Radio is in BIG trouble

[wpiv926]

Clear Channel announces massive job cuts. Citadel is on brink of bankruptcy. Others chains and small operators are cutting jobs as we speak. The drastic downturn in advertising, coupled with the unavailablity of working capital (credit), has hit the industry hard. Satellite Radio certainly hasn't helped. And, the overabundance of stations (14,000 plus), has split the pie even further.

I have seen this day coming for years. I wish the FCC would allow some FM stations to go dark, like they do with AM. That way, say an owner has 1 AM and 7 FM stations in a market. Of the 7 FM stations, 2 are low powered class "A" stations that said owner cannot afford to put much effort into, and just throws something on the air to keep it out of the hands of a competitor. If this owner knew that the FCC would allow him to turn in the licenses of the 2 smaller stations (with the AM of course), and not have to fear that a competitor would be allowed to snatch them up, this person would go for it. That way, his overhead would be reduced, while at the same time affording the owner the chance to focus ever decreasing resources on making the remaining 5 stronger signal FM stations sound better and put out a better product.

Just like GM needs to shed some brands, radio is going to have to "thin the heard", in order to survive in this new age.

 

[gr8oldies]

Presumably the lower powered FMs have at least some audience, and why take that particular choice off the air, when it can at least remain on the air with a minimum of maintenance. What would make this a reality is if "localism" rules were reinstated, making said stations build separate studios in a suburb, or super-serve a bedroom community with no retail advertising base.

 

[davideduardo]

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I have seen this day coming for years. I wish the FCC would allow some FM stations to go dark, like they do with AM. That way, say an owner has 1 AM and 7 FM stations in a market. Of the 7 FM stations, 2 are low powered class "A" stations that said owner cannot afford to put much effort into, and just throws something on the air to keep it out of the hands of a competitor. If this owner knew that the FCC would allow him to turn in the licenses of the 2 smaller stations (with the AM of course), and not have to fear that a competitor would be allowed to snatch them up, this person would go for it.

AMs that go dark can open up the frequency for a new licensee... as long as they meet the current technical standards. So there is no difference. What is different is that the AMs that go dark are generally really bad facilites or in small unsustainable markets.

And, as to A's in big markets... two of the top 10 in sales demos in LA are comboed A's... KRCD and KBUE. An A can do well, if the coverage is matched top the selected format.

 

[Silkie]

Clear Channel announces massive job cuts. Citadel is on brink of bankruptcy. Others chains and small operators are cutting jobs as we speak. The drastic downturn in advertising, coupled with the unavailablity of working capital (credit), has hit the industry hard. Satellite Radio certainly hasn't helped. And, the overabundance of stations (14,000 plus), has split the pie even further.


From a business perspective the problem in no small part is due to the big boys buying all the competition because they could, and then proceeded to turn their own small world failures into great big, worse failures. The world spinning faster and faster could never come to an end as long as they kept gorging themselves. They were like kids who could not afford ice cream even after pooling their allowance. Chumps. Nobody could tell them that the top would spin for a time and then wobble to a stop. I guess it doesn't occur to anyone that they are the reason for their own downturn in advertising which results in an unavailability of working capital (not necessarily credit). They turned everything into canned prefabrication. To use a small scale analogy, how long did The Backstreet Boys last? Granted, The Monkees were also a prefabricated group, but they had a small coalition of greats writing for them. All that money to buy all the competition, and they could not afford quality air staff at some of the small town stations here and there. They drove their goodwill away.

Satellite radio is not the problem, because technology and tradition can work together quite well. There is no such thing as "overabundance of stations" to real business people who know how to compete. Inductees in the Radio Hall of Fame are a testament to those facts. Those who live on are another small coalition of greats who have dedicated themselves to radio and its improvement. They hopped off the merry-go-round so that they could save radio, before the machinery totally malfunctioned and threw them off spinning into the dust with the big boys.

The real estate dynamic markets could never come to an end either.

