Rolling Back the Buffalo Rock Radio Clock

[davideduardo]

September 6, 1991:

"Buffalo's two rival AORs Rich Communications' WGR FM (97 Rock) and Metroplex Communications' WUFX (The Fox) - signed a five-year arketing agreement (LMA) Tuesday (9/3), creating "The Rock Network."

Rival stations form `The Rock Network'

Buffalo's two rival AORs - Rich Communications' WGR - FM (97 Rock) and Metroplex Communications' WUFX (The Fox) - signed a ive -year local marketing agreement (LMA) Tuesday (9/3), creating "The Rock Network." Under the deal, which was arranged by broker Gary Stevens, Rich will handle both programming and sales for the Fox, whose format will remain intact. Fox Business Manager Terry
Lucasik has been upped to Station Manager; virtually everyone else at the station was fired, including GM Peter Coughlin and PD Ralph Cipolla. The Fox on -air staff was promptly hired by Rich. along with its news and promotion directors, and Rich is interviewing former Fox sales staffers for possible positions with the Network. Rich pians to hire a new PD for the Fox, according to Exec. VP /GM Jim Meltzer. WGR -FM MD Bob Richards will handle programming duties in the interim

'Superstation'

"Although listeners will hear no difference, this agreement will create for advertisers a superstation that will reach a larger share of key target audiences than any other single station in the market," remarked Metroplex Chairman NormanWain, who first proposed the deal in late May. "This guarantees the long-term visibility of the Fox and gives local advertisers more bang for the buck."

Meltzer said Rich was persuaded to enter the LMA because "it makes good business sense, assures the Fox will remain a strong presence in the marketplace under local management, and guarantees listeners will continue to have a choice between two rock radio formats. Despite the new arrangement, Meltzer insisted the stations are "still rivals. Both are trying to build their individual audiences, and I've got aggressive bonus plans for both airstaffs."

 

[flybynight]

September 6, 1991:

"Buffalo's two rival AORs Rich Communications' WGR FM (97 Rock) and Metroplex Communications' WUFX (The Fox) - signed a five-year arketing agreement (LMA) Tuesday (9/3), creating "The Rock Network."

I didn't live in WNY at the time, but heard about this from a friend when it was announced. Both of us were stunned at the notion of this incestuous arrangement. We were also only 2 of the very few people I knew at the time who had any sense of what was to come.

I understood the cost-savings angle, but saw a very dark cloud developing where talent and actual competition was concerned.

 

[davideduardo]

I didn't live in WNY at the time, but heard about this from a friend when it was announced. Both of us were stunned at the notion of this incestuous arrangement. We were also only 2 of the very few people I knew at the time who had any sense of what was to come.

I understood the cost-savings angle, but saw a very dark cloud developing where talent and actual competition was concerned.

And this was a sort of advance notice about the state of radio.

Metroplex, owned by Norm Wain and Bob Weiss, was one of the most successful non-corporate groups of that era. But radio was in the doldrums, and an NAB survey at the time showed half of all stations were not profitable.

So for a really good operator like Metroplex to look for solutions means the industry was having issues. Too many Docket 80-90 move-ins, drop-ins and upgrades, and too many new stations with no new revenue. So things like that LMA were a natural effect.

And that was in the pre-Internet era, and only a couple of years after the first huge and cumbersome cellular phones came on the scene.

Disclosure: A decade earlier I was a manager for one of the Metroplex stations and I thought that the company was absolutely great.

 

[TheBigA]

This is a great story, and the timing is important. A lot of people think had the Telecom Act of 96 not been passed, that radio would still be owned by small groups, and stations would all still have full local staffs. This story shows just one example of companies seeking to economize and share resources. The other thing that was going on during this time was the explosion of satellite-delivered formats from TranStar and Satellite Radio Networks. The fact that Rush Limbaugh was able to get major talk stations to run a syndicated show in the middle of the day (rather than after 7PM) was an indication of how vulnerable radio was in the late 80s and early 90s. Soon other dayparts would fall, and you'd have syndicated morning shows. All of this happened before 1996. As I always say: Never underestimate the drive of a station owner to economize.

 

[gr8oldies]

This was about the time Jacor's WLW formed an LMA with Taft's WKRC, and we had "700 WLW" and '550 WLW".

 

[Rob Piotrowski]

A lot of people think had the Telecom Act of 96 not been passed, that radio would still be owned by small groups, and stations would all still have full local staffs.

Wrong. Had T'96 not been passed you wouldn't have as much consolidation and that would mean less Wall Street money poured into the industry.

 

[TheBigA]

Wrong. Had T'96 not been passed you wouldn't have as much consolidation and that would mean less Wall Street money poured into the industry.

