Radio and our Culture of Greed

[EbolaMonkey]

You could use a lesson in what a monopoly is. The key comes in the first four letters: "mono," which is Greek for one. All big companies don't operate as one. They compete very actively and aggressively within their markets in attaining audience and revenue. That is what determines a monopoly. Quality is not part of the definition.

If you're going to make legal arguments, you have to know what the law is. What these companies are doing is legal. Firing their staff would have been equally legal under the previous Communications Act. It was legal for one station to have 30% of a local market's audience and revenues in the 1960s, and it's legal for one company to do the same with five stations today

Yes, there are several large radio companies in every market. Roughly 10 for 50 stations in New York. But if you think these companies are in fierce competition, then you're not watching very closely. They lobby on national issues as one group. And, when two companies compete head-to-head in a format within a market, it's because even second or third place can make money -- not because winning the format war is important to them. Local employees may operate under the illusion that they're in fierce competition, and that's fine. But at the corporate level, those things aren't important. Each market is neatly sliced up, with each company watching over its share of the revenue pie. All the companies have chosen to ensure profits by cutting costs. So there's no consequence for layoffs that result in skeleton crews running large stations.

You owe yourself a good look at the other side of the case. Ben Bagdikian has been accurately predicting the trajectory of Big Media since the 80's. He's a smart man. See what he has to say:
http://benbagdikian.net/index.htm

 

[TheBigA]

They lobby on national issues as one group.

No, they are all members of the NAB, as are other non-corporate stations. And lobbying is a common industry practice, permitted by law. All industries have lobbying groups, including the ones I listed, such as breweries, soft drinks, cell phones, and automobiles. Two weeks ago you saw all three heads of the US auto manufacturers lobbying Congress for a bail out. Does that mean they're a monopoly or cartel? No.

By the way, they don't agree on all issues. Most recently, there was a split among major companies with regards to HD Radio.

And, when two companies compete head-to-head in a format within a market, it's because even second or third place can make money -- not because winning the format war is important to them.

Making money IS winning the war. Don't you understand? And you want to make more money than the other companies. As for winning the format war, it's important to the programming people. Anyone who programs wants to win. There are lots of different kinds of people working at a radio station.

Each market is neatly sliced up, with each company watching over its share of the revenue pie.

That may be how it looks, but it doesn't happen by design. And when a station changes format, it doesn't ask permission. Quite often, talent is stolen from its competitor, and it's not a very pleasent affair.

You owe yourself a good look at the other side of the case. Ben Bagdikian has been accurately predicting the trajectory of Big Media since the 80's.

I read The Media Monopoly, where I've read all the things you've posted here. You obviously agree with him. Hooray for you. Bagdakian has never worked in broadcasting. And as I've pointed out, every industry has consolidated far more than broadcasting, and the media has become far more democratized as a result of new media. Twenty years ago, you would not have the ability to post your opinions on a public message board. Now you do. Everyone now has access to the public. Some are better than others. But there is no monopoly any more.

 

[davideduardo]

Yes, there are several large radio companies in every market. Roughly 10 for 50 stations in New York. But if you think these companies are in fierce competition, then you're not watching very closely. They lobby on national issues as one group. And, when two companies compete head-to-head in a format within a market, it's because even second or third place can make money -- not because winning the format war is important to them. Local employees may operate under the illusion that they're in fierce competition, and that's fine. But at the corporate level, those things aren't important. Each market is neatly sliced up, with each company watching over its share of the revenue pie. All the companies have chosen to ensure profits by cutting costs. So there's no consequence for layoffs that result in skeleton crews running large stations.

You owe yourself a good look at the other side of the case. Ben Bagdikian has been accurately predicting the trajectory of Big Media since the 80's.

Media has changed a lot since the 80's. Newspapers are turning unprofitable everywhere, which a number of companies on the brink of failure. Network TV has ever decreasing shares, while everyone on the planet seems to have their own cable channel. The internet is now "media" in a major way, and nobody dominates there... not even Google or Microsoft or any of the old line media companies as the fragmentation is total.

And fragmentation is the reason why stations no longer do many expensive direct format battles... there are so many ways now with fragmented music tastes and talk content preferences that lateral attacks on weak spots in the market are more effective than direct format to format battles. And, as media buyers became more sophisticated and computers aided in buying, there is no need to be overall #1 in many cases if winning in a particular demo may make more money.