 

[TheBigA]

There is no such thing as "overabundance of stations" to real business people who know how to compete. Inductees in the Radio Hall of Fame are a testament to those facts. Those who live on are another small coalition of greats who have dedicated themselves to radio and its improvement. They hopped off the merry-go-round so that they could save radio, before the machinery totally malfunctioned and threw them off spinning into the dust with the big boys.

That's an interesting re-writing of history. I lived through it, and I know it's not true. They hopped off the merry-go-round because their own personal greed got the better of them. They cashed out and retired to someplace warm.

Those who left already knew they were in a declining business. They could see the FCC was over-licensing the spectrum, and were cutting back the power of once-great AM stations. They saw their market shares decline in the late 80s, and demanded ownership limits be increased to 12-12-12 in the early 90s. It has nothing to do with knowing how to compete. Many in the Radio Hall of Fame pioneered the programming techniques being used today. Syndication of talent, nationalization of formats, and cost cutting in programming were all being done long before consolidation. In fact, even if consolidation was reversed, they'd still continue. Just not under the same ownership.

 

[SirRoxalot]

That's an interesting re-writing of history. I lived through it, and I know it's not true. They hopped off the merry-go-round because their own personal greed got the better of them. They cashed out and retired to someplace warm.

Somebody offers you so much money that you can simply bank it - after taxes - and get more in interest than you can earn running your radio station. What do you do? Turn it down?

Of course they cashed out and retired to someplace warm. They couldn't figure out how the new owners would handle the massive debt service, but assumed that they had a plan. After all, they convince a bank to lend them the money to buy the property. I doubt that most of the people who "cashed out" anticipated that the talent that made the stations so valuable would be the first casualties of new ownership.

It's hard to stomach a corporate apologist like you castigating those guys for "personal greed". They sold something tangible at a value set by the buyer. The greed of corporate honchos taking multi-million dollar salaries and bonuses while cutting thousands of jobs of people who created the product that gave the company value seems a lot more heinous to me.

 

[TheBigA]

Somebody offers you so much money that you can simply bank it - after taxes - and get more in interest than you can earn running your radio station. What do you do? Turn it down?

If you care about the art of radio, yes. Art has no price. It's priceless, or should be.

It's hard to stomach a corporate apologist like you castigating those guys for "personal greed".

I'm not "an apologist." I'm a realist. I didn't castigate them. I just had the courage to speak honestly.

I'm not re-writing history, because I was there, and know what the motivations were at the time. And I can safely say that had de-regulation not happened, and all owners had retained their stations, we'd be in exactly the same place we are now.

 

[PTBoardOp94]

And I can safely say that had de-regulation not happened, and all owners had retained their stations, we'd be in exactly the same place we are now.

How is this possible? If we had a limit of one AM, one FM, and one TV in a market, the whole concept of cluster selling becomes that much more difficult. Setting up one station to "flank" another is nearly impossible.

Certainly, that doesn't prevent stations from running Lia and Blair Garner for half of their broadcast day, nor does it prevent them from tracking talent from another of their 22 stations in other markets.

I guess it depends on your perception of where we are.

 

[TheBigA]

Certainly, that doesn't prevent stations from running Lia and Blair Garner for half of their broadcast day, nor does it prevent them from tracking talent from another of their 22 stations in other markets.

I guess it depends on your perception of where we are.

Exactly. Before deregulation, you had LMAs. So they would be even more prevalent now.

Stations would LMA flankers and you'd have companies setting up cluster sales operations outside of stations. Some have taken place in the years after deregulation.

Even if you restrict ownership to 7-7-7, stations can carry syndicated shows from outside companies they don't own. Lots of stations do that now.

 

[SirRoxalot]

Priceless

Somebody offers you so much money that you can simply bank it - after taxes - and get more in interest than you can earn running your radio station. What do you do? Turn it down?

If you care about the art of radio, yes. Art has no price. It's priceless, or should be.

NOW you tell us radio is an "art"? How do you manage to squeeze "art" into your corporate spreadsheet? How is it that the "priceless" aspect of the "art of radio" wasn't included in the purchase price when the consolidators were figuring the operating costs for the stations they overpaid for?

