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Revenue dictates what radio can do

B

b-turner

I've read the comments about how radio is failing because it is not live and local or is voice-tracked. Even when it was live and local can you tell me an average jock got good pay, maybe benefits and such? Revenue is why and all the options and changes in businesses, radio is forced to adjust.

I follow a community where a station is that I follow and have. They share financial figures and I have data on this small market. There are 4 commercial stations and 3 public supported. The population is about 43,000. 34 stations can be received. There is 1 AM with a translator plus a public translator I'm calling one of the 3 public stations. Retail Sales is around $716,000,000 with about 1,100 businesses. Other towns in the area would create about another $250,000,000.

Formts are: Adult Contemporary, Classic Rock, Country and the AM is classic hits. The public stations are NPR News/Talk, Americana and Classical.

The 4 commercial stations were doing $1,030,434. The public stations generated $384,639 three years ago in June 2023. The total radio dollars $1,415,073 in 2023
The 4 commercial stations were doing $827,000. The public stations generated $291,048 as of figures I got June 1. Total radio dollars $1,118,048.
That is a loss of $297,025 over 3 years for a loss of 21% or about 7% per year.

When you have 3 stations billing $20,000 each try doing live and local. One commercial station bills $98,000. How many salaries can you pay on that income?

The fact is these stations do well with listeners. They love their stations. These stations are known throughout the area with both listeners and potential advertisers. In other words they do things right.
 
Revenue is nice and you aren't wrong. It's the cost of doing business that dictates what radio can do though. 20k a month is breaking even for an owner/operated AM/FM translator but is the yearly music licensing costs for a small market full power FM. P&L sheets matter.
 
Great topic. What can radio do? Not much. The part of this that people don't seem to understand is that there are a lot of intangibles involved in owning a radio station. Even if you're the owner, there are things you can't control.

Starting with the signal. The signal is property of the federal government. The owner has a license to operate. But the owner can't just raise the power or move to another frequency. If his license is for AM, that's where he has to stay, unless he spends more money on an FM translator.

The owner can't control the devices people use to listen to his station. That's all handled by the electronics industry. For the most part, that industry is based in China. They don't care about local radio stations in the US. Most of the companies stopped making traditional radios a long time ago. The quality of those devices is controlled by the manufacturers. If my station sounds like crap on the radio made inn China, there's nothing I can do about it.

The owner doesn't really control revenue. That's a function of the marketplace. Since all revenue is from advertising, the amount of revenue is based on what they're willing to pay. If they feel their money is better spent elsewhere, that's where they go. They have lots of choices. The owner can't just add more commercials if the revenue starts to go down. Why? Because the listeners will only put up with so many commercials before they leave and go to another device that has fewer commercials. They also don't like those long form infomercials. So the owner options for revenue are limited.

This is the quandary radio owners have. There's not much in their control. As the topic of this thread indicates, revenue dictates what radio can do. Revenue is declining. There's not much the owners can do to change that. They can own more stations, and spread the expenses over more signals. But that doesn't change the fact that more stations mean more signals each with declining revenue. The amount of revenue is set by the market. The owner can continue to budget as though it's 20 years ago. But at some point he runs out of money.

So what can the owners do? Diversify. If the on air advertising is declining, what else can you create or sell that you can make money with? The answer most owners have come up with is digital content. Streaming, podcasting, online content. But that requires more staff. So the owner diverts money and staff from the declining business to invest in a growth area. That's what we're seeing at iHeart, Audacy, and all the other companies. The traditional business is declining, so they're investing in a similar, related business.
 
It’s just business. Obviously this board has a particular focus, but nonetheless there is often a sort of idea that floats around that somehow radio (or TV in those forums) are not bound by the same laws of economics that every other business experiences.

It’s totally valid that ad-supported media needs to anttract its own product to sell, the eyes and ears. But that is still bound by what you can get for selling said product to the actual paying customer.

Such is life.
 
TheBigA said:
Great topic. What can radio do? Not much. The part of this that people don't seem to understand is that there are a lot of intangibles involved in owning a radio station. Even if you're the owner, there are things you can't control.