And, finally, all industries and businesses lobby through a trade association, whether they be dry cleaners or auto parts manufacturers. Suggesting that this is unique to radio or an indication of collusion is ingenuous. It's how all business in the US... and the world... is done.

And, in case you did not notice, the cost cutting is in reaction to our recession, not some radio issue. A half million people became unemployed just last month!

 

[davideduardo]

Let's compare the number of radio companies in New York City with the number of companies that, let's say, make engines for jet airliners.

There's plenty of competition.

A completely fallacious argument. A false comparison.

Nope. Jack Welch himself said that if you can't be first or second in a field, get out.

Nearly all areas of business are highly consolidated, most to a greater extent than radio. How many newspapers does your town have? How many department store chains are operating there? How many drug store chains?

The drug store one is quite appropriate as most markets have now two to four major operators, plus outlets in major supermarket chains and WalMart. Then there are the mom and pops... in declining numbers. Just like radio markets... the good signals are owned by larger entities, and the bad ones struggle, often locally owned. It's the way of business to create, like WalMart, efficiencies which are disruptive in the market.

And, if you are going to dismiss an argument, you should explain why. "A false comparison" does not cut it. Answer the "why" question.

 

[EbolaMonkey]

And, if you are going to dismiss an argument, you should explain why. "A false comparison" does not cut it. Answer the "why" question.

Are you serious? You think you can compare companies that build jet engines with entertainment companies that purchase radio frequencies from the government? I'll wait and see if you can justify THAT before I accept the invitation to go off on an argumentative wild goose chase.

Nearly all areas of business are highly consolidated, most to a greater extent than radio. How many newspapers does your town have? How many department store chains are operating there? How many drug store chains?

Since my position is that consolidation is unhealthy for capitalism in all areas of the economy, I don't see how the above is supposed to persuade me.

The oil industry has been in collusion with the auto makers for decades. Hence the small number of alternative energy autos on the market when oil prices sky-rocketed. And the hybrids that exist are expensive for individuals who were hit hardest by oil prices. If the automakers hadn't been operating under the influence of the oil giants, they would have been ready with a sustainable business model when oil became more expensive. And don't kid yourself that this was a surprise. The concept of "Peak Oil" is well known and well understood by Corporate America. They've chosen to bleed the oil economy dry rather than do the work it would take to transition this society into the next era of energy consumption.

I don't think we've reached Peak Oil. But the last calendar year gave us a small taste of what will occur once Peak Oil occurs.

The internet is now "media" in a major way, and nobody dominates there... not even Google or Microsoft or any of the old line media companies as the fragmentation is total.

Really? Here are the top news sites:
http://www.alexa.com/site/ds/top_sites?catid=8&ts_mode=subject&lang=none

The Old Media virtually controls online news.

Media has changed a lot since the 80's. Newspapers are turning unprofitable everywhere, which a number of companies on the brink of failure. Network TV has ever decreasing shares, while everyone on the planet seems to have their own cable channel. The internet is now "media" in a major way, and nobody dominates there... not even Google or Microsoft or any of the old line media companies as the fragmentation is total.

Badgikian predicted this. Another reason I trust his analysis. Radio is on the same trajectory for many of the same reasons.

 

[EbolaMonkey]

That may be how it looks, but it doesn't happen by design. And when a station changes format, it doesn't ask permission. Quite often, talent is stolen from its competitor, and it's not a very pleasent affair.

I think you're being naive here. Sure there are small and insignificant chess matches going on at the local level. But they don't amount to much from a corporate perspective. And over time, there are fewer cases of talents being lured to other companies. That era is coming to an end. Expensive talents are now considered prime targets for cost cuts. Fewer companies are looking to add a significant programming expense to the bottom line.

Also consider that most premium radio talents established themselves before the Telecommunications Acts of 1992 and 1996. In recent years, the economics of radio have not been conducive to creating mega shows like Stern's, Limbaugh's or Imus's. Those shows were grandfathered in, so to speak.

 

[davideduardo]

That may be how it looks, but it doesn't happen by design. And when a station changes format, it doesn't ask permission. Quite often, talent is stolen from its competitor, and it's not a very pleasent affair

I think you're being naive here. Sure there are small and insignificant chess matches going on at the local level. But they don't amount to much from a corporate perspective. And over time, there are fewer cases of talents being lured to other companies.

