Ownership De-Consolidation?

[Dighton Rockhead]

It was mentioned today in Tom Taylor's online newsletter that the new administration in Washington will likely advocate policies that will encourage large station groups to start selling off some of thier properties.

Should this come to pass......What could this mean for our own little corner of the world?

I've long held that the Telecom Act of 1996 did this market no favors.

Diversity in ownership wouldn't necessarily mean a BETTER situation here in RI/SE MA......but it can't get any worse than it is now?......

or could it? Thoughts, anyone?

 

[SqueakyWheel]

Coming from an old time radio family, the first thing I was taught about the radio business was that owners didn't make a lot of money until they sold the station. Be happy if sales revenue covered expenses and decent salaries(NOT astronomical salaries).

When the Wall Street types eyed the radio business as a profit generator, it was over. To have a excellent product in the biz does not jibe with short term gains.

The Public Service mandate, E.A.S., as much as we make fun of or would love to get around this stuff, the fact is the PUBLIC RADIO AIRWAVES are the number one way to communicate to the population, and GOVERNMENT has a obligation to our democracy to make sure they are not taken over by too few voices and opinions, and that public communication/information is available 24/7 in times of emergency. Who the hell has a battery operated internet connection, or (soon to be digital) T.V., for that matter.

We have our world wide communication now, thanks to the Internet. But we still need our locals around with their boots on the ground, because only local business owners can truly feel the pulse of BOTH of Radio's consumers, listeners and advertisers, to put out a product that satisfies the needs of both.

Competition in radio was stifled from the beginning due to finite bandwith available, without the goverment in essense forcing some diversity through ownership rules it would be too easy to have too few points of views expressed, and your society is reduced to group think..or worse. Normal rules of free market competition can't apply, Radio is too important.

The old 7 7 7 rule worked for a bunch of decades, bring it back!

 

[wknd92]

It is funny that this got brought up on Taylor's thing today because about a week and 1/2 ago I was having the same conversation over dinner with 2 people still in radio. The consensus was that the deregulation hurt the industry overall, led to less competition and less overall quality in markets/industry and that they should scale back to a mandate of owning 4 stations total in any market (2 FM max and 2 AM max) and an overall cap of total owned stations countrywide (maybe in the 150-200 ballpark).
The benefits would be to greater competition between the stations for ad dollars where not only reps; but ad firms would actually have to do some work and also reinvigorating the overall on air sound as there would be need for differentiation between stations.

 

[Speaker of Truth]

And just who wants to actually BUY all these stations?

CBS pretty much has their entire group up for sale, with some legendary calls avaliable..anybody seeing any takers?

For all the millions of words expended on this topic, even if you had an infusion of local owners, you'd still see stations on the bird for the most part..its still the most cost effective solution..no salaries no benefits, no worries..

You'd also see owners promoting their own political viewpoints..WSARs editorials come to mind...and all these "voices" wouldn't have an outlet in any case..

In case of emergency, I have a web enabled cell phone..to be entertained, I have two IPods...and the internet gets me any voice I want to hear..at any time I choose to hear them..

Radio can be important...but after having worked for local owners, and for corporate owners, give me the corporate guys anytime..at least you're told up front what's expected..and you have the tools to do what you need to do..

 

[SqueakyWheel]

Speaker of Truth, you've been lucky. Care to tell us who the "great corporate guys" are, and if they are still around? Are they hiring?

 

[Moonstruck]

Corporate radio has resulted in higher salaries (for some) and probably more resources available. The problem with jobs is when a decision comes down to cut people there isn't always a lot of logic behind it and the "lucky" ones who remain at the station end up having to work harder to take up the slack. Then you have the issue that there are always certain "stars" who don't have to work harder because they will always feel their job is to be an on air personality and nothing more. Stars eventually burn out though.

 

[wknd92]

Speaker of Truth, you've been lucky. Care to tell us who the "great corporate guys" are, and if they are still around? Are they hiring?

Cap Cities was a great corporation to work for, as was the old ABC. Looking back now, we didn't know how good we had it with Telemedia, either.

