More Consolidation is Not the Answer to Poor Business Decisions

[ted chittenden]

The "two of us" were talking about radio on a trip from Palm Springs to LA and back today. My question, part way through the trip to LA, was "have you thought about listening to a traditional radio station instead of our car system's choices of Sirius/XM and Apple CarPlay?"

The answer was "no". The main reason was the 14 minutes or so of ads each hour. We talked about how ads "used to be much more fun" in the era of "sooner or later, you'll own General" or "Double your pleasure, double your fun..." Today's ads for "if you have been disabled or maimed in an auto accident" and other intense hard-sell messages are hard to listen to, back to back, for 7-minute stopsets filled often with 15 to 20 ads that are 30" and even 15" long.

I agree with you about the commercials. I would also add that what is being sold over the air (and also through online simulcasts) mostly has to do with sex and other bodily functions. I almost never hear McDonald's or Domino's Pizza ads anymore; in fact, out of all of the fast food franchises, the only group I regularly hear ads for now is Wendy's.

Something else is bothering me about the current advertisement market that I think is also reflective of how many new radio stations wish to break into the field. When I listen to old top 40 airchecks on Youtube and other places, I'm strongly reminded about how many small local businesses advertised on the radio. Stations certainly participated in national ad campaigns from big businesses, but there was a very healthy dose of mom-and-pop ads as well from the smallest towns to the biggest cities. Now those mom-and-pop ads (and in some cases businesses) are almost completely gone from the ad buys, and more and more stations are relying either only or primarily on national ad buys.

So now, not only do you have to sit through 7-minute ad sets but they are all for the same body products from the same national advertisers you would hear everywhere else. And I can see nothing in the future that will buck these trends.

 

[Radio Bob]

I agree with you about the commercials. I would also add that what is being sold over the air (and also through online simulcasts) mostly has to do with sex and other bodily functions. I almost never hear McDonald's or Domino's Pizza ads anymore; in fact, out of all of the fast food franchises, the only group I regularly hear ads for now is Wendy's.

Something else is bothering me about the current advertisement market that I think is also reflective of how many new radio stations wish to break into the field. When I listen to old top 40 airchecks on Youtube and other places, I'm strongly reminded about how many small local businesses advertised on the radio. Stations certainly participated in national ad campaigns from big businesses, but there was a very healthy dose of mom-and-pop ads as well from the smallest towns to the biggest cities. Now those mom-and-pop ads (and in some cases businesses) are almost completely gone from the ad buys, and more and more stations are relying either only or primarily on national ad buys.

So now, not only do you have to sit through 7-minute ad sets but they are all for the same body products from the same national advertisers you would hear everywhere else. And I can see nothing in the future that will buck these trends.

I couldn't agree more. At the first station I worked at in the middle 60's I only remember one maybe two national buys. Everything else was local. We did about 20K a month which was great for the 60's. By the 90's I had moved on but a friend who worked there fished a list of their agency sales out for me. They were doing 15 to 20K a month from agenys and the four sales guys from the 60's were long gone. They only now had one local salesman. Of course when 2008 hit they had no local sales staff to fall back on and began laying off and automating away the local feel.

 

[TheBigA]

The answer was "no". The main reason was the 14 minutes or so of ads each hour.

From Edison Research:

1. The percentage of daily time spent with ad-free audio has grown by 34% since 2015. As of Q1 2022, 39% of listening done by those age 13+ is to ad-free audio, up from 29% in 2015.

2. The rate of change for younger people is even higher, as the daily time spent with ad-free audio among those age 13-34 has risen by 43% since 2015. As of Q1 2022, 50% of daily listening done by age 13-34 is to ad-free audio, up from 35% in 2015. It’s notable that half of all daily audio consumed by 13-34-year-olds in the U.S. is ad-free.

The problem is that radio has no other revenue stream that can replace commercials. They're in a catch 22. They can't cut the number of commercials and they can't increase the price. Programmers know what the problem is, and there's nothing they can do about it.

 

[Theater of My Mind]

Scenario one: More consolidation is allowed, and radio companies that are already doing poorly double down on what they're currently doing. Radio descends further into mediocrity and continues its decline.

How much further can radio descend into mediocrity at this point, though? I know, every time it seems like it has hit the lowest possible point, there's another round of something that makes it even worse. But is there anyone at all still creating exciting, innovative programming on the radio right now?

 

[TheBigA]

But is there anyone at all still creating exciting, innovative programming on the radio right now?

Sure! Lots of people. Depends on what you consider "innovative."

 

[TheBigA]

This article says Brendan Carr may be open to loosening some ownership limits:

Brendan Carr: FCC Needs To ‘Move Very Quickly’ To Help Local Broadcasters.