The change in "luring away" talent from another station is mostly due to the issues of tortuous interference in our litigious society. Today, if Hertz (to make an example outside radio) even talks with an executive from, let's say, Enterprise, there are lawyer letters, threats of lawsuits, hints about injunctions, etc.

Also consider that most premium radio talents established themselves before the Telecommunications Acts of 1992 and 1996. In recent years, the economics of radio have not been conducive to creating mega shows like Stern's, Limbaugh's or Imus's. Those shows were grandfathered in, so to speak.

Gee, I personally know of some impressive talents who were doing overnights or somesuch in 1992. And I'm trying to think of where Seacrest was in '92...

 

[davideduardo]

And, if you are going to dismiss an argument, you should explain why. "A false comparison" does not cut it. Answer the "why" question.

Are you serious? You think you can compare companies that build jet engines with entertainment companies that purchase radio frequencies from the government? I'll wait and see if you can justify THAT before I accept the invitation to go off on an argumentative wild goose chase.

OK, how about supermarket chains in any given market or electronics / white goods retailers? There is extreme consolidation everywhere.

Since there is an oversupply of radio stations in just about every market , the "limited market" idea of decades ago does not apply; in 1941 Cleveland had 2 radio stations, while today it has 38. And, except for new channels, of which there are essentially none in major markets, stations don't purchase licences from the government; they trade on the open market with very small fees involved.

So consolidation in radio does not appear to be much different than consolidation in other businesses.

The oil industry has been in collusion with the auto makers for decades.

Men in black. Cue the helicopters.

Hence the small number of alternative energy autos on the market when oil prices sky-rocketed. And the hybrids that exist are expensive for individuals who were hit hardest by oil prices.

Hybrids are immensely more complex than conventional cars, making them cost more. Most people who have driven a hybrid don't want one, either.

The people hardest hit by the now changed oil price situation don't buy new cars, anyway.

The internet is now "media" in a major way, and nobody dominates there... not even Google or Microsoft or any of the old line media companies as the fragmentation is total.

You say that old media controls online news. Drudge? Yahoo? Independent sports, special interest and classified sites?

Badgikian predicted this. Another reason I trust his analysis. Radio is on the same trajectory for many of the same reasons.

Speaking of newspapers, we knew 30 to 40 years ago that younger people were not acquiring the paper habit. Predicting the outcome of ageing is hardly a sign of prescience.

Competiton is alive, but the survival instinct is greater than the competitive one. Right now, and not just in radio, the issue is making it through this horrible economy (Linens 'n Things, Mervyns, Circuit City, the auto makers, etc., etc.)

 

[TheBigA]

I think you're being naive here.

And I think you're attempting to create a conspiracy where none exists.

Sure there are small and insignificant chess matches going on at the local level. But they don't amount to much from a corporate perspective.

The "chess match" is far more significant at the corporate level because more is at stake. But as far as radio is concerned, and in terms of its regulation, the only place it matters is at the local level.

Also consider that most premium radio talents established themselves before the Telecommunications Acts of 1992 and 1996. In recent years, the economics of radio have not been conducive to creating mega shows like Stern's, Limbaugh's or Imus's. Those shows were grandfathered in, so to speak.

I'm not sure what your point is. From a corporate perspective, in terms of cost-cutting, the economics and the realities of the competitive marketplace have made shows like those even more important. Thus, Clear Channel is syndicating Ryan Seacrest, Westwood One syndicated O'Reilly and Dennis Miller, and Talk Radio Network has Laura Ingram. All have been created in the last five years. Plus, local stations have themselves become syndicators.

At the same time, the government has been advocating and promoting more LPFM stations across the country, providing small communities their own radio stations, and the law restricts syndication and consolidation in LPFM. So there are lots of options to large corporate radio, if you don't approve.

 

[adma]

Gee, I personally know of some impressive talents who were doing overnights or somesuch in 1992. And I'm trying to think of where Seacrest was in '92...

Though arguably, it's in fact TV that "made" the Seacrest phenomenon, not radio...

 

[BJSteigner]

Music and Radio and our Culture of Greed

You want to see greed? How about the MPAA and the RIAA!

That's just a couple of the most greediest organizations on the planet.

