Question about the Radio Owners

[Surfer]

Of the major radio owners (Clear Channel, Citadel, Cumulus, Beasley, etc.), which one do you think really knows how to run their business profitably? Forget the programming side of the business and simply focus answers on $$$. While we all agree stock prices suck for all of them, some seem to have a better time monitoring their cash flow and not dipping into the red. I'm interested in what everybody thinks.

 

[TheBigA]

That's a hard question to answer because knowledge of how to run a business isn't enough. It implies that the circumstances in that business will remain unchanged, and that you win or lose simply on the abilities or knowledge of the people. That's not always the situation.

No doubt, the circumstances behind running radio has changed. None of the stock-based companies are doing well. That means there are either a whole lot of stupid people (which is possible) or it's taking time to adapt and change the focus of these companies to the current environment.

My view about this is that large corporations have always owned radio, from Westinghouse in the 20s to insurance companies like Lincoln Financial today. What has changed is that most of these larger companies were diversified companies, and radio was simply part of their portfolio. Today, you have stock-based companies in which radio is their only asset. I think that was a mistake. It's like putting all your eggs in one basket. Now that the sands have shifted, everyone is rushing around investing money in new businesses to go where the money is. That scares off investors until something becomes a hit.

I don't think any company is ignoring the changes or trying to find new ways to make money on their assets. We're just in a period of transition, and it won't help investments until a clear direction is seen.

 

[12 In a Row]

The Big A, I agree.

So many are quick to point the finger at the large corporations for the state of today's radio.
Any investor, large or small should NEVER put all of their money in one place, as taught in Economics 101.

Just a decade or so ago, owning a successful local newspaper, radio or tv station was a license to print money.

How many of us would have thought the internet would have such a HUGE impact by 2008?
Just a few short years ago, if you wanted to be entertained and informed, you NEEDED the paper, radio and tv.
How many of us could have predicted a bad economy that only looks like it's going to get worse before it gets better?
Major advertisers are shifting away from the norm in addition to be forced to cut their own budgets.

You are correct, until the sands shift, settle down and there is a clear direction, no one in their right mind will invest.

 

[dgendvil]

I know we've seen this before in the late 80's & early 90's when some owners we're in the red because radio was now profitable instead of being a loss leader, & that was before they had the telecom act of '96. Is that correct?

 

[Goat Rodeo Cowboy]

I know we've seen this before in the late 80's & early 90's when some owners we're in the red because radio was now profitable instead of being a loss leader, & that was before they had the telecom act of '96. Is that correct?

I'm sorry. You want to translate what you typed into what you meant to say? Owners in the red because they become profitable? They were in the black when they were loss leaders?

Al Kelly, God rest his sould, would be proud of you. ;D

 

[smedge2006]

How many of us would have thought the internet would have such a HUGE impact by 2008?
Just a few short years ago, if you wanted to be entertained and informed, you NEEDED the paper, radio and tv.
How many of us could have predicted a bad economy that only looks like it's going to get worse before it gets better?
Major advertisers are shifting away from the norm in addition to be forced to cut their own budgets.

This assumes that radio CEOs did nothing to shoot themselves in the foot in the past 15 years, such as -- chasing the baby boom through 25-54 and ignoring younger demos until they finally started ignoring radio, consolidating and de-localizing their stations, putting hundreds if not thousands of people out of work in the 90's (well before the impact of new technologies) just to pad the bottom line, cutting local content of all sorts including local news, etc. etc. etc.

 

[TheBigA]

ignoring younger demos until they finally started ignoring radio

I keep reading this, and it's a myth. No one is "ignoring younger demos." Lots of stations program directly to them. Heck, Disney Radio is aimed at kids!

And the ratings show that the younger demos don't ignore radio. Just mix it with other media. Which is fair.

consolidating and de-localizing their stations

That's also a bit of an exaggeration. Radio is still the most local medium by far. Even more local than most newspapers in terms opf percentages. Certainly more local than TV.

putting hundreds if not thousands of people out of work in the 90's (well before the impact of new technologies) just to pad the bottom line, cutting local content of all sorts including local news, etc. etc. etc.

Local news on music stations was gone before the 90s. Replaced by stations that program news 24/7. So there's still lots of local news on the radio. As for putting people out of work, I'd say that issue has hit all employers except the government.

 

[amfmxm]

ignoring younger demos until they finally started ignoring radio

I keep reading this, and it's a myth. No one is "ignoring younger demos." Lots of stations program directly to them. Heck, Disney Radio is aimed at kids!

