RADIO (as we know it) is DEAD!!!

[davideduardo]

Re: Rebirth

In case you hadn't noticed, Clear Channel has taken stations dark, and has sold stations at a loss. They're cutting their losses in some markets in order to stop bleeding dollars. They probably won't be the only ones.

The stations they took dark, two of them, are certified dogs. There have been posts elsewhere that the stations never were able to do well. How CCU got them is probably answered by having to take them with a bunch of better stations. Why they did not spin them is probably answered by recognizing the inability to sell dog AMs.

I hope more of this happens.

. Wall Street realizes that the days of double-digit growth in revenue and ever-increasing radio station values are over. That's why stock prices are down.

I looked at the RAB figures, and we have not had double digit growth for decades. The idiocy of Cramer's analysis is in his statements like "in the car is where it happens." or words to the effect. In truth, about a third of listening is in car, less in many markets... bad data creates bad conclusions.

I think the real problem is that investors thought consolidation would create great growth in profits, and it did not. I owned a large cluster (9 stations in a market) in the late 60's, and we did not save money. We just were enabled to do second tier formats once we covered the main ones well.

Radio has been in a recession for years because owners overextended themselves in a buying frenzy. Like homeowners who bought more house than they could pay for with the idea that they'd be making more money in the future, they're nearing default. The rising cost of interest on the money that they borrowed speeded up the process.

While true in a couple of cases, this is pretty much urban legend. Most expansion was financed by equity, not debt, or by merger. At least one top 10 owner did it with no debt at all!

 

[War Of Attrition]

Re: Rebirth

While true in a couple of cases, this is pretty much urban legend. Most expansion was financed by equity, not debt, or by merger. At least one top 10 owner did it with no debt at all!

Which one was that? Susquehanna? Greater?

 

[SirRoxalot]

Monkey Business

I looked at the RAB figures, and we have not had double digit growth for decades.

Investors were certainly promised double-digit growth, and those promises were incorporated in budget projections for stations and clusters.

The idiocy of Cramer's analysis is in his statements like "in the car is where it happens." or words to the effect. In truth, about a third of listening is in car, less in many markets... bad data creates bad conclusions.

I agree that Cramer is an idiot when it comes to radio. My point was that Cramer reflects Wall Street's attitude, which has soured on radio since they've finally figured out that they've been hoodwinked by the whole "cash flow" sales pitch.

Radio has been in a recession for years because owners overextended themselves in a buying frenzy. Like homeowners who bought more house than they could pay for with the idea that they'd be making more money in the future, they're nearing default. The rising cost of interest on the money that they borrowed speeded up the process.

While true in a couple of cases, this is pretty much urban legend. Most expansion was financed by equity, not debt, or by merger. At least one top 10 owner did it with no debt at all!

The expansion was financed by the perceived equity of radio stations. That equity was based on values that had been pumped up by consolidators overpaying for radio stations based on the "cash flow" myth that Cramer and others have soured on. Stations selling for 15x cash flow made - and makes - as much sense as the dot-com flame-out of the late '90s. You might as well call Clear Channel "Radio Enron".

The stations that Clear Channel took dark may be dogs, or maybe they were just overpriced and trying to serve markets that they didn't cover well.

Give the licenses to local community groups who won't have a financial monkey on their backs and who can operate them successfully and serve the public interest, convenience, and necessity with whatever niche format works in their coverage area.

 

[12 In a Row]

It's all about the money!

If you are expecting someone to give you a radio station, I wish you the best of luck.
Now that you have it, what are you going to do with it?

Where is the money to operate the business while you get on your feet? Those monthly bills pile up fast.
Studio/office lease, telephone system, computers, traffic software, supplies, electric, heat, air, BMI,ASCAP, payroll, health insurance,
just to name a few.

Are you prepared to take your savings, cash in your 401K to keep it going until it catches on? Sure is an expensive hobby.

Advertising revenue is down and the local businesses are just barely hanging on.

Years ago banks fell out of favor with radio. Now, Wall St. has been burned and is moving on. Where do you get the money? Loan sharks?
Even the venture capitol people want out.

You are correct, radio has not seen double digit growth for decades, long before CC came along. Can't blame them for everything wrong with the business. Radio has not kept up with technology.

Yes, there are plenty of radios on in the office, it's simply background/passive listening.
Lots of businesses pipe in satellite radio.