Wrong. Wall Street money began pouring into the industry long before the 96 act. Study the financial history of broadcasting, and look specifically at Capital Cities and its purchase of ABC. What year did that happen? Corporate consolidation wasn't necessary in order to achieve consolidation of the business. Companies were finding legal ways to get around the ownership laws, and still deliver larger audiences to advertisers. So even without the 96 Act, which mainly changed the telephone industry, you would still have consolidation in programming (with consultants and syndication) and sales (with LMAs and "networks")

 

[davideduardo]

Wrong. Had T'96 not been passed you wouldn't have as much consolidation and that would mean less Wall Street money poured into the industry.

Look at all the publicly traded companies going back, say, 25 to 30 years before consolidation.

Storer, Taft, Mooney, Lin, ABC, CBS, Cap Cities, Gross, Rahall, Scripps-Howard, Starr were all pure broadcast companies that were public.

Admas-Russel, Avco, Bartell, Blair, Chris-Craft, Combined, Co9wles, Fairchild, Fuqua, Gannett, General Tire, Globetrotter, San Juan Racing, Schering-Plough, Wometco, Sonderling, Rollins, Pueblo International, Reeves, Outlet, Metromedia, Media General, Jefferson Pilot and about a dozen others were listed as "Broadcasting with other major interests" in the 1975 Broadcasting Magazine index of 135 stocks "allied with broadcast media".

There was plenty of "Wall Street Money" way before consolidation as shown by this list.

What was not present to a greater extent was private equity. That was a late-20th Century financial market boom that packaged secured debt, pure equity or both for investors and which did not go through the conventional equity markets.

When I put together a package to purchases some major market stations in 1979 (NYC, Miami, Hartford), we got our commitment from Manny Hanny and Chase, which were as Wall Street as they came. And that was 27 years before consolidation.

What you got immediately at the time of consolidation was a lot of bank financing and a lot of private equity financing, but not a lot of new stock issues on the NYSE or OTC listings. Remember, bank consolidation was a product of the Reagan years, and most banks were just in the consolidation process back then. So the loans for radio station acquisitions were primarily done by regional banks when they were done via not private equity or debt packages.

 

[flybynight]

When I put together a package to purchases some major market stations in 1979 (NYC, Miami, Hartford), we got our commitment from Manny Hanny and Chase, which were as Wall Street as they came. And that was 27 years before consolidation.

"He's a guy, she's a girl and that's a dog---and they're all cops! Manny Hanny and Chase, this fall on NBC"

 

[TheBigA]

Admas-Russel, Avco, Bartell, Blair, Chris-Craft, Combined, Co9wles, Fairchild, Fuqua, Gannett, General Tire, Globetrotter, San Juan Racing, Schering-Plough, Wometco, Sonderling, Rollins, Pueblo International, Reeves, Outlet, Metromedia, Media General, Jefferson Pilot and about a dozen others were listed as "Broadcasting with other major interests" in the 1975 Broadcasting Magazine index of 135 stocks "allied with broadcast media".

That is the category of radio owners that took the biggest hit in the 80s. The best example was when GE bought RCA in 1985. Both companies sold their radio interests that year, to focus primarily on television and the NBC TV network. One can't underestimate the effect that had on the radio business at the time. Both RCA and GE had been founding companies in the radio industry, and both were leaving the business. The companies that bought those radio stations went on to become major players in radio consolidation in the 90s.

 

[Rusty Bridges]

September 6, 1991: "Buffalo's two rival AORs Rich Communications' WGR FM (97 Rock) and Metroplex Communications' WUFX (The Fox) - signed a five-year arketing agreement (LMA) Tuesday (9/3), creating "The Rock Network."

And less than five years after cutting this deal, Rich Communications completely divested, selling the two FMs to Mercury Communications, selling two AMs to Keymarket. Mercury years later sold out to Citadel. Most readers know how that went. Keymarket was swallowed by another company, then Sinclair took over. Within a few years it sold the radio group to Entercom. And most readers know how that went.

 

[davideduardo]

And less than five years after cutting this deal, Rich Communications completely divested, selling the two FMs to Mercury Communications, selling two AMs to Keymarket. Mercury years later sold out to Citadel. Most readers know how that went. Keymarket was swallowed by another company, then Sinclair took over. Within a few years it sold the radio group to Entercom. And most readers know how that went.

And that story show how difficult running independent radio stations had become. Consolidation was the result of a need to severely cut overhead as half of all stations had become unprofitable.

 

[TheBigA]

And that story show how difficult running independent radio stations had become. Consolidation was the result of a need to severely cut overhead as half of all stations had become unprofitable.

All of which goes back to Docket 80-90 in the 80s, which over licensed the spectrum, creating too many stations, driving down individual station shares. This was happening at a time when TV usage was rising, as well as radio TSL was starting to drop. Meanwhile, national syndication was on the rise, with several new companies providing national programming, and offering advertisers access to a national radio audience.