FCC Chair Brendan Carr is giving a strong indication which way the regulatory winds are blowing at the Federal Communications Commission as it approaches the still-pending 2022 quadrennial media ownership

www.insideradio.com

I'm surprised at this. I'd been led to believe Carr didn't like big media. Here's what he says:

“Fundamentally, advertising is what supports local journalism and big tech companies have been taking so many of those local ad dollars. So, the FCC needs to not sit idly by,” Carr said. In an interview with News Nation, Carr said the move to relax some media rules limits the scale that local operations can build, and believes there is a “very bright” future for local news. He said that efforts to promote ownership and programming diversity in media have been well-intentioned, but Carr thinks the real-world impacts have been devastating. Carr thinks the current FCC rules limiting an owner to eight stations or less in a market are based on “misguided” views of diversity of ownership. “The reality is we need to let some of these broadcasters get to scale so they can hire the local reporters,” he said.

The fact is we really only see full time all news stations in major markets.

 

[davideduardo]

The fact is we really only see full time all news stations in major markets.

And the reality is that it takes a huge population to generate the kind of rates needed to sustain all news formats. Those stations get low TSL and depend on a higher cume to get a formula of TSL and cume that justifies higher rates.

In small markets, there is not a big cume base, and the format is limited by not having as much big local news to report on. And rates are lower, proportional to the population.

When NBC tried an all news network in the later 1970's, it failed. First, it was mostly non-local news. Second, the local stations did not have enough money to insert good local content in the local news windows in the format. And smaller market size did not allow for a full news staff.

Today, radio news listeners are older. Most are out of sales demos. The FCC commissioners can wish for all they want, but they can't make advertisers use a medium that does not reach their client base.

No matter what an FCC person says, there is no way all news can be done in smaller markets.

 

[TheBigA]

Those stations get low TSL and depend on a higher cume to get a formula of TSL and cume that justifies higher rates.

The news clock is partly to blame. The clock is built on a story cycle that has a lot of repetition. The original phrase used by Group W news stations was "You give us 22 minutes, we give you the world." The bad news is they repeat the same stories three times an hour. CNN used to do that as well. This is why the news format evolved to news/talk. It's cheaper and less repetitive, so it gets higher TSL.

 

[RadioGuy1864]

All news can not work in small markets. News/Talk can work (for now) in middle markets, but it's still an expensive format to run.

 

[davideduardo]

All news can not work in small markets. News/Talk can work (for now) in middle markets, but it's still an expensive format to run.

Most smaller market news/talk stations are really Talk stations, and they only have national news feeds. Since it is all networked programming, it is very cheap to run.

 

[davideduardo]

The news clock is partly to blame. The clock is built on a story cycle that has a lot of repetition. The original phrase used by Group W news stations was "You give us 22 minutes, we give you the world." The bad news is they repeat the same stories three times an hour. CNN used to do that as well. This is why the news format evolved to news/talk. It's cheaper and less repetitive, so it gets higher TSL.

The real reason why medium markets dropped all news was the cost and the demos. Not TSL.

In the top 20 market where at different times I worked with two all-news stations, at one point we had four of them, all on AM. But about 20 years or so ago, the age of the listeners started biting them all. So gradually two of them added talk segments outside of AM and PM drive, and the other two dropped the format due to costs.

In the last 15 years, the morning and afternoon all news blocks became news heavy talk shows, mostly based on current events and with detailed news on the hour and half hour. Those moves allowed both stations to stay in the top 10 in 12+, and gave enough 18-49 to be attractive to agency buys.

Since that market is almost 100% local agency driven, many advertisers like the news/talk stations and ask for them to be included in buys, even if the demos are old.

 

[TheBigA]

The real reason why medium markets dropped all news was the cost and the demos. Not TSL.

The demos aren't any better if they switch to the talk format. All that happens is the older demos listen longer. That doesn't help with agency buys.

What Carr is talking about is using the FCC to help fund the hiring of at least one news reporter. That's what he's saying here: "The reality is we need to let some of these broadcasters get to scale so they can hire the local reporters.”

The other part of his "carrot & stick" is that he then uses the FCC to attack the specific reporting he doesn't like.

 

[davideduardo]

The demos aren't any better if they switch to the talk format. All that happens is the older demos listen longer. That doesn't help with agency buys.

Actually, the demos are quite a bit better for talk formats. In the two cases I mentioned, dropping all news... first in daytime and night... and then 24/7 lowered the average age by about 12 years.

What Carr is talking about is using the FCC to help fund the hiring of at least one news reporter. That's what he's saying here: "The reality is we need to let some of these broadcasters get to scale so they can hire the local reporters.”

The problem is that most stations don't want news. When we had the requirement to have at least 8% News and PA for AMs and 6% for FMs, music stations did everything they could to hide the news and PA in overnights and Sunday morning.