Just where does the "art" reside? In the automation system? The engineering staff? Management? It certainly can't come from the "talent", because that's the "expense" that's getting cut most by the consolidators. You certainly wouldn't cut something "priceless", would you?

I'm not re-writing history, because I was there, and know what the motivations were at the time. And I can safely say that had de-regulation not happened, and all owners had retained their stations, we'd be in exactly the same place we are now.

You're not the only one who was there. A lot of the people on these boards were there, and saw what happened. Some people sold out because the price was too hard to resist. Some sold out because the "big boys" had already come to town and gotten a foothold, and hit them with a double whammy of offering a lot of money, while driving down rate in the market with their existing stations to add to the pressure to sell. The consolidators figured that they could get the rate back up when they had a big enough cluster to dictate to advertisers.

Had deregulation not happened, the amount of debt on those stations wouldn't have been near the current levels. More revenue could go to operations instead of debt service. More competition would force more owners to try to win instead of putting a lot of resources into a few stations, and using the rest as computer or satellite fed flankers and spoilers. More stations would be targeted at their original city of license instead of rimshots of bigger markets. In other words, we'd have what financiers call a "diversified portfolio" of owners. Some would win, some might lose, but station values would have remained a lot more realistic than they were a couple of years ago. The fact that station values are coming back to reality is part of what's killing the consolidators now.

 

[TheBigA]

Re: Priceless

How do you manage to squeeze "art" into your corporate spreadsheet?

I don't know who you think you're talking to, but I have no corporate spreadsheets. So cut the crap.

Had deregulation not happened, the amount of debt on those stations wouldn't have been near the current levels.

Most of the owners of radio stations at the time had diversified interests. They could only own 12 radio stations, but they bought other things. Car dealerships, shopping malls, restaurants, etc. Lots of those companies were in debt from other purchases. Also, lots of companies that owned radio stations were, themselves, purchased. Not by broadcasting companies, but by bigger conglomerates. So debt isn't limited to companies that bought radio stations. Especially now.

More revenue could go to operations instead of debt service.

But that's not what they did. I remember visiting WPTZ in Plattsburgh NY in the 70s, operating from an old barn in a cow pasture. This was the #1 station in town. They didn't reinvest their revenue into operations, thats for sure. I visited WKFM, the only rock station in Syracuse, operating out of a dumpy building in Oswego that it shared with its co-owned AM station. They ran a syndicated rock format with the same nameless, voiceless air talent 24/7, regardless of the fact that there was two feet of snow on Erie Blvd. These are stations that had no real debt at the time. They didn't direct revenue to operations before deregulation. Why would they change?

More stations would be targeted at their original city of license instead of rimshots of bigger markets.

WKFM was licensed to Fulton, located in a suburb of Syracuse. Yet its signal was targeted at the University community, not Fulton. I challenged the station's license on that basis and lost. So much for your theory.

In other words, we'd have what financiers call a "diversified portfolio" of owners.

All of whom would be as focused on the bottom line as the current group of owners. Meet the new boss, same as the old boss. So what?

 

[TheBigA]

Just to correct a mistake in the above post, Fulton is about 40 miles NW of Syracuse. The station targeted Syracuse rather than Fulton, or even Oswego, which was closer, and where its studio (such as it was) was located.

 

[SirRoxalot]

Cut the What?

There's no doubt that radio employed more people, and programming was more diversified prior to consolidation. Owners who had diversified interests were better protected against a downturn in a single sector than the consolidators are now.

Geez, you're using Plattsburg as an example? How about if you pick a RATED market? Why not pick Booneville? Old Forge?

WKFM was hardly the "only rock station" in Syracuse in the '70s. Heck, WOUR in Utica was doing decent business in Syracuse in the '70s. There was some damn good radio on AM in Syracuse in the '70s, doing much better business than WKFM. You'd best not try to snow those of us old enough to remember what was really going on. There were automated stations running the "Superstars" format and the like, but few of them brought in serious revenue. Most of the sales guys considered them easy to sell against.

Many owners got into radio so they could save money on advertising their other properties. That's real synergy, and was far more effective than the "synergies" that were supposed to save money for the consolidators.