 

[SirRoxalot]

Our two corporate stars seem to have forgotten how much the consolidators overspent trying to create monopolies in certain demographics in markets. They were going to use "synergies" (a/k/a job cuts) to drastically reduce costs. Are there too many stations? Probably, but with the explosion of translators it's arguable that there are more stations that ever on the dial. TSL did indeed start to drop. The reason heard over and over from listeners is that radio had become stale, predictable, less relatable. We still hear every day from people who lament that you can drive from market to market and hear essentially the same music and presentation everywhere. I had managers - including some management people on this board - praising the "McDonaldization" of radio - mind-numbing sameness spreading across the radio landscape in market after market.

Of course, the consolidation apologists will disagree with all of this. So did the head honchos at Clear Channel/iHeart, Citadel, and Cumulus. We know how that turned out. Entercom supposedly was smarter about their recent "merger". Anybody looked at their stock price lately?

But, carry on. I suspect that some of you are drooling at the idea that you'll be able to type lame copy into a computer, tweak a few dials, and have a robot voice deliver your brilliance without any input from those pesky talent people. Radio's journey to the Dark Side will be complete.

 

[TheBigA]

Our two corporate stars seem to have forgotten how much the consolidators overspent trying to create monopolies in certain demographics in markets.

As we've discussed many times, the price one spends is based on the marketplace. There are no absolutes in a free economy. The view that they overspent is made in hindsight. They spent what the market required, and the lenders agreed was a fair price, given the circumstances AT THE TIME. But of course it's always so much easier to view things 20 years later. Nobody felt they overspent at the time.

As for the so-called "McDonaldization" of radio, that began in the 1930s with network radio. It allowed the entire country to have the shared experience of Fibber McGee & Molly and the Lone Ranger. It continued in the 70s with national consultants telling radio stations what to play and who to hire. Now we have SiriusXM, which allows people to hear the exact same thing in real time from coast to coast. We see 30 million people are paying an average of $10-15 a month for that. So maybe driving from market to market hearing the same music and presentation isn't such a bad thing. If McDonalds is the model, and it's a successful company, than what's the problem? Same with WalMart, Pizza Hut, and every other national chain.

Meanwhile the people of Buffalo have a local owner running a small AM station to a 3 share in the ratings, and all people can do is attack him and find fault.

 

[tbolt909]

As we've discussed many times, the price one spends is based on the marketplace. There are no absolutes in a free economy. The view that they overspent is made in hindsight. They spent what the market required, and the lenders agreed was a fair price, given the circumstances AT THE TIME. But of course it's always so much easier to view things 20 years later. Nobody felt they overspent at the time.

As for the so-called "McDonaldization" of radio, that began in the 1930s with network radio. It allowed the entire country to have the shared experience of Fibber McGee & Molly and the Lone Ranger. It continued in the 70s with national consultants telling radio stations what to play and who to hire. Now we have SiriusXM, which allows people to hear the exact same thing in real time from coast to coast. We see 30 million people are paying an average of $10-15 a month for that. So maybe driving from market to market hearing the same music and presentation isn't such a bad thing. If McDonalds is the model, and it's a successful company, than what's the problem? Same with WalMart, Pizza Hut, and every other national chain.

Meanwhile the people of Buffalo have a local owner running a small AM station to a 3 share in the ratings, and all people can do is attack him and find fault.

Wasn't the goal to eliminate the competition by buying the competition? The big fish gobbled up the medium fish and paid a King's Ransom. Greed and arrogance. Screw the listeners by giving them 9 minute stopsets and then play "FreeBird" for the millionth time. Quality Content or Public Service? Who needs it? Why have a steak in a nice restaurant when you can get something from the McDonald's $1 menu or a Baloney sandwich? Now listeners have options they didn't have pre-internet. Radio doesn't like grappling with that.

The running joke in the 90's was "Who owns us this month?" Stations were bought, sold and swapped everywhere. Remember the Jacor slogan -- The Noise You Can't Ignore.!
That noise may have been the Death Rattle...

 

[davideduardo]

Wasn't the goal to eliminate the competition by buying the competition?

No. The goal was to be able to combine operating expenses (one GM, one insurance policy, one office location) and to create a spectrum of formats that would be able to be tailored for nearly every buy.

The big fish gobbled up the medium fish and paid a King's Ransom.

No, they paid only a bit more than what had been the going cash flow multiples going into consolidation for profitable stations. And they paid good stick values for underperformers, as there were limited stations and competing buyers.

Greed and arrogance. Screw the listeners by giving them 9 minute stopsets and then play "FreeBird" for the millionth time.

When I got into radio, the FCC was scrutinizing stations at the 3 year renewals for exceeding 18 minutes of ads an hour. We even had to submit "composite week logs" to prove we were under 18 minutes.

