More Consolidation is Not the Answer to Poor Business Decisions

[Theater of My Mind]

Fantastic editorial by @lanceventa. It echoes many of the things some of us have been lamenting on this discussion board for a long time, perfectly articulated and given the national exposure it deserves on RadioInsight.

This is possibly my favorite thing I've ever read from you. Kudos, Lance!

More Consolidation Is Not The Answer to Poor Business Decisions

In a speech at The Media Institute’s 2025 Communications Forum on Wednesday, NAB President/CEO Curtis LeGeyt reopened the push to

radioinsight.com

 

[Jean Luc]

Right on. In addition, owning more stations means borrowing more money, having more debt. And we all know how well that's worked for the big mega owners. Some people never learn. Given these companies' financial track records, only loan sharks would loan them more money. Funny, when even big companies owned a lot fewer stations and ownership was a lot more local, radio was a lot more profitable. Listeners have turned to "other options" not because they are there but because radio has become a much less attractive option. The money grubbers never have gotten radio.

 

[davideduardo]

Right on. In addition, owning more stations means borrowing more money, having more debt.

Station owners have used financing for more than 80 years to buy and build stations. The first thing you learn in college finance classes is that you borrow money at a lower rate than your anticipated rate of return on the investment.

And we all know how well that's worked for the big mega owners.

It worked just fine until the 2008 depression which was not in any of the computer-generated projections of "best to worst performance" that lenders use to evaluate loans. And the pandemic of 2020 is something the whole world has never seen. Add in the unanticipated negative effect on rates of the PPM and the more rapid than ever guessed expansion of the Internet and you have a "perfect storm".

Some people never learn. Given these companies' financial track records, only loan sharks would loan them more money.

The bad track records are on the part of the lenders, who did not anticipate either the 2008 economic collapse or the pandemic. It's not radio's fault here.

Funny, when even big companies owned a lot fewer stations and ownership was a lot more local, radio was a lot more profitable.

No, it wasn't. In the FCC financial reports from the 50's, half of all stations did not make money. Before consolidation in the early 90's, that figure was the same.

Listeners have turned to "other options" not because they are there but because radio has become a much less attractive option. The money grubbers never have gotten radio.

The banks don't run programming. But when ad revenue is down, inflation adjusted, by about 60% or more since 2000, stations have to cut expenses.

What you are not considering is that listeners want one-on-one programming, not one-to-many. Radio can not compete with that, but that is neither the lenders' nor stations' fault.

 

[lanceventa]

Station owners have used financing for more than 80 years to buy and build stations. The first thing you learn in college finance classes is that you borrow money at a lower rate than your anticipated rate of return on the investment.

It worked just fine until the 2008 depression which was not in any of the computer-generated projections of "best to worst performance" that lenders use to evaluate loans. And the pandemic of 2020 is something the whole world has never seen. Add in the unanticipated negative effect on rates of the PPM and the more rapid than ever guessed expansion of the Internet and you have a "perfect storm".

It worked after 2008 as well. Once the mobile revolution with the smartphone took hold in the early 2010s, legacy media became hard to sell to wall street and investors...

After the corporate renaming, a higher level executive at Audacy explained why they rebranded the company and Radio.com succinctly by noting there were not many names more toxic to investors than "Radio" and "Dot Com".

 

[Mediafrog+]

Fantastic editorial by @lanceventa. It echoes many of the things some of us have been lamenting on this discussion board for a long time, perfectly articulated and given the national exposure it deserves on RadioInsight.

This is possibly my favorite thing I've ever read from you. Kudos, Lance!

More Consolidation Is Not The Answer to Poor Business Decisions

In a speech at The Media Institute’s 2025 Communications Forum on Wednesday, NAB President/CEO Curtis LeGeyt reopened the push to

radioinsight.com

That article is the first time I’ve heard the proposal that FM-HD subchannels be mapped to “virtual” frequencies. So I suppose any HD subchannel could be mapped to any unused frequency in a market? Or perhaps to a “frequency” outside the FM band, such as 109.1, 112.5, 115.3, etc.

On a recent thread on one of the TV boards, there was discussion of “pointer channels” being used on ATSC 3.0 transmissions. These would be mapped as any other TV subchannel, but there is no actual video or audio being transmitted. Instead there is a data file that launches an online stream. Such pointer channels could be leased out to streamers for easy viewer access.

So an example would be a Channel 24.1 as a main OTA program, with 24.2, 24.3 and 24.4 also transmitted as OTA subchannels. But 25.5, 25.6, 25.7 etc. would launch streamers.

I suggested in that thread that radio could do the same thing, with virtual HD channels launching audio streams in a connected car.

Just letting my mind ramble a bit.

 

[Kent]

That article is the first time I’ve heard the proposal that FM-HD subchannels be mapped to “virtual” frequencies. So I suppose any HD subchannel could be mapped to any unused frequency in a market? Or perhaps to a “frequency” outside the FM band, such as 109.1, 112.5, 115.3, etc.