I'll leave it up to the people in the business. How many of you vets feel like your better off now than you were ten years ago?

 

[TheBigA]

Re: Cut the What?

There's no doubt that radio employed more people, and programming was more diversified prior to consolidation.

Not true. There was more format duplication per market than now. And there are more formats now than then.

Owners who had diversified interests were better protected against a downturn in a single sector than the consolidators are now.

When you go bankrupt, it doesn't matter how diversified you are. The bank takes the whole business. I worked for a guy whose non-radio business went bust, and we found ourselves on the street very quickly.

Geez, you're using Plattsburg as an example? How about if you pick a RATED market?

That one came to mind, and you probably know the place.

WKFM was hardly the "only rock station" in Syracuse in the '70s.

OK...it wasn't IN Syracuse...that's my point. Neither was WOUR. Utica is an hour away. Great example of a rim shot aiming at the bigger market (Syracuse) than serving Utica-Rome. Thanks for helping me make my point.

There was some damn good radio on AM in Syracuse in the '70s, doing much better business than WKFM. You'd best not try to snow those of us old enough to remember what was really going on.

WKFM was the #5 station in town. They may have been doing better business, but most of them were not getting bigger audience.

I'll leave it up to the people in the business. How many of you vets feel like your better off now than you were ten years ago?

I'm making more money and I have more responsibility. Thanks for asking. But I've moved around and adapted to a changing industry. How many vets have done the same?

 

[davideduardo]

Re: Cut the What?

Geez, you're using Plattsburg as an example? How about if you pick a RATED market? Why not pick Booneville? Old Forge?

Again, showing your knowledge of radio, are you?

Burlington / Plattsburgh is rated market 138.

 

[SirRoxalot]

Re: Cut the What?

Geez, you're using Plattsburg as an example? How about if you pick a RATED market? Why not pick Booneville? Old Forge?

Again, showing your knowledge of radio, are you?

Burlington / Plattsburgh is rated market 138.

Well EX-CUUUUUUUUSE ME. I've been to Plattsburgh, which is in NY. If you do a search for Plattsburgh at the Arbitron site, you get nada. Forgive me for not realizing that it's part of the BURLINGTON, VT market. Either way, the example cited was hardly typical of small markets of the era.

The Syracuse situation was that there was some very good AM rock radio in the '70s, but "progressive" FM was beginning to make inroads. Syracuse had a student run station at SU, and WOUR in Utica was a monster in that part of CNY. WKFM piggy-backed on the growing interest in FM music stations, which was typical of the era. What happened to WKFM when it got some local FM competition? Automation went away.

Management is generally making more money now, but programming costs are lower, the programming positions that are left are generally making the same money or less than ten years ago, and listening is down. Yet both of you refuse to see any correlation between programming cuts, listening losses, and declining revenue.

And you wonder why radio is in the shape that it's in.

 

[gr8oldies]

OK, Mom and Pop (or Consolodated Insurance) would be completely immune from the economic downtown if they just had more disc jockeys.

Reality is there were plenty of pits that passed for radio stations, even in some good size markets. To think now that our local dial has expanded to 30 stations that there would be enough advertising revenue to keep all 30 operating independently is naive at best. I can think of maybe two that could make a living serving their original city of license and region (one because I was there when it did..even though we were also trying to be a move-in). The rest of the suburban-licensed stations are in suburbs that are so tied in to the larger city for work, recretion and shopping that you'd never build a base for a station that targeted that suburb exclusively. Some of our COLs are only cities because they were thwarting the atttempt of the main city to annex the former townships.

It's so interesting that while many of us were working in facitlities that were held together with chewing gum and baing wire we all wanted some company with deep pockets to buy is, rebuild the plant and have some promotional dollars. We got them, now we all want the chbewing gum and baling wire back.

 

[TheBigA]

Re: Cut the What?

Either way, the example cited was hardly typical of small markets of the era.