And WABC played the #1 song every 90 minutes. Repetition has been part of music radio since Top 40 was invented in 1952.

Quality Content or Public Service? Who needs it? Why have a steak in a nice restaurant when you can get something from the McDonald's $1 menu or a Baloney sandwich? Now listeners have options they didn't have pre-internet. Radio doesn't like grappling with that.

And entertaining listeners with their favorite music is not a public service? I am on record at the FCC as questioning the definition of "public service" in this regard.

The running joke in the 90's was "Who owns us this month?"

No, it was a brief joke for the first wild year of consolidation, culminating in the NAB convention where someone handed out buttons that said "Do you know who your owner is today?".

Stations were bought, sold and swapped everywhere. Remember the Jacor slogan -- The Noise You Can't Ignore.!

That was actually Jacor's Randy Michaels-inspired slogan prior to consolidation.

 

[TheBigA]

That noise may have been the Death Rattle...

Meanwhile, you have a local owner who has risked his personal money, not that of some investment firm, he's doing it because he loves radio, and you attack him daily.

What a hypocrite. You don't like corporate radio, and you don't like small local radio.

 

[davideduardo]

Our two corporate stars seem to have forgotten how much the consolidators overspent trying to create monopolies in certain demographics in markets.

Nobody got "monopolies" as that was not legal. But what we got were a few companies in each market that controlled multiple stations. Just as we have just 4 (soon 3) companies that provide cellular phone services and infrastructure.

There is a difference between a monopoly and an oligopoly.

They were going to use "synergies" (a/k/a job cuts) to drastically reduce costs.

The intended synergies were not through job cuts. They were through things like shared office space, a single insurance policy, one outside auditor, a single phone system and the like.

In some cases, there were personnel cuts such as traffic and accounting, but those were coming anyway with better traffic software, improved billing processes and other technological changes that cut staff, just as the elimination of the 1st Class License requirements cut "engineers".

TSL did indeed start to drop.

TSL started to drop in the late 80's, but it was a product of improved diary system quality control and procedures. The big drop in the major markets was in 2008, when the PPM showed actual TSL was about 40% lower under that system than in the diary.

Up till then, TSL had been relatively flat from the late 80's to the late 00's.

The reason heard over and over from listeners is that radio had become stale, predictable, less relatable. We still hear every day from people who lament that you can drive from market to market and hear essentially the same music and presentation everywhere.

In the late 60's I used to drive around and listen to Top 40 stations in many places each time I visited the US. Yes, they had different jingles and different jocks, but the songs were 90% the same, the contests were about the same ones we copied out of Gavin and the rotations were ultra-similar.

And going back even further, Snookie Lanson and the crew sang the same songs each week on Your Hit Parade on national radio and then national TV. It's one country, and apart from some regional variants, the big hits were the same.

I had managers - including some management people on this board - praising the "McDonaldization" of radio - mind-numbing sameness spreading across the radio landscape in market after market.

And way before consolidation we had everyone copying Storz and McLendon, then Chuck Blore and Color Radio, Bill Drake and Boss Radio and Lee Abrams and Superstars. And every market had a Shulke or a Boneville station at the top of the ratings, sometimes one of each.

Of course, the consolidation apologists will disagree with all of this. So did the head honchos at Clear Channel/iHeart, Citadel, and Cumulus. We know how that turned out. Entercom supposedly was smarter about their recent "merger". Anybody looked at their stock price lately?

Different situation. I, for one, think David Field is frightened by the spectre of Shari Redstone and the possibility that she will not only merge CBS and Viacom but see that the Entercom deal is not to her liking and use the majority position she controls following the Reverse Morris Trust to bring the whole group under her control.

Field's only solution is to up the cash flow and make the deal hard to rationalize.

But, carry on. I suspect that some of you are drooling at the idea that you'll be able to type lame copy into a computer, tweak a few dials, and have a robot voice deliver your brilliance without any input from those pesky talent people. Radio's journey to the Dark Side will be complete.

You know, that is what people said when the Jack format went wide. The fact is that today there are loads of listeners who do not want jocks talking. That, as much as fewer commercials, is the appeal of Pandora. The change in the way talent is employed is not necessarily a defect.[/SIZE]

 

[tbolt909]

Meanwhile, you have a local owner who has risked his personal money, not that of some investment firm, he's doing it because he loves radio, and you attack him daily.

What a hypocrite. You don't like corporate radio, and you don't like small local radio.

But I do like NPR.

Criticism of outlandish boasts is not an attack. Ever heard of Hubris? Perhaps not. I've said that it's great that an Oldies format can succeed. You have called it "Advertiser Repellent" on other forums. Hypocrisy? I'm guessing that you don't like getting listener feedback either unless it's fawning praise...