And the ratings show that the younger demos don't ignore radio. Just mix it with other media. Which is fair.

consolidating and de-localizing their stations

That's also a bit of an exaggeration. Radio is still the most local medium by far. Even more local than most newspapers in terms opf percentages. Certainly more local than TV.

putting hundreds if not thousands of people out of work in the 90's (well before the impact of new technologies) just to pad the bottom line, cutting local content of all sorts including local news, etc. etc. etc.

Local news on music stations was gone before the 90s. Replaced by stations that program news 24/7. So there's still lots of local news on the radio. As for putting people out of work, I'd say that issue has hit all employers except the government.

1. Re ignoring young demos. Disney is the huge exception, and their focus on kids 6-12 relates more to development of their TV audience and themepark biz than ad revenue. Teens (12-17) have been ignored by radio programmers in nearly every market for at least 30 years for the same reason radio has largely ignored 55+ adults--no demand by ad agencies and little demand by direct advertisers. The radio industry started slicing itself up into fairly small demographic segments around 1975, roughly the point when Arbitron emerged as the industry standard. Prior to that point, mass-appeal programming allowed stations to target teens as part of a larger "young adult" approach--sold as "18-34."

2. Whether radio is still "local" or not really depends on the market. Certainly, in the largest markets most top radio stations are programmed locally and fully staffed by local talent, or nearly so. In hundreds of smaller markets, though, local content is a rare commodity. It is not uncommon in very small markets to have one or two people running 5 or 6 radio stations--basically keeping an eye on the automation.

3. Local news on radio is ordinarily "kiss and a promise" news--two or three headline stories ripped directly from the local newspaper, sometimes rewritten and sometimes not. Yes, there are exceptions, but even in large markets, very few radio companies actually employ reporters. Just anchors--and usually just one, serving a half-dozen stations.

4. The entire philosophy of Mergers & Acquisitions that swamped radio upon the arrival of Wall Street is to buy as many business units of the same industry as the law allows, combine them to eliminate duplication by firing most of the staff, and show immediate & enormous gains in cash flow--then sell the resulting shell to the next Greater Fool. In radio, the play took about a dozen years. There are few of us left. Yes, we saw thousands--tens of thousands--of our co-workers get blown out.

 

[TheBigA]

Teens (12-17) have been ignored by radio programmers in nearly every market for at least 30 years for the same reason radio has largely ignored 55+ adults--no demand by ad agencies and little demand by direct advertisers.

I think you're overstating the issue. CHRs are built largely around teens and 20s. One of the scary things about the music people that age like is it's so obscene and violent that it can't be played on the radio. I hear it when someone that age drives past me with their windows open. There's a large demand for people under 25 by advertisers. That is the age of greatest disposable income and fewest responsibilities, and when buying habits are formed. Some advertisers have decided that TV is a better value than radio. But it's not because they don't want to reach that demo.

In hundreds of smaller markets, though, local content is a rare commodity. It is not uncommon in very small markets to have one or two people running 5 or 6 radio stations--basically keeping an eye on the automation.

Once again, overstating the situation. The big companies have all but deserted small markets. You go to places like Cumberland Maryland or small towns in the Dakotas and it's all locally owned and managed. Sure they automate some formats, but at least one or two stations are live and local. One of the biggest problems in radio is that even in very small towns, the population hasn't grown in 20 years, but there are twice as many radio stations. It's hard to operate when costs go up and ad rates go down.

Local news on radio is ordinarily "kiss and a promise" news--two or three headline stories ripped directly from the local newspaper, sometimes rewritten and sometimes not. Yes, there are exceptions, but even in large markets, very few radio companies actually employ reporters. Just anchors--and usually just one, serving a half-dozen stations.

I got started reading rip & read 30 years ago in a medium market. Tell me something new. Have you looked at the reporting in small local papers lately? They don't have any reporters either. Even the local stories come from AP. This is why radio and newspapers need to pool resources. The government opposes this idea. Too much "media concentration," they say. But it's better than no media at all.

The entire philosophy of Mergers & Acquisitions that swamped radio upon the arrival of Wall Street is to buy as many business units of the same industry as the law allows....

The only difference between this and what existed before is that before, companies owned radio as part of a collection of properties. Several insurance companies owned radio as part of diversified holdings. What happened in 2000 is that you had radio-only companies. The only problem with that is you put all your eggs in one basket.