They never tell anyone that their corporate friends and politicians get freebies from them and take it out on the consumers for illegal downloads.

That needs to be looked at.

 

[davideduardo]

Gee, I personally know of some impressive talents who were doing overnights or somesuch in 1992. And I'm trying to think of where Seacrest was in '92...

Though arguably, it's in fact TV that "made" the Seacrest phenomenon, not radio...

True, but however he did it, he gets great ratings and helped KIIS recover from a severe demo mismatch between mornings and the rest of the day.

 

[Goat Rodeo Cowboy]

I missed out on the earlier parts of this conversation and for the sake of my good health, maybe that is a good thing.

It started out with the first few posts draped in the garb of religion and scripture language. While you guys were busy here solving the problems of broadcasting, I was distracted by what other people were writing about our current economic condition and I found a "religious theme" over there that fits right in here.

For several years I have marvelled at the tenacity of some people who throw around "free markets" and "the market is self correcting" thus it is moral for government to try and regulate markets. I created in my own mind some terminology that some people are almost making a religion out of these issues. And in my reading I now find that the think tank people and the academics of economic studies have a well used term: "MARKET FUNDAMENTALISTS".

We are indeed a capitalist society. We indeed use the free market concept and let it reach out as far as it can without collapsing. We indeed support the concepts of supply and demand and within decency, pricing accordingly. What our economy has learned, is learning, is that the market place cannot be trusted to totally regulate itself. We have made the economy a fundamentalist religion is we think it can be totally trusted. (Can you say MADOFF?)

After about 40 messages on the problems and solutions of radio, this conversation has conveyed to me that the MARKET FUNDAMENATALIST approach to radio (that translates deregulation) doesn't work well either.

The broadcast industry needs to pow-wow and come to some conclusion on how much regulation is the optimum amount. And the participants in this pow-wow need to include ALL the stakeholders. Listeners. Advertisers. And others.

Now, if you will excuse me, I must get back to the monastery.

 

[EbolaMonkey]

Since there is an oversupply of radio stations in just about every market

This is a defeatist assumption motivated by self-interest. If NYC's roughly 50 radio stations had 50 different owners, I think we'd find that a vibrant capitalistic radio economy would emerge. With more creativity, higher employment, etc.

Goat Rodeo Cowboys nails the bottom line quite well. BigA and David are advocating a tortured and extreme economic theory that bears little resemblance to capitalism, though they DO claim to "worship" at capitalism's alter. Frankly, I doubt they really believe their own posts. They're merely stringing together some mostly unfounded claims in an attempt to further their own interests in the current radio economy. The fact that they are looking out for number one is pretty normal.

Gee, I personally know of some impressive talents who were doing overnights or somesuch in 1992. And I'm trying to think of where Seacrest was in '92...

As another poster pointed out, Seacrest was boosted by TV. So were Ingram, Dennis Miller and O'Reilly. Again, the overall trend is that mega shows aren't being created via local radio these days. My point stands.

I'd like to go continue going point-by-point, but I've got a busy day ahead... maybe tomorrow or sometime next week.

 

[TheBigA]

If NYC's roughly 50 radio stations had 50 different owners, I think we'd find that a vibrant capitalistic radio economy would emerge. With more creativity, higher employment, etc.

First of all, NYC has more than 50 radio stations.

Second of all, if you study ratings reports from the 70s, you'll see that there were a handful of stations that got the bulk of the audience, owned mainly by the large companies like ABC and CBS. There wasn't a lot of "creativity" but rather a lot of copy-cat formats.

More owners doesn't lead to a level playing field. The rich get richer, and the poor stay poor. That's capitalism. So you'd have a handful of very rich and powerful stations, and a whole bunch of stations like WEVD and WHBI.

I can also tell you that wider ownership doesn't lead to more employment. Back in the 80s, we started to see the rise in engineering services companies. Radio stations were able to operate without full time engineers, so they replaced them with engineering service contracts, similar to what homeowners get for their heating system. So one engineer would cover five stations (with different owners) in the NY area. I know of several guys who did that. Now, with the bigger companies, they can afford their own in-house engineers to cover their 5 station cluster.