I have a 22 daughter and a 14 year old son. They rarely if ever listen to the radio. Like the rest of their friends, they get their entertainment and information from their I-Pods, internet, TV, games and cell phones.

They don't even need radio to listen for the no school announcements. It's now automated, where they call your home and cell phone to inform you of a delay or closing.

The next generation and Wall St. looks at radio as old fashioned technology.

I'm not so sure "local" is the magic bullet that will make radio cool again.

What will people be talking about today?

American Idol?
Obama winning big over Clinton?
Roger Clemens?
Last nights City Council meeting?

We all have great passion for the business and some stations continue prosper.
There are simply too many stations and not enough revenue to go around.

 

[davideduardo]

Re: Rebirth

While true in a couple of cases, this is pretty much urban legend. Most expansion was financed by equity, not debt, or by merger. At least one top 10 owner did it with no debt at all!

Which one was that? Susquehanna? Greater?

HBC. But your two are also close.

 

[SirRoxalot]

But It's Not Dead Yet

I'm not so sure "local" is the magic bullet that will make radio cool again.

What will people be talking about today?

American Idol?
Obama winning big over Clinton?
Roger Clemens?
Last nights City Council meeting?

We all have great passion for the business and some stations continue prosper.
There are simply too many stations and not enough revenue to go around.

What will people be talking about on a radio station that's live, local, and well-programmed? In my market, they'll likely talk about American Idol, Obama winning big over Clinton, Roger Clemens, weather & traffic, the Buffalo Sabres, the continued recovery of Richard Zednick, a local woman who was jailed for killing her teen-aged daughter is now out of jail and won't be retried because it's been determined that her daughter died of a cocaine overdose, 1500 local workers who'll be affected by GM's buyout offers, the local Water Authority director who's retiring with a platinum parachute at the expense of rate payers - and about 20 other topics that a syndicated or voice-tracked host wouldn't even know about.

Radio has always been about the relationship between the broadcaster and the listener. There's enough revenue to go around if the overhead isn't exorbitant, and the biggest cost of overhead is debt service for many stations. Reduce the debt service, and radio can prosper. Why else do you think that all of those other technologies are scrambling for bandwidth so that they can offer content similar to what radio can offer?

 

[davideduardo]

Re: But It's Not Dead Yet

What will people be talking about on a radio station that's live, local, and well-programmed? In my market, they'll likely talk about American Idol, Obama winning big over Clinton, Roger Clemens, weather & traffic, the Buffalo Sabres, the continued recovery of Richard Zednick, a local woman who was jailed for killing her teen-aged daughter is now out of jail and won't be retried because it's been determined that her daughter died of a cocaine overdose, 1500 local workers who'll be affected by GM's buyout offers, the local Water Authority director who's retiring with a platinum parachute at the expense of rate payers - and about 20 other topics that a syndicated or voice-tracked host wouldn't even know about.

Nice point. And no iPod playlist can duplicate the powerful combination of some good music and good content that relates.

 

[12 In a Row]

Sounds like most excellent morning drive News stations.

What are your plans for the rest of the day?
Are you planning for the future? 5 years? 10 years?

Technology? TV planned ahead...this time next year, digital replaces analog.
High Def, Blue Ray, and what will the advertising landscape look like in 5 or 10 years?

How are you going to attract a demo that hasn't grown up with radio?

What group of investors are going to give you their business? Or will it be the FCC that will throw you the keys and say, have fun!

I live in a town where 10 years ago a few overnight convenience stores were open 24 hours and all did well.
5 years later, 3 times as many stores opened. They all choked...too many and not enough customers.

As of today, half of them went out of business and only 2 remain open 24 hours.
Again, thin the herd or we all die.

 

[oaktree]

This about says it ...

http://seekingalpha.com/article/64210-radio-industry-too-much-supply-means-too-little-profit

I, for one, agree. Apply for a limited time STA for six months. Sell the station within that time, with verification of one year's worth of financing available with no income (rather than three months,) and if the deal's not done ... turn in the license, the party's over.

Free the allocation list to eliminate interference. Happens in market after market. Don't want to see that station lost in a community? Then stop putting so many, including move-ins, there, and adding to the "clutter" that radio has become. Do we really need 500 channels on every radio? I think not.

While some "community group" radio is good ... so much of it isn't. And if it keeps up, we'll see all brokered radio everywhere. What good is that in "serving the local need and interest" of a local market ... especially a small one?