I don't think anyone bought stations with the idea of selling them. But the ownership situation in radio by the 1990s had degerated to the point where most of the original radio owners, like NBC and others, were looking to get out. There were twice as many stations as there had been in the 70s, and that meant that owning only a couple stations per market was unrealistic. That's why the ownership rules were changed, since it took three times as many stations to reach the same number of people as you could with a couple stations in the 60s. Economies in personnel had already begun, with stations using engineering services instead of hiring chief engineers. They were using automation, but it wasn't custimized or directable to specific markets. Once you had Proffit Systems in 1993, you could create localized programming from a centralized source. But all this precedes deregulation.

Employment in any business changes as the marketplace changes. The only jobs for life are in the Supreme Court and ministry. Otherwise, you're an at-will employee. The growth area in radio now is in new media. Young people are getting their entertainment from other devices besides the radio, so it's up to radio to be where the audience is. Which gets back to point #1. Radio wants younger audiences, and that's why they're making the push towards new media.

 

[amfmxm]

Teens (12-17) have been ignored by radio programmers in nearly every market for at least 30 years for the same reason radio has largely ignored 55+ adults--no demand by ad agencies and little demand by direct advertisers.

I think you're overstating the issue. CHRs are built largely around teens and 20s. One of the scary things about the music people that age like is it's so obscene and violent that it can't be played on the radio. I hear it when someone that age drives past me with their windows open. There's a large demand for people under 25 by advertisers. That is the age of greatest disposable income and fewest responsibilities, and when buying habits are formed. Some advertisers have decided that TV is a better value than radio. But it's not because they don't want to reach that demo.

In hundreds of smaller markets, though, local content is a rare commodity. It is not uncommon in very small markets to have one or two people running 5 or 6 radio stations--basically keeping an eye on the automation.

Once again, overstating the situation. The big companies have all but deserted small markets. You go to places like Cumberland Maryland or small towns in the Dakotas and it's all locally owned and managed. Sure they automate some formats, but at least one or two stations are live and local. One of the biggest problems in radio is that even in very small towns, the population hasn't grown in 20 years, but there are twice as many radio stations. It's hard to operate when costs go up and ad rates go down.

Local news on radio is ordinarily "kiss and a promise" news--two or three headline stories ripped directly from the local newspaper, sometimes rewritten and sometimes not. Yes, there are exceptions, but even in large markets, very few radio companies actually employ reporters. Just anchors--and usually just one, serving a half-dozen stations.

I got started reading rip & read 30 years ago in a medium market. Tell me something new. Have you looked at the reporting in small local papers lately? They don't have any reporters either. Even the local stories come from AP. This is why radio and newspapers need to pool resources. The government opposes this idea. Too much "media concentration," they say. But it's better than no media at all.

The entire philosophy of Mergers & Acquisitions that swamped radio upon the arrival of Wall Street is to buy as many business units of the same industry as the law allows....

The only difference between this and what existed before is that before, companies owned radio as part of a collection of properties. Several insurance companies owned radio as part of diversified holdings. What happened in 2000 is that you had radio-only companies. The only problem with that is you put all your eggs in one basket.

I don't think anyone bought stations with the idea of selling them. But the ownership situation in radio by the 1990s had degerated to the point where most of the original radio owners, like NBC and others, were looking to get out. There were twice as many stations as there had been in the 70s, and that meant that owning only a couple stations per market was unrealistic. That's why the ownership rules were changed, since it took three times as many stations to reach the same number of people as you could with a couple stations in the 60s. Economies in personnel had already begun, with stations using engineering services instead of hiring chief engineers. They were using automation, but it wasn't custimized or directable to specific markets. Once you had Proffit Systems in 1993, you could create localized programming from a centralized source. But all this precedes deregulation.

Employment in any business changes as the marketplace changes. The only jobs for life are in the Supreme Court and ministry. Otherwise, you're an at-will employee. The growth area in radio now is in new media. Young people are getting their entertainment from other devices besides the radio, so it's up to radio to be where the audience is. Which gets back to point #1. Radio wants younger audiences, and that's why they're making the push towards new media.

Big A--

Cumberland, Maryland? Nearly all the stations there are owned by a couple of out-of-town newspaper companies. The Dakotas? As you may recall, the "Minot Case" has become infamous (fairly or not) as the great example of Clear Channel's devastating impact on small markets. You're just taking stabs in the dark, aren't you?

I'm not interested in insulting you, but your observations seem to show a partial understanding of these issues. Are you coming at it from a large-market perspective? Station management or elsewhere? I've worked in both large and small markets as a GM or Market Manager for the past 30 years or so, and can't say that my observations quite square with your take.