Historically, increased competition in radio doesn't lead to more creativity but less. When a new station flips format and goes after a market leader, the first thing the heritage station does is tighten up their playlist to give listeners less of a reason to sample the new station. What 50 different owners would lead to is fewer formatic choices, as the owners would all seek a piece of a big pie, rather than 100% of a smaller format. That's what we saw in the 70s, when there were 5 beautiful music stations in NYC. Now we have 5 soft rock station. All from different owners. If you had fewer owners, you'd get more format diversification, as you have with satellite radio.

Again, the overall trend is that mega shows aren't being created via local radio these days. My point stands.

You may not be familiar with a lot of them. John Boy & Billy, Big D & Bubba. These are local station teams who have syndicated their shows to other stations in the last few years. You won't be hearing them in the Top 10 markets, but they're out there. I expect to see many more of them in the coming years, as more talent concentration takes place. And they won't be limited to syndication within ownership groups. In other words, I expect to see Citadel stations airing shows originated by CC stations, and similar combinations crossing company lines.

 

[davideduardo]

Since there is an oversupply of radio stations in just about every market

This is a defeatist assumption motivated by self-interest. If NYC's roughly 50 radio stations had 50 different owners, I think we'd find that a vibrant capitalistic radio economy would emerge. With more creativity, higher employment, etc.

New York has 79 stations in the metro. 29 are non-coms, and only 26 are deemed "viable" which in this context means they have an adequate signal to cover the metro, day and night, and a few signals that, like WHUD, cover a "market inside the market". That means the full B's on the ESB and the 50 kw AMs... and that same list with only tiny changes has existed since the 70's.

The reason there is no change is based in the FCC technical standards and the laws of physics.

Goat Rodeo Cowboys nails the bottom line quite well. BigA and David are advocating a tortured and extreme economic theory that bears little resemblance to capitalism, though they DO claim to "worship" at capitalism's alter.

The only economic theory is the one that says to buy cheap and sell dear. Stations today look for audience segments that they can do well within and which advertisers have an interest in. Then, in competition against other media, like cheaper-than-radio cable, desparate newspapers and all manner of outdoor, internet and direct contact media, they sell the advantages of radio which are usually reach and frequency and quantifiable audiences.

As long as the current model works, it's not going to change... although the distribution may take on new dimensions.

Frankly, I doubt they really believe their own posts. They're merely stringing together some mostly unfounded claims in an attempt to further their own interests in the current radio economy. The fact that they are looking out for number one is pretty normal.

I certainly believe what I write, and after 49.95 years in radio, I have already looked out for #1. I am in radio because I still love it, even in the hard times, and believe in the model of advertiser supported media.

As another poster pointed out, Seacrest was boosted by TV. So were Ingram, Dennis Miller and O'Reilly. Again, the overall trend is that mega shows aren't being created via local radio these days. My point stands.

No, it does not. Ingram was never a national star, and, without taking anything away from what he achieved on WABC, there were "Ingrams" at most Top 40 stations, from New York and LA to Albuquerque and Miami.

Stern did not come from TV, nor did Delilah, Paul Harvey, Rush Limbaugh, Kraddick, Kasem, Art Bell, Piolín, Dr. Laura, Pistolero, etc., etc. and the regional syndicated shows previously mentioned are legion and successful.

 

[adma]

You may not be familiar with a lot of them. John Boy & Billy, Big D & Bubba.

And if you reflect on it...with names like that, no wonder radio's losing the college educated crowd.

 

[videokilledtheradiostar]

Gee, I personally know of some impressive talents who were doing overnights or somesuch in 1992. And I'm trying to think of where Seacrest was in '92...

Though arguably, it's in fact TV that "made" the Seacrest phenomenon, not radio...

Seacrest is a no talent talking head pretty boy. Who is very saleable to lower demos who are morons to begin with.
Worked his way up probably by boning some top executive.

 

[davideduardo]

Seacrest is a no talent talking head pretty boy. Who is very saleable to lower demos who are morons to begin with.
Worked his way up probably by boning some top executive.

Not quite.

In LA, from the latest numbers today, in 18-49 his show is #1 in the market. And in 25-54 it is 4th, only a couple of tenths of a share away from the #1 station. Hardly "lower demos" and with an adult cume of 980,000 hardly limited to "morons."

People like him. A lot.

 

[AM FM listener]

People as successful as Seacrest will always attract a lot of "haters". Other examples include Rush, Stern, Dr. Laura, etc. It's hard to argue with his numbers at KIIS though.