 

[tsjclkt362]

No it isnt dumb McDonalds - I HATE McDonalds BTW - food stinks! Radio is dying becuz these DJs dont play song requests!

Revoking licenses of failed operators does.

And I still contend, that to make the properties retain any value, there are way too many ... and more on the way. Failed operators should be like other businesses gone bad ... fold them up and go home in many instances.

A station that can only get a fire-sale price in a small town and causes the band to be further subject to noise, co-channel interference and other problems need only look at the cutbacks and hatchet jobs that are going on in supposedly pre-dominant stations and facilities on a regional or major market basis.

I'd much rather listen to a station that I can get further than 20 minutes from where I live, before the frequency is taken over by someone else on that frequency or nearby interference because there is no signal from the little tea pot station that is failing miserably.

Further, we've been saying for years that a great deal of AM's problems have directly been related to overcrowding of the band.

As for "public need and necessity," that does not mean "new radio stations doing new things." Failing stations do not serve anyone's need or necessity. Nor does the regionalization of radio stations-turned-repeaters as is happening now in markets like LA.

If you have less of something, you create more demand. Less "bad" might make better radio, in my opinion.

And as one who grew up and worked in the "Drake Era" (which I deeply miss,) the price of stations going through the roof came about because then-owners could do it and others like the consolidators had the wide-open checkbooks to meet that "need."

The problem is, after scraping the cream off the top, they found they had debt-service problems just as homeowners of below-prime rate mortgages have today.

It's very seductive to have a plan before buying "too much" ... but it's a killer when it all catches up with you as that plan unravels. The good days are great ... but when the tide turns, look out. Ask Clear Channel, Citadel and CBS Radio. They know how it feels...buying too much too frequently...and losing.

A lot of those rimshots and second tier stations in smaller conglomerates would be better off off the air. After all, they don't even serve their city of license most times ... they compete to call the "bigger market" their sales target.

It's an abuse that the corporates needed to do to get the primary stations they really wanted. The rest of the stations were trashed ... as they were when the previous owners begged Clear Channel and others to buy them ... at way inflated prices.

And they did.

Thin the herd. There's way too much to go around now as it is. Radio isn't McDonalds.

 

[davideduardo]

No it isnt dumb McDonalds - I HATE McDonalds BTW - food stinks! Radio is dying becuz these DJs dont play song requests!

You are joking, right?

 

[tsjclkt362]

No I'm not. If it is dying that is probably one of the reasons I am sure. AND I really wanted to hear that song! i had to download it myself just to hear it!!

No it isnt dumb McDonalds - I HATE McDonalds BTW - food stinks! Radio is dying becuz these DJs dont play song requests!

You are joking, right?

 

[adma]

May I say something, about the point that David Eduardo and others have raised that, henceforth especially within the biz, it's less a matter of "platform" and more one of "content".

If the platform for said content changes, will these issues we persistently complain about really concern us (at least, those of us not "in the biz") anymore?

After all, I think part of the existing problem is that, perhaps as a legacy of decades of listening to and setting our literal and cultural clocks by the darned thing, the realm of terrestrial radio, of AM/FM, looms too large, like its vestigial 1968ness or 1978ness or 1988ness still exists in 2008. We've "bonded" with it. It's mother's milk. It's "ours". And to witness all this degradation is like a slap in our face.

But if the platform changes, well...will all that bad least-denominator rock and AC and oldies and Jack-type and and hip-hop and conservative-talk-spew and brokered preacher/infomercial we love to loathe loom so large anymore?

It's a new context. And it isn't like these loathed formats will be extinct; more like, to those of us who loathe them, they'll be more "out of sight, out of mind"? Wherein so-called mass-appeal formats become more like mega-niche formats, and free to float within their own profitable niche once this whole AM/FM thing is jettisoned.

You can already sense it within satellite: XM/Sirius might have their FM-style crap music formats, but somehow the shift in context renders them more "out of sight, out of mind".

Heck, the reason why under-30s don't complain about AM/FM as much as 40/50somethings isn't because it specifically caters to them, but these days quite the reverse: "out of sight, out of mind". And in the case of AM, add a whole slew of over-30s as well.

For that matter, it's all even migrated to the political realm; compared to past attempts at direct confrontation/counter-programming (cf. Air America), the Democratic/liberal camp is taking a much more "out of sight, out of mind" approach to the conservative media this season--and from some reports, it's working...