Hardly typical? Maybe you're right. Operating out of a converted barn in a cow pasture was better than operating out of a beat-up double-wide trailer with a leaky roof! Or a cinder block building with a tar roof and no AC in West Palm Beach Florida. How many examples do you want? The only radio stations of the era that had passable facilities were owned by big companies like Newhouse and Park. That's where everyone wanted to work, so they could get out of the toilet. Just admit you're wrong. Small owners didn't invest revenue into personnel or programming before deregulation, and they wouldn't do it if ownership laws were reversed. Especially under the current circumstances.

WOUR in Utica was a monster in that part of CNY.

That's not the point. You said that radio would serve its COL instead of rim shotting a larger city, and WOUR was a perfect example of a station that didn't serve its COL, but rather Syracuse. Just admit you're wrong. Radio stations ignored their city of license before deregulation, and they'd continue to do it if dereg was reversed.

Yet both of you refuse to see any correlation between programming cuts, listening losses, and declining revenue.

Because stations were losing audience before programming cuts. Automated stations got great ratings with no staff before deregulation. Hey look, you can put two or three things together and say one caused another, but that doesn't mean it's true. Blame warm weather in the winter on global warming. Go ahead.

 

[SirRoxalot]

Did crappy stations exist before deregulation? Yes. Did decent facilities - and even some very nice facilities - exist in small markets before deregulation? Yes. For every "beat-up double-wide trailer with a leaky roof! Or a cinder block building with a tar roof and no AC" you could probably find a decently equipped station in the same market, or a nearby market that was a comparative palace.

Some independents were write-offs. Some were money-makers with the owner sitting in the big office near the back of the building. You can't characterize all stations as either "good" or "bad". The consolidators certainly have their share of crappy facilities, or computers in a closet filling up bandwidth without serving an audience.

Those of us working in "facitlities that were held together with chewing gum and bailng wire" were usually on the way up in the industry, or on the way down. Most small town stations were waypoints, not endpoints for the majority of broadcasters. There were a few "long-timers", who were generally locals who wanted to stay in the area, and made a good enough living because the owners valued consistency in morning drive and on the sales force. Now, those stations are owned by a bigger company with a bunch of little stations that are satellite fed, with a lot less local service elements and programming.

WOUR, BTW, wasn't targeted at Syracuse. It was targeted at Utica. Syracuse students found it because it played music that wasn't available in Syracuse at the time. WOUR was not a rimshot targeted at Syracuse, WOUR was a signal from a nearby market that listeners in Syracuse sought out because it offered alternative programming.

You say that "stations were losing audience before programming cuts", but you don't offer any proof of that. The programming cuts really began in the '80s as more and more local stations fell under the spell of outside consultants who offered to "cut programming costs". That's when Arbitron says that listening started to decline. If you have different numbers, roll out your sources.

 

[TheBigA]

WOUR, BTW, wasn't targeted at Syracuse. It was targeted at Utica. Syracuse students found it because it played music that wasn't available in Syracuse at the time. WOUR was not a rimshot targeted at Syracuse, WOUR was a signal from a nearby market that listeners in Syracuse sought out because it offered alternative programming.

Wow...so it was an accident, purely coincidental that a radio station would program music that would appeal to college kids who lived an hour away. How naive are you? They had a SALES OFFICE in downtown Syracuse! They broadcast concerts live from Syracuse venues. They did everything they could do to attract Syracuse listeners other than apply for a CP to move the studio and tower to Erie Boulevard! What more do you need?

You say that "stations were losing audience before programming cuts", but you don't offer any proof of that. The programming cuts really began in the '80s as more and more local stations fell under the spell of outside consultants who offered to "cut programming costs". That's when Arbitron says that listening started to decline. If you have different numbers, roll out your sources.

I just gave you an example of a radio station in Fulton operating in the 1970s from an equipment rack in Oswego. How much more could you cut from such a station? That had nothing to do with an outside consultant. It had everything to do with a small town owner seeing a gold mine in Syracuse, spending no money on staff, and cashing in. I'll see if I have an old SRDS in the basement, but I bet their rates were similar to other top rated stations in town.

Radio has been run by cheap owners since it began. Don't blame consultants, corporations, Wall Street, or anyone else. It's been cheap from day one, it's been about making money, not spending it, and none of this is recent history.