I believe mapping the subchannels to areas outside the current FM band was what was tested. It was significantly more popular in focus groups than the "stations between the stations." So, of course, the HD Alliance went with the layered "stations between the stations" approach that its own research said wasn't well-liked.

On a recent thread on one of the TV boards, there was discussion of “pointer channels” being used on ATSC 3.0 transmissions. These would be mapped as any other TV subchannel, but there is no actual video or audio being transmitted. Instead there is a data file that launches an online stream. Such pointer channels could be leased out to streamers for easy viewer access.

Seems like that was tested in Seattle when Sinclair owed the radio stations in addition to KOMO-TV 4. If you had an ATSC 3.0 capable of TV, you could dial up various combinations of 4.x and get the various radio stations in the cluster.

 

[lanceventa]

That article is the first time I’ve heard the proposal that FM-HD subchannels be mapped to “virtual” frequencies. So I suppose any HD subchannel could be mapped to any unused frequency in a market? Or perhaps to a “frequency” outside the FM band, such as 109.1, 112.5, 115.3, etc.

Go to page 4 of this SBE newsletter from 2006 that explains the research study Cox did and the rationale. In retrospect, they were 100% right.

https://www.sbe59.org/files/newsletter/0106.pdf

The FCC's rulemaking regarding it can be read here: Federal Register :: Request Access

 

[Delete My Account]

I know it's been repeated numerous times, but I'm skeptical of "half of all stations didn't make money."

Reason being, is if that was the case from the 50s to the 1996 Telecom act, how did so many of those stations stay on the air when many more than today were not owned by a large corporation who could sustain a non profitable part of their business? Especially when the limits were tighter on how many stations an individual company could own.

What I suspect was that many of these operations were profitable as "mom and pop" operations. They earned enough to be returned in salary to the owner/operators and didn't have surplus at the end of the year. And they weren't publicly traded, so unless we were party to a sale we wouldn't see the books.

I'm open to being shown otherwise, however.

 

[Deus Ex Machiato]

After the corporate renaming, a higher level executive at Audacy explained why they rebranded the company and Radio.com succinctly by noting there were not many names more toxic to investors than "Radio" and "Dot Com".

iHeart did a pretty good job of branding with both "radio" and "dot com" in the name.


I'm wondering aloud if Audacy considered what the listeners wanted. You know...the consumers of the product? Yes, investors are important, but some investors (cough cough, private equity and vulture capitalists) are only interested in extracting value for shareholders and then liquidating the carcass of the company when they've bled it dry.

 

[davideduardo]

I believe mapping the subchannels to areas outside the current FM band was what was tested. It was significantly more popular in focus groups than the "stations between the stations." So, of course, the HD Alliance went with the layered "stations between the stations" approach that its own research said wasn't well-liked.

When I was the HBC (Hispanic Broadcasting Corporation) representative/delegate to the HD Alliance, I took exception to the "stations between the stations" phrase as I thought it was confusing and suggested doing focus groups. The ugly phrase stayed, and that decision and the potential trade practices liability (collusion et. al.) caused us to drop out of the Alliance.

 

[TheBigA]

My take is the NAB thinks that because this FCC is republican that its leader is Ajit Pai. It's not. Carr is not going to do things that radio owners want.

Yes Carr talked about "outdated rules." But I don't see him changing ownership rules. What he's talking about is enforcing "public interest" rules. He will want owners to explain how more consolidation is in the public interest. The same question Michael Copps used to ask. Copps is a democrat. Carr's views about regulation are more in line with Copps than with Pai.

It's the job of the NAB to do what the owners want. We know owners want to loosen ownership rules. Brendan Carr doesn't care what media owners want. He works for a man who dislikes and distrusts the media. We can already see where he's going. Curtis LeGeyt has a tough job for the next four years. The fact that he's a democrat won't make it any easier.

 

[davideduardo]

iHeart did a pretty good job of branding with both "radio" and "dot com" in the name.

But they had established their brands before investors turned negative towards "radio" and, maybe, "dot.com". And we are talking about painting an image for investors, not listeners.

I'm wondering aloud if Audacy considered what the listeners wanted. You know...the consumers of the product? Yes, investors are important, but some investors (cough cough, private equity and vulture capitalists) are only interested in extracting value for shareholders and then liquidating the carcass of the company when they've bled it dry.

The "Audacy" name was implemented to change investor perception, not listener attitudes. To listeners, each station had its name or call letters by which they identified.

 

[davideduardo]

I really don't think owners are looking to own more stations. I think they're trying to lose less money. The real problem is finding money. The fact that Audacy went to George Soros, that tells you a lot.

What tells you even more is how and why Soros funds financed the purchase of the kennel full of dog stations and markets from Univision. They have made no successful and profitable change in programming and there has been a constant turmoil in the management structure. If that purchase was indented to create some kind of collection of "progressive" radio stations, after two years there is essentially nothing remarkable that has been done except for the destruction of WAQI in Miami.

