Should corporations be allowed to own radio stations?

[Surfer]

OK, as long as ANY corporate entity owns a radio station they will look at the bottom line. Not that it is bad but corporations are good at being...well...corporations. They bow to Wall Street pressure.

Radio should be aware of it's listeners and advertisers who, ultimately, drive sales. As long as a radio station is corporate owned (or, in it for the money), radio doesn't have much of a fighting chance. Small stations that are owned by just a few people (and there are some left) seem to want to do it right.

Maybe corporations are the worst thing for the business. They sure don't pay any better.

 

[bierkenstock]

Are proposing that radio become a toy or a "hobby" for the very rich, to play the music they like and spout the political views they agree with?

Almost all proprietors are "in it for the money." Some of the greediest SOBs I ever knew were independent station owners. At least corporate management has to operate on a business-like basis and is accountable to stock holders (who are people, too). And even these independent proprietors form corporations to hold radio properties.

A little inconsistency here. It's OK for you to want to be paid more. It's not OK for shareholders to want more profits and dividends. How they are greedy and you're not? Shouldn't you work in radio to selflessly serve the public interest, convenience and necessity?

 

[Matt]

Actually, I wish someone would pass a law that a broadcast facility could NOT be owned by an "LLC", or Limited Liability Corporation.

This is the legal loophole that allows major companies to own local businesses, run them like pieces of a corporate empire, but avoid monetary liability for damages (real or perceived) by the local operation. That's why it's called "limited liability".

The LLC effectively separates the interests of the station ownership from the "public trustee" responsibility of the station operations. As long as that quarterly "interests/programs" list is in the public file, the owners don't have to give another thought to how they are serving the community and are free to make as much money as possible...screw the public!

Of course, this will never happen as no one really wants to be responsible for anything adverse that goes on at a radio station.

Later....
Matt Smith
WGSR-TV

 

[SaltyDog]

Actually, I wish someone would pass a law that a broadcast facility could NOT be owned by an "LLC", or Limited Liability Corporation.

This is the legal loophole that allows major companies to own local businesses, run them like pieces of a corporate empire, but avoid monetary liability for damages (real or perceived) by the local operation. That's why it's called "limited liability".

Calling the Limited Liability aspect of a Limited Liability Corporation a loophole stretches the term loophole beyond all comprehension. As you said, it's the very reason for its existence.

While the Liability is limited to the local entity, that is still a lot of liability. An LLC can have many millions of dollars at risk. I've run radio stations for Mom and Pop operators, big corporations and LLC's. If there was any difference at all between their approaches to owning and operating radio stations, it was because of the personalities involved and not the legal structure.

People get all worked up by the word "corporation" as it conjures up images of grey monolithic monstrosities devoid of any human component. In reality, a corporation is a legal fiction created by lawyers. When you look behind the facade, you still find people running them. Some are great, some are horrible and most are in between.

 

[JbeJay]

People get all worked up by the word "corporation" as it conjures up images of grey monolithic monstrosities devoid of any human component. ... When you look behind the facade, you still find people running them. Some are great, some are horrible and most are in between.

It's OK for you to want to be paid more. It's not OK for shareholders to want more profits and dividends. How they are greedy and you're not?

Good points.

It never ceases to amaze me how people can spout off about evil corporations without understanding Economics 101.

Jay

 

[hammondo]

The ownership of my 4 stations and other broadcast stuff we had (and later my funeral homes) was ALWAYS in a corporation. First myself and a partner. Later myself, and my wife.

There are many advantages over a sole proprietorship. Pretty evil, huh? The LLC stuff wasn't around back then.

 

[davideduardo]

OK, as long as ANY corporate entity owns a radio station they will look at the bottom line. Not that it is bad but corporations are good at being...well...corporations. They bow to Wall Street pressure.

Radio should be aware of it's listeners and advertisers who, ultimately, drive sales. As long as a radio station is corporate owned (or, in it for the money), radio doesn't have much of a fighting chance. Small stations that are owned by just a few people (and there are some left) seem to want to do it right.

Maybe corporations are the worst thing for the business. They sure don't pay any better.

Of the 13,000 or so radio stations in the US, nearly all but a tiny handfull (less than 100) are owned by corporations of some kind.

The reasons are multiple... in a small station, the owner can pass shares to family over time to provide for estate planning and an orderly, non-disruptive transfer upon death or retirement. In addition, a corporation shileds personal assets, like the owner's home and other investments, from the legal consequences of actions by the staiton, it's staff and so one; why should the owner lose everything should a commentator or DJ make an actionalble remark, or a station vehicle be involved in an accident? Further, a corporation can be sold with all its assets and liabilities, contracts and obligations moving with the corporation, not the former owner. The cost savings and ease of transfer alone make this sufficient reason for going with a corporate structure.

The corporation provides both protection for owners of small stations and a way to plan for the future. In the case of bigger stations, and in some markets a single FM is worth several hundreds of millions, it allows groups of persons to come together to own a station and establishes, via bylaws and legislation the rights and limitations of each participant in a corporation.

The first station I built, in 1964, was owned by a corporation of which I was the sole shareholder. Were I to not have had access to such a device, I never would have built the station, I never could have gotten financing during my first 6 months of losses on operations, and many things I did would have required a personal rather than a corporate guarantee.

Nearly all US radio stations are businesses; the corporation is the standard way of organizing a business. The sole proprietorship is nearly unknown today.

 

[Surfer]

After re-reading my first post I would like to make a clarification.

Making money, for anybody, is good...even a corporation. Making money at the expense of listeners, advertisers, investors or anyone else is not. Corporations have a TENDENCY to ignore how the medium could be better (and probably make a lot more money) and go with the latest "cheap" or "cost-cutting" solution. Usually, this results in a poorer quality product down the line.

 

[hammondo]

Surfer, I think your promoting a "bum rap."

I think you should replace the word, "corporation" with the word "business. It's not just corporations.

 

[SirRoxalot]

I think that the real complaint is about short-sighted owners - and stockholders - who sacrifice long-term growth for short-term profits.

 

[JbeJay]

I think that the real complaint is about short-sighted owners ... who sacrifice long-term growth for short-term profits.

That's a situation which is not limited to corporations and is not limited to radio.

But to prevent "corporations" from owning and operating radio stations is NOT an intelligent solution.

 

[SaltyDog]

Corporations have a TENDENCY to ignore how the medium could be better (and probably make a lot more money) and go with the latest "cheap" or "cost-cutting" solution.

Corporations don't run radio stations, people do. If you have a better way, put your pitch together, round up some investors and buy your own stations.

 

[dbdigital]

I think that the real complaint is about short-sighted owners ... who sacrifice long-term growth for short-term profits.

That's a situation which is not limited to corporations and is not limited to radio.

But to prevent "corporations" from owning and operating radio stations is NOT an intelligent solution.

Since a corporation is nothing more than a legal shell for doing business and protecting one's assets, it may be more a matter of corporate culture and ethics that determine whether a company is good for radio (or at least the business of radio) or not.

I know a few who work (or have worked) for Clear Channel who say that it has one of the worst corporate cultures in the country. As such, I don't think it is by accident that they are most associated with what's wrong with media consolidation. But not all media companies are bad or have a bad rap like C.C.

db

 

[gr8oldies]

When you talk about "making money at the expende of listeners and advertisers", I don't know what you mean? Is it that your local station won't play your favorite obscure song, or cater to you individually. No one is making money if no one is listening. There's a lot of TