit from its sale.

I seem to recall that the FCC has a law about how long a station can remain off the air before forfeits its license. I can't remember what the length of time is, but a station can't simply shut down and expect to keep its license.

 

[SirRoxalot]

Fewer Stations? Monkey Business?

If a station isn't economically viable, it should turn in the license. If real estate, NIMBYs, or other factors make it impossible to operate in the COL, turn in the license.

That doesn't mean that there will be less radio service. Radio is an elastic medium. If a station shuts down in one locale, it opens up the frequency for another COL, or allows another station to increase coverage by expanding their signal through a power increase and/or directional antenna.

It would be interesting to see who'll benefit by having WTFX go silent on 610. It wouldn't surprise me if Clear Channel has a station on 610 that might be able to expand coverage in another area.

Whether "less" stations will mean "better" business remains to be seen. With all the cutbacks going on, certainly many stations are becoming "less" than they were.

 

[Goat Rodeo Cowboy]

I seem to recall that the FCC has a law about how long a station can remain off the air before forfeits its license. I can't remember what the length of time is, but a station can't simply shut down and expect to keep its license.

Maximum time to be silent is one year. I gather that you can go in and power the station up for a day or two one a year and keep the license from being cancelled.

Why would anyone pay the property taxes on the assets and keep a piece of paper alive for two or three years while being non-operational for all practical purposes?

1. To keep the frequency until a new application window opens up. There is a risk. What new rules will take effect prior to the next window. The last A.M. window was surprising to many of us. Because the FCC will no longer grant daytime-only CPs and licenses, wilting daytimers were a hot item as people signed contracts to buy them contingent on getting approval to move the license to another market.

2. In a small, rural market where the economy just makes it impractical to financially survive for now, the owner might have knowledge that a Japanese car company is negotiating to buy land for a new factor that will turn the town around. Or that the state government will eventually build a new prison, mental hospital or college in the area. Or someone who knows that the community will eventually be targeted for a "regional" retail shopping area. For years I have driven through South Portland, TN and been amazed at this Wal-Mart in the middle of nowhere. South Portland is slowing becoming a "new city". I haven't checked lately to see what has become of the dog-eared daytime AM station sitting there hanging for for dear life.

40, 50 years ago the raging topic in our country was the plight of farmers. Farmers like my dad were the big grinding national problem. Everyone knew you could no longer hack it with "40 acres and a mule" but it was a lifestyle that MUST BE PROTECTED. We have muddled along all these years and never has there been a coherent program on how to get from there to here in the farm world. About the only defense we have for struggling, small A.M. stations: "It is a lifestyle that ought to be protected."