 

[SirRoxalot]

Foresight

To get back to the grown-up discussion...

Companies are bidding billions of dollars for bandwidth in the current FCC auctions, yet some of you are advocating that we shut down radio stations and give up a viable system of delivering information and/or entertainment.

Just what do you think that they want to do with that bandwidth? Deliver streaming audio, video, and/or information to devices that are a couple of hundred dollars a pop. Telecom people are getting giddy over WiFi and WiMax - technologies that have more limitations on distance than a 1KW AM.

If you return the bandwidth to the FCC, what do you think will happen to it? It will be reallocated, likely chopped into 10 or 100 digital channels, and you'll have exponentially MORE channels deliver information and entertainment to a new generation of devices.

In short, the problem is not with AM radio. The problem is with the OPERATORS of AM radio. There are good operators - in may cases people who DIDN'T buy into radio in the last 10 years - who are delivering decent product, and making a reasonable return on their investment.

Studies show that 12-34s still sample radio, but find little there that interests them. That's a PROGRAMMING problem, not a technology problem. Operators who program compelling content for younger audiences - and there are some - get results. Even our friend who's complaining about not "playing requests" has a point - that radio isn't serving his (selfish) needs. That doesn't mean that it couldn't.

If the station values are realigned at realistic levels, the cost of operation will fall in line, and stations will be able to survive, or even thrive. Stop trying to turn small market stations into large market rimshots, and serve the markets that they're licensed for, and you're like to be more successful in the long run.

If you want to "thin the herd", thin the herd of operators that bought stations at "way inflated prices", making them economically unviable. The market seems to be doing that currently, which is why stock prices are falling for the consolidators. Some of these companies may not survive.

That's still no reason to take those radio stations dark.

 

[davideduardo]

No I'm not. If it is dying that is probably one of the reasons I am sure. AND I really wanted to hear that song! i had to download it myself just to hear it!!

Inside secret department:

Few stations have taken requests since the 50's and 60's. Even most request shows are preprogrammed with the songs that get requested most often, and if someone requests one that is not in the list, they are told that the hour is already all filled with other peoples requests.

There is a reason. No station is going to let one person whose only programming qualifications are owning a telephone take over the programming of the station. Songs are played based on how well they score with a cross section of listeners via music tests and call out, not individual listeners. Songs are scheduled to create good patterns, avoid the same song playing the same time it did yesterday, etc., etc. In other words, they are programmed for the thousands of listeners, not the person on the phone.

And all of us have loads of stories of people calling to request the song we are playing right now, or just played 5 minutes ago. Like prize pigs, most request line callers are not loyal, useful listeners.

 

[12 In a Row]

To quote people much smarter than me , "too much supply means too little profit."

In any size market, you have X number of potential customers and X number of dollars.
Too many restaurants, banks, gas stations, you name it, someone is going out of business.

Some seem to lay all of the blame on corporate. At the time, radio looked like a great investment.
Playing Monday morning quarterback is fun but not productive.

Have you ever made a bad decision in your life? Bad business decisions come from using your heart and ego and not your head.

Imagine owning a couple of radio stations that are just hanging on.
Out of towners with a ton of money come in and make you an offer you can't refuse. Take the money and run!

Looking at it from the opposite side, why aren't you blaming the former owners for selling out?

The way I see it, 10 years ago a bunch of stations were just barely making it.
If corporate radio didn't step in, tons of the stand alones would have gone out of business.
Let nature do it's thing and thin the herd.

At least CC and the others have been keeping them on the air.

Is it great programming? For the most part, NO.
Would it be great programming if the former owners still had the station(s)?
Considering the challenges facing us? Probably not.

Damn it, it's Clear Channel's fault that dog AM's and Class A FM's are still on the air!

 

[SirRoxalot]

KILL BAD RADIO!

You certainly are not saying that CC and others purchased those stations who were "barely making it" out of the goodness of their hearts, are you?

CC and others purchased those stations with the idea of turning them into larger market rimshots, or creating "regional synergies" that centralized billing & traffic, allowed for regional syndication and/or voice-tracking, and creating regional broadcast monopolies to allow them to extract additional revenue from local advertisers while cutting costs for programming an back-office operations. In fact, those savings, and expected revenue increases would make up for overpaying for those stations in the first place, right?