 

[oaktree]

Here's a problem. It will require much more work in changing the law and legislate such a downsizing, in my opinion.

Here's why:

There will be a hue and a cry from the big "consolidators." They will snivvle and cry and whine. A lot. The NAB will go ballistic.

Then, after that demonstration ... they'll all go behind closed doors, probably to their Wall Street bankers, and laugh ... really hard ... all the way to, well, you know ... where.

Why?

Because like Clear Channel, which developed the model in radio that we most know about (and others had been doing it for years,) corporations will go just like the "Baby Bells" of the telephone company did years and years ago.

The corporations will make a grand play to "break up" ... and, even, dissolve. BUT ... there will be "spin-offs." As in, "Oh, no ... we're not Clear Channel (or, fill in the blank, here ...) We're Aloha Trust, the Pineapple Broadcasting Company, or (pick a name here.) Or, we'll be called Clear Channel West, Clear Channel Aloha Hawaii, Citadel Northeast, etc. etc. etc.

And, the very same conglomerates will own huge gobs of each of the "break ups" ... like CapStar, Jacor, etc. etc. etc. and it will start all over again.

It's about $$$$ and lots of it, mostly private, because mom and pop or small regional banks won't touch radio as an investment. Wall Street has been burned from it. And it's high interest venture capital or equity firms like Lee-Bain who have desk drawers full of wonderful "small chunk" names that could divide a company to only reassemble it as a whole over time.

 

[SqueakyWheel]

Yes, the suits would cry, but the NAB should look at it as a way to increase membership

 

[Speaker of Truth]

"Squeaky Wheel", you're missing the point I was trying to make..

I worked for one Mom and Pop Operation in Missouri that refused to provide any health insurance to their employees..I worked for another in Illinois where the ownership simply cancelled the health insurance when they decided they wanted no role in paying for it..

That never happened working for a larger corporation..

Those of you who think working for a local owner is some sort of Nirvana have either never done it, or had far better experiences then I did..

At least with a larger corporation, you already know what to expect..with some local owners the rules change on a daily basis..

 

[SqueakyWheel]

Sorry, Speaker. Just trying to lighten things up a bit.

Back to serious, my family owned a small station, and you are correct, shoestring was the order of the day. In the 80's, working for Sandusky was great, ad and promo budget, research, all the toys the locals could not afford. So what happened to those days? Why was it working then, and not now?

I came across something on another post that made sense, that is that over the years, as companies have paid more and more for properties, more money needed to be made to pay back the nut, so the downward spiral began...instead of putting money in, it was(is) sucked out.

90+percent of us in the business don't get the six figure paychecks, never did, and knew getting into the biz it is (was?) a gypsy life if you wanted to move up the ladder. I never owned a piece of furniture I couldn't lift myself until I was in my 30's.

So I can't argue that a couple of decades ago corporations were better in general to work for than mom and pop outfits, but now it appears the corporations have turned into the local owners of old.

"...with some local owners the rules change on a daily basis.."

 

[oaktree]

Keep in mind, Clear Channel (and Bain-Lee) have high REVENUE expectations of at least 50% profit margins .... that why they buy low and sell high.

It is generally 14% higher in margins than other businesses in other sectors ... as well as radio.

They intend to "maximize" that figure of "making revenue."

 

[gr8oldies]

No, Mom and Pop radio was far from Nirvana. Ask anyone who ever worked for Vern Kaspar in Indiana! Basically, you had smaller stations owned by local businesspeople (sometimes car dealers, sometimes others) while larger market stations were owned by companies who made their living in another line of work (often financial or insurance companies, or in the case of RKO, tires). Other factors came into play, such as Docket 80-90, which sought to fill in the gaps between class B and C stations with Class A's, which brought new competition to established smaller stations, quickly bringing spot rates to the dollar a holler range, and forcing cuts in large air, news and sports staffs that were formerly employed in a standalone AM/FM combo, where it uised to be "us and the paper". No, we did not have broadcast utopia in the 60s, 70s, 80s and 90s. I don't honestly know how mom and pop radio would have been in any better position to fight the internet, satellites and all of the other new media.