As unpleasant as it may be, read both books released this year on Clear Channel, "Clear Vision" by Reed Bunzel (authorized, underwritten & published by Clear Channel) and "Right of the Dial," by Alec Foege. In "Clear Vision" Lowry Mays brags that he worked 10 years deregulating radio leading to the Telecom Bill of 1996. One of his sons (Mark, I believe) likewise brags that their inside knowledge of the Telecom Bill put them so far ahead of the rest of the industry that they had an 18-month headstart in the merger & acquisition game. It allowed them to make billions at everyone else's expense, and they've left a shell of an industry in their wake.

Any parallel you notice with this week's national financial crisis is not coincidental. It's deregulation gone wild.

 

[Goat Rodeo Cowboy]

That's also a bit of an exaggeration. Radio is still the most local medium by far. Even more local than most newspapers in terms opf percentages. Certainly more local than TV.

[\quote]
.....

Local news on music stations was gone before the 90s. Replaced by stations that program news 24/7. So there's still lots of local news on the radio. As for putting people out of work, I'd say that issue has hit all employers except the government.

I don't want to say something here that will get our conversation banished to Take-It-Outside, but in reading this and a quote you put in another thread, my comment is that you are quite an expert on current political thinking of the conservatives and neo-conservatives, and you are looking at broadcasting through "Rove Colored Glasses".

I live in the rim-shot territory surrounding Atlanta GA. I look to the south and I see city and major market media of all kinds. I look around me and I look to the north and I see mountains and Appalachia and little burgs that remind me of life in American 50 years ago.

I run across TV news units every two or three weeks around here. In 10 years of living here, I have NEVER, NEVER, NEVER seen a RADIO news unit. Let me clarify that. NEVER.

I get a local newspaper that publishes 4 days a week, and I get the Atlanta Journal Constitution, a classic 7-day a week metropolitan newspaper. If my little town city council does something significant, I READ about it. If my county council does something significant (and they often do, not only significant but sometimes appalling!) I READ about it. My county is 140,000 people and growing like a weed. It is one county outside the "Metro Area" designation. I NEVER, NEVER, NEVER get radio news about my city or county. Again, let me clarify that. NEVER.

Now, you could argue that I live in an unusual situation that is not typical of the rest of the country. I have spent five years looking for a small, home-town radio station that I could capitalize. I have never looked at a prospective station that was doing something that would pass for real NEWS CASTING. And in my search and travels I have tuned in and/or visited a lot of stations that were not doing much better.

NOW, in defense of radio, the county to the east of me has what has to be one of the top 50 or 100 small market stations in America. They do news. They have a talk show that is local that may end up on a radio near all of you one of these days through syndication. They have a live and local morning show "that is to die for!" And they actually have a news staff. So good radio, and good radio news DOES EXIST, finding it is something like finding a needle in the haystack.

Please explain to me why, if the current regulatory system and the current business climate is so good for radio, why is good radio like a needle in a haystack?

 

[davideduardo]

I think you're overstating the issue. CHRs are built largely around teens and 20s.

Really, they are aimed principally at 18-34 and 18-39 women. In fact, Kiss, the CHR in LA, is also #1 en 25-54 in the entire market.

There's a large demand for people under 25 by advertisers.

No, there is not. There is a large demand for 25-54 year olds, a bit less for 18-49 and less for 18-34. There is no demand for under 18 in radio.

 

[davideduardo]

As you may recall, the "Minot Case" has become infamous (fairly or not) as the great example of Clear Channel's devastating impact on small markets.

You mean the case where Clear did everthing it was supposed to, yet the local officials had neither installed the EAS activation gear properly nor did they know how to do an activation?

Radio got blamed, Clear got blamed, yet it was the local officials who did not do what they should have.

And, of course, the fact that the train spillage happened at around 2 AM when in a small town nearly nobody is listening to radio, did not cross anyone's mind.

 

[TheBigA]

There is a large demand for 25-54 year olds, a bit less for 18-49 and less for 18-34. There is no demand for under 18 in radio.

But, as I said, there IS demand for people under 25. Which is in sharp contrast to conventional wisdom that says radio has written off the next generation. I hate to point this out, but Gen Y is now anyone over 18.

 

[Tibbs4]

The REAL station-by-station breakdown can be summed up by asking one question:

Which group owners are still privately owned, bought all or the majority of their stations before the prices went through the roof,
maintained a steady course and HAVE NO DEBT and finally, stay competitive, lead the market against the huge companies in ratings
and set the market rates, stay lean and focused, etc?? There are very few. That's the only way a group owner is really banking $$$.