All of that sounded good in theory. The problem was that rim-shots failed to gain traction in larger markets because any successful format could be easily co-opted by a station with a better signal. Small-town synergies didn't work because people who live in small towns tuned in the radio to hear about their town, from someone they knew or were at least familiar with. Small town people tend to be very provincial - which is where the term "provincial" came from. If they wanted more polished, big-city announcers who didn't relate to them or what was going on in their world, they would have tuned in big-city radio - which is nearly universally available - in the first place.

Not only that, but local advertisers were suddenly being told that rates were going up, and that they could no longer buy :10s, :20s, or :30s in order to save money or increase frequency. They had to buy :60s, and the new, former-big-city-sales-guy-turned-market-manager just wasn't excited about schmoozing guys who were willing to spend a few thousand dollars a year of their hard-earned money on broadcast advertising, but would get giddy over colon-blow shows and other infomercials that drove listeners away from their radios.

And to think that it hasn't worked out for the "big thinkers" and "whiz kids" who came up with this whole scheme...

I HOPE that radio as we know is NOW (in many places) is dead. It's time to get back to what WORKED, not what FAILED. It's NOT that there are too many radio stations. It's that there are NOT enough well-programmed radio stations.

 

[12 In a Row]

Insert Quote
You certainly are not saying that CC and others purchased those stations who were "barely making it" out of the goodness of their hearts, are you?

Of course not!!
Stations barely making it, took the money.

Why are you blaming corporate? Was your job one of the ones cut?

4 or 5 stations operating out of one buidling, with one phone system, one receptionist, one sales team, etc. is sure a whole lot less expensive than 5 buildings, 5 phone systems....you get the picture.

The vast majority of listeners have and will find the better station, better talent, period.

 

[SirRoxalot]

The REAL Story

12, I've never been out of a job in radio unless I chose to pursue another line of work. My job was not cut, so you can drop that little dig, OK?

My arguement is with the "Corporate Business Model". CC & others threw large chunks of money at stations that were "barely making it", or in many cases "making it comfortably". Their plan was to dramatically increase profits by:

1. Cutting programming costs through syndication and voicetracking. After all, why wouldn't the rubes want to hear "John Goodvoice" from a larger market instead of some local guy who could best be described as "colorful".

2. Screw the locals and target that signal toward a nearby larger market. Move the stick, rework allocations - do whatever it took to make your station a player in the "market where the money was". If you already own stations in the larger market, use your new "rim-shot" to protect the flanks of one of your money-makers.

You're a small-market owner. You make a decent living, belong to the local "country club", schmooze local business owners, and go to Kiwanis, Rotary, Odd Fellows, and the Masonic lodge on your "nights off". Some offers you a chunk of money that - invested wisely - will bring in as much in interest as you earn by working.
The guy's a big-city manipulator, which means that you're not even taking advantage of some starry-eyed dreamer. OF COURSE YOU TAKE THE MONEY. Gee, it's too bad that some of the loyal folks who helped you make that comfortable living are now out of a job, and people come up to you on the street and ask you "What have you done to your radio station?", but you just smile and say "Sorry, I sold it. Here's their phone number".

The "Big Corporate" strategy worked in some cases, but in many cases failed dismally. In many cases, the listeners found the better station and the better talent - their iPod. Small market listeners live in small markets because they LIKE their small town, and the small town feel. The "colorful" guy was one of theirs. "John Goodvoice" is not, and they ignored him and his big-city approach.

The "rim-shot" failed dismally because it didn't really reach the entire market, and the minute you had some kind of success, a full-market station "stole" your format and beat your brains out. So, you cut staff and ran colon-blow or niche formats that might help you make the inflated mortgage payment. Or, you just suck up the mortgage payment and use the station as a flanker to tie up formats similar to your money-maker.

CC (and others) are getting out of the small markets BECAUSE they failed dismally. Let's hope that they next owners don't overpay, and are able to serve the LOCAL community and make a fair profit in the process.

 

[Basnya]

Small-town synergies didn't work because people who live in small towns tuned in the radio to hear about their town, from someone they knew or were at least familiar with. Small town people tend to be very provincial - which is where the term "provincial" came from. If they wanted more polished, big-city announcers who didn't relate to them or what was going on in their world, they would have tuned in big-city radio - which is nearly universally available - in the first place.

CC (and others) are getting out of the small markets BECAUSE they failed dismally. Let's hope that they next owners don't overpay, and are able to serve the LOCAL community and make a fair profit in the process

Exactly.