The other part of his "carrot & stick" is that he then uses the FCC to attack the specific reporting he doesn't like.

In any case, having a "reporter" is of no use unless you have a news anchor or news department. Most stations today have neither. And listeners to most formats do not want them, either.

 

[TheBigA]

Actually, the demos are quite a bit better for talk formats. In the two cases I mentioned, dropping all news... first in daytime and night... and then 24/7 lowered the average age by about 12 years.

That may be true in your case, but nationally, the median ages are about the same. All News is 59.8 and News/Talk is 59.4. All talk is 62.1.

Also nationally, adding talk also shifts the audience more male from 54% in all news to 62% in all talk. News/talk is 56% male.

In any case, having a "reporter" is of no use unless you have a news anchor or news department. Most stations today have neither. And listeners to most formats do not want them, either.

I'm just conveying what Carr is saying. You need to speak with him. As I said, he's playing the carrot & stick approach, advocating more local news while attacking stations that provide it. He's also against using federal funds to support local news. CPB has been directing some of its funding specifically for local news staffing, and the NPR local news training service is paid for by a grant from CPB.

How stations are enhancing statehouse journalism with CPB funding - Current

With its latest round of funding, CPB has invested $4.9 million in its state government initiative.

current.org

 

[AMRadioGuy]

I keep hearing the phrase about "new & innovative operators." Why would a new & innovative operator use an old & obsolete distribution system?

What people want is for somebody else to spend somebody else's money and play what I want on the radio.

Well, one reason might be because I'm not sure if radio needs to just be an old & obsolete distribution system.

It could have been that in the 50s when radio dramas moved to TV. The way radio had been done, with the big networks and syndicated programs, was obsolete. It moved to TV. The dramas, the variety shows. Instead of shifting the blame over to the new medium, owners innovated and top-40 became a thing. I get that digital is a thing. No question about it. But I don't believe broadcast radio is obsolete as a medium. It just needs to innovate. How, I'm not sure. But it's always easier to find fault than find new ways for an old thing to be relevant.

 

[TheBigA]

Instead of shifting the blame over to the new medium, owners innovated and top-40 became a thing.

The device known as the radio continued to be available in homes. That situation has changed. The device known as a radio is what's become obsolete. Not the programming, nor the concept of wireless transmission. Radio companies don't control the device, as they did in the 40s and 50s. Back then, the companies that owned radio stations also owned radio manufacturing companies. That entire business moved to China. Today, for most people, the audio device is a phone, not a radio. The problem with broadcast radio today won't be improved with a new format. Any possible music format you can think of is already available.

 

[AMRadioGuy]

The device known as the radio continued to be available in homes. That situation has changed. The device known as a radio is what's become obsolete. Not the programming, nor the concept of wireless transmission. Radio companies don't control the device, as they did in the 40s and 50s. Back then, the companies that owned radio stations also owned radio manufacturing companies. That entire business moved to China. Today, for most people, the audio device is a phone, not a radio. The problem with broadcast radio today won't be improved with a new format. Any possible music format you can think of is already available.

I don't think it's that simple, because if the device itself was the issue, why haven't radio stations had much success with their online streams? Digital devices are the new "radios." When I go look at the ratings publicly available (and I know they don't tell the whole story) the streams do peanuts usually in comparison to the on-air signals.

To me, at least, that would suggest that the issue is a bigger one than a physical radio being obsolete.

 

[TheBigA]

I don't think it's that simple, because if the device itself was the issue, why haven't radio stations had much success with their online streams?

It depends on the station. My take is that Nielsen isn't set up to really count people listening to radio online. The stations themselves can see actual usage numbers from their ISPs. That's the number SoundExchange uses to charge royalties, not Nielsen. What we're seeing is a big difference between those public numbers and what stations see internally.

 

[ted chittenden]

The other part of his "carrot & stick" is that he then uses the FCC to attack the specific reporting he doesn't like.

I would amend the end of your last sentence to read: "...and then uses the FCC to attack the specific reporting his boss doesn't like." If I remember what I once heard correctly, Carr shied away from going after reporters in 2022 when he was asked about it; so I rather think he is using the "carrot and stick" now to show his loyalty to the currently sitting U.S. President.

 

[TheBigA]

I would amend the end of your last sentence to read: "...and then uses the FCC to attack the specific reporting his boss doesn't like." If I remember what I once heard correctly, Carr shied away from going after reporters in 2022 when he was asked about it; so I rather think he is using the "carrot and stick" now to show his loyalty to the currently sitting U.S. President.

It's hard to tell where one ends and the other begins. The main thing I notice is that all of his news media investigations are being started by him individually, not by the full bank of FCC commissioners. So he's using the FCC to pursue his agenda, not that of the Commissioners as a whole.