 

[amfmxm]

The REAL station-by-station breakdown can be summed up by asking one question:

Which group owners are still privately owned, bought all or the majority of their stations before the prices went through the roof,
maintained a steady course and HAVE NO DEBT and finally, stay competitive, lead the market against the huge companies in ratings
and set the market rates, stay lean and focused, etc?? There are very few. That's the only way a group owner is really banking $$$.

And that kind of brings us back to Surfer's original question: which groups really know how to run their businesses profitably. The quick answer--probably, most of them, up until this point. A lot of money has been made by a handful of people at the very top of these groups. And, many of us in the middle have made a much-better-than-average living as well. Radio's survivors have done alright, even as we watched our ranks thin by the truckload.

But for the near future, Tibbs is on the mark. Publicly-held radio companies, particularly (as Big A pointed out) those radio-only outfits in the stock market, are walking on eggshells. Privately-held firms are in much better shape.

Notice the recent fire sales the big guys have been having? ABC, CC, now CBS. Just a glimpse of what's to come?

 

[1900radio]

>>Local news on radio is ordinarily "kiss and a promise" news--two or three headline stories ripped directly from the local newspaper, sometimes rewritten and sometimes not. Yes, there are exceptions, but even in large markets, very few radio companies actually employ reporters. Just anchors--and usually just one, serving a half-dozen stations.


Really? Who are ou and why are you so bitter? So many people on these boards don't know what modern radio should be. WHY do you think we need more than a headline? Bullet points are the new articles. Novels were replaced by magazines. And what NEW content would you have these reporters coming up with that TV and newspaper doesn't?

As to the original question. Without a doubt, Clear Channel is the best at running radio as a business. Whether you agree with what product they produce or not, they know how to make money. Hardly any other companies have had the foresight to invest in the internet and HD like CC has.

 

[amfmxm]

>>Local news on radio is ordinarily "kiss and a promise" news--two or three headline stories ripped directly from the local newspaper, sometimes rewritten and sometimes not. Yes, there are exceptions, but even in large markets, very few radio companies actually employ reporters. Just anchors--and usually just one, serving a half-dozen stations.


Really? Who are ou and why are you so bitter? So many people on these boards don't know what modern radio should be. WHY do you think we need more than a headline? Bullet points are the new articles. Novels were replaced by magazines. And what NEW content would you have these reporters coming up with that TV and newspaper doesn't?

Me? I'm a longtime broadcaster, a market manager of a half-dozen properties & former owner of several stations over a 40+ year period. Bitter? Not at all. As far as local radio news goes, though, I do recognize that we--and TV and the net--steal most of it from local newspapers that do still employ dozens of actual reporters, the people who leave their offices to cover governmental meetings, fires, crime & the like. You know, "reporters."

There was a terrific PBS report on this issue a year or two ago ("Frontline," I think), highlighting the dependence on newspaper reporting throughout the rest of "the media"--and expressing concern that we may be all be up sh*t creek if newspapers continue their current merger & acquisitions-driven staff slashing.

When all the newspaper reporters are fired, who will we steal the news from?

 

[Goat Rodeo Cowboy]

As to the original question. Without a doubt, Clear Channel is the best at running radio as a business. Whether you agree with what product they produce or not, they know how to make money. Hardly any other companies have had the foresight to invest in the internet and HD like CC has.

The mafia knows how to make money. "Women of the Night" know how to make money. Non-ethical salesmen of aluminum siding know how to make money. Slum landlords know how to make money. The sub-prime mortgage industry knew how to make money.

None of those occupations are mentioned in the constitution of our nation. Freedom of THE PRESS, the idea of free speech is ingrained in our nation.

Do you want your children and grandchildren to live in a nation that attempts to live with no one left to report the news while we make some feeble effort at self government?

Oh well. As long as they know how to make money. What else matters. Radio, like oil painting and quilting and fine cuisine is an art for some people. They would do it for the fun of it. And our world is the better for it.

Yeah. I want that on my tombstone: "Well, He knew how to make money."

 

[TheBigA]

Radio, like oil painting and quilting and fine cuisine is an art for some people. They would do it for the fun of it. And our world is the better for it.

And for them, there's something known as NON-COMMERCIAL RADIO.

There's lots of it out there, in terms of community licensees, educational licensees, even individual licensees. LPFM is all non-commercial, and the FCC & Congress are looking to expand it.

So rather than force commercial broadcasters to change, simply refocus attention on the non-commercial stuff. It already exists and needs everyone's support.