Starting with the signal. The signal is property of the federal government. The owner has a license to operate. But the owner can't just raise the power or move to another frequency. If his license is for AM, that's where he has to stay, unless he spends more money on an FM translator.

The owner can't control the devices people use to listen to his station. That's all handled by the electronics industry. For the most part, that industry is based in China. They don't care about local radio stations in the US. Most of the companies stopped making traditional radios a long time ago. The quality of those devices is controlled by the manufacturers. If my station sounds like crap on the radio made inn China, there's nothing I can do about it.

The owner doesn't really control revenue. That's a function of the marketplace. Since all revenue is from advertising, the amount of revenue is based on what they're willing to pay. If they feel their money is better spent elsewhere, that's where they go. They have lots of choices. The owner can't just add more commercials if the revenue starts to go down. Why? Because the listeners will only put up with so many commercials before they leave and go to another device that has fewer commercials. They also don't like those long form infomercials. So the owner options for revenue are limited.

This is the quandary radio owners have. There's not much in their control. As the topic of this thread indicates, revenue dictates what radio can do. Revenue is declining. There's not much the owners can do to change that. They can own more stations, and spread the expenses over more signals. But that doesn't change the fact that more stations mean more signals each with declining revenue. The amount of revenue is set by the market. The owner can continue to budget as though it's 20 years ago. But at some point he runs out of money.

So what can the owners do? Diversify. If the on air advertising is declining, what else can you create or sell that you can make money with? The answer most owners have come up with is digital content. Streaming, podcasting, online content. But that requires more staff. So the owner diverts money and staff from the declining business to invest in a growth area. That's what we're seeing at iHeart, Audacy, and all the other companies. The traditional business is declining, so they're investing in a similar, related business.
Click to expand...
So why would anyone want to own a radio station.
 
TheBigA said:
Great topic. What can radio do? Not much. The part of this that people don't seem to understand is that there are a lot of intangibles involved in owning a radio station. Even if you're the owner, there are things you can't control.

Starting with the signal. The signal is property of the federal government. The owner has a license to operate. But the owner can't just raise the power or move to another frequency. If his license is for AM, that's where he has to stay, unless he spends more money on an FM translator.

The owner can't control the devices people use to listen to his station. That's all handled by the electronics industry. For the most part, that industry is based in China. They don't care about local radio stations in the US. Most of the companies stopped making traditional radios a long time ago. The quality of those devices is controlled by the manufacturers. If my station sounds like crap on the radio made in China, there's nothing I can do about it.

The owner doesn't really control revenue. That's a function of the marketplace. Since all revenue is from advertising, the amount of revenue is based on what they're willing to pay. If they feel their money is better spent elsewhere, that's where they go. They have lots of choices. The owner can't just add more commercials if the revenue starts to go down. Why? Because the listeners will only put up with so many commercials before they leave and go to another device that has fewer commercials. They also don't like those long form infomercials. So the owner options for revenue are limited.

This is the quandary radio owners have. There's not much in their control. As the topic of this thread indicates, revenue dictates what radio can do. Revenue is declining. There's not much the owners can do to change that. They can own more stations, and spread the expenses over more signals. But that doesn't change the fact that more stations mean more signals each with declining revenue. The amount of revenue is set by the market. The owner can continue to budget as though it's 20 years ago. But at some point he runs out of money.

So what can the owners do? Diversify. If the on air advertising is declining, what else can you create or sell that you can make money with? The answer most owners have come up with is digital content. Streaming, podcasting, online content. But that requires more staff. So the owner diverts money and staff from the declining business to invest in a growth area. That's what we're seeing at iHeart, Audacy, and all the other companies. The traditional business is declining, so they're investing in a similar, related business.
Click to expand...
All true we see the same situation on the TV side over how they have to adapt to the current business environment all for the same reasons such as adapting to newer TV's. Making content that generates viewers on Disney+, Peacock, Paramount+ and Fox One apps. local TV station owners like Gray, Sinclair, Hearst Tegna having to adapt to FAST channels type stuff here simply because that's where the audience moved to.
 