 

[TheBigA]

If that purchase was indented to create some kind of collection of "progressive" radio stations,

As you know, I never believed that story. I also don't believe he invested in Audacy to affect its programming. Contrary to what Carr thinks.

 

[TheBigA]

The industry that will benefit the most from this FCC is the ISP business. Carr is looking to get every home connected to the internet. He is looking to cut ISP regulations, and direct federal funds to construction. That's not a positive for broadcasters. During Biden, he kept asking why the FCC wasn't doing more to use the money appropriated in the infrastructure bill to making internet more affordable. That's his interest. He visited North Carolina last week primarily to see how the telecom situation is, and if they need to do more for cell service. He didn't seem to care about the radio stations in the area. To him, what some call mainstream media is a problem.

While I could nitpik Lance's commentary, I mainly disagree with the premise. I don't expect this FCC to agree to any real changes to the ownership riles.

 

[Rusty Muck]

The problem is simple: radio failed to adapt to the times, hitched itself to the wrong wagon with HD Radio, and found itself left behind by streaming devices and the smartphone while at the same time failing to ditch AM behind entirely under the idyllic definition of it being "the place to go to in the event of an emergency".

The Radioplayer app should already be here and made standard in all cars, but neither of those will happen, and it'll be further self-sabotage.

Further consolidation in radio wasn't going to happen anyway and that the NAB is still continuing to push that idea just shows how out of touch they are. It's amazing.

 

[davideduardo]

As you know, I never believed that story. I also don't believe he invested in Audacy to affect its programming. Contrary to what Carr thinks.

Then the real question is, “why in the world did they buy a whole bunch of terrible radio stations”

For many years, I was responsible for the programming and research for all those markets and stations. I am familiar with the facilities, many of which are very bad and more than half of which are AM only. If not for political reasons, I can find no justification for having made the purchases.

 

[TheBigA]

Then the real question is, “why in the world did they buy a whole bunch of terrible radio stations”

Soros is not Musk. He seems to give his money to likeminded people to empower their goals, whatever they are. He doesn't tell them what to do with the money. It's up to them. So these two women were out of work and had what they thought was an idea. They just needed money. He helped empower them to accomplish what they wanted. Unfortunately they have no idea what they're doing. If their intent was to use the stations to influence the 2024, they failed. If Soros invested in Audacy with the goal of influencing the 2024 election, he failed. But I don't believe that was his intention.

 

[Kent]

I know it's been repeated numerous times, but I'm skeptical of "half of all stations didn't make money."
Reason being, is if that was the case from the 50s to the 1996 Telecom act, how did so many of those stations stay on the air when many more than today were not owned by a large corporation who could sustain a non profitable part of their business? Especially when the limits were tighter on how many stations an individual company could own.

Keep in mind that many, if not most, radio stations were part of larger businesses. They served a purpose, even if they lost money. Someone I work with is part of a family that owns radio stations. The family also owned electronic stores. It might have one left, but most of them have closed. The radio stations were in and near small towns that were never going to sustain them, but they were great for showcasing the stereos and guaranteed all the equipment in the store could have audio to show off to the customers. The radio stations were run on a shoestring budget but never made much, if any, money. The stereos and aftermarket installs were the high margin products, and the money made off of those justified the radio stations’ existence.

It’s also not an accident that insurance companies were among the early adapters of radio. Again, they could afford to lose money on the radio stations if their customers listening reduced their claims based on information they got off the radio.

Pure play radio companies are a fairly new concept. Most mom and pop operators also had their hands in other businesses as well. That might not be the only reason money losing stations stayed on-air, but it’s a big one. Also, don’t forget that stations have been going dark and not returning for decades. I can remember stations going dark in the 80’s, and it wasn’t a rare phenomenon even then. At the time, there was no one year shot clock to get back on-air. I can think of a handful of stations that were gone for several years and mysteriously returned. That’s not possible now. Well, it’s not if the owner follows the law, anyway.

 

[TheBigA]

The problem is simple: radio failed to adapt to the times

You need to look at the timeline. The industry that failed to adapt to the times was the music business. They were still wedded to the physical product model as late as 2005. Their response to napster was to sue. They sued napster and they sued the users. Bad PR to sue unwed mothers or college kids.

The early investors in satellite radio were radio companies and ex-radio people like Lee Abrams. I attended the congressional hearings on satellite radio on behalf of a radio company interested in investing. However, internet radio in the 90s was pretty rough, because the internet was slow. We're talking about the era of dial-up internet and AOL. So the idea of a big radio company getting into streaming in the 90s was not practical. The infrastructure wasn't ready for that kind of thing until 2004. Once the iPhone was available, that changed everything.

But there was a lot of interest on the part of radio companies in the 90s to find other platforms beyond broadcasting.