Y2kTheNewOldies said:
All true we see the same situation on the TV side over how they have to adapt to the current business environment all for the same reasons such as adapting to newer TV's. Making content that generates viewers on Disney+, Peacock, Paramount+ and Fox One apps. local TV station owners like Gray, Sinclair, Hearst Tegna having to adapt to FAST channels type stuff here simply because that's where the audience moved to.
Click to expand...
The demo audience moved to Youtube and TikToc. Nothing the networks can do to get them back.
 
I've watched the growth of a local media group over, well, most of my lifetime. They went from one small-market UHF TV station to now having the CBS/Fox/NBC signals plus a slew of sub-channels, and most of local radio stations. Keys?

  1. Package deals. PACKAGE DEALS. Salesperson walks into...anyplace...HVAC contractor, furniture store, used car dealer...and can fashion so many deals your head will spin. Got $20/day to spend? Or $2,000? What demo you want? We got 'em all. Okay, my friend, so you'll have local weather every morning on NBC, 40 ten second spots in the afternoon on Fox, 10 thirty second spots daily on classic country, hard rock and classic hits, and banner ads on the Hot Country and AC websites. I'll stop back in two weeks and we'll tweak things. The guy from that other radio station? "I can sell you 20 ads a day. Deals? Okay, buy 30 and I'll give you 2 more for free!"
  2. One building. All the admin, all the studios, all the staff in one place (or just a few.) A program director can also co-host a local TV show and do PM drive. What do you need? What works? We can change it TODAY.
I daydream of owning a radio station, but if I had to make money at it...a nightmare!
 
I love your thinking DelmarvaDX. What I'm finding in my neck of the woods is mostly smaller packages under $500 a month. These national chains are eating the lunch of the local business we rely on. We offer website and Facebook in addition to radio. As for radio, we have a channrl on the major TV provider, an app and online with ads airing on all of them. Lots of those that could have spent, say, $1,500-$3,000 a month either sold to a national chain or have become smaller because of the national chains. Being 50 miles from a major city kills agency buys. Even so, we average about 11 units an hour.
 
"I daydream of owning a radio station, but if I had to make money at it...a nightmare!"


Very deep-pocketed people like Stephen King and Delilah have given-up. That would certainly give me pause.
 
b-turner said:
I love your thinking DelmarvaDX. What I'm finding in my neck of the woods is mostly smaller packages under $500 a month. These national chains are eating the lunch of the local business we rely on. We offer website and Facebook in addition to radio. As for radio, we have a channrl on the major TV provider, an app and online with ads airing on all of them. Lots of those that could have spent, say, $1,500-$3,000 a month either sold to a national chain or have become smaller because of the national chains. Being 50 miles from a major city kills agency buys. Even so, we average about 11 units an hour.
Click to expand...

We have about 11-12 units an hour. Political rates run in the slightly higher than mid single digits. Regular rates are upper single digits for 30s and lower double digits for 60s.

We have medium sized packages.... $250 to $500. We have a few bigger ones.. $7oo to about %1200. Im not aware of may that are any bigger than that.

We're in the west half of a rated market. Only our 250 watt country translator and our 15kw CHR station make it reliably 45 miles into the hub of the market. Our 50kw AC signal doesnt make it to the hub of the market and barely to the county line despite what maps show. We dont pay for the ratings, and we get a few agency buys but not many.
 
My average account spends $300 a month. Our $300/month package is $580 month to month but I sign people up on a "no penalty cancellation anytime" contract that becomes 'til furher notice at the anniversary. I learned long ago if you can join the list of monthly fixed costs like utilities and rent versus the list of bills you have control over, the client tends to stay on perpetually. One of those has been on about 7 years. About 30% will not go a full year and cancel. Most say they'll try a couple of months and I say sign the annual because it cost less and you can stop anytime. If I do my job right and we produce the results to justify it, you'll want to stay on all year and be the one guy asking for the business and getting it in the slow times when no competitors are asking for business. Here clients range from $100 to $1,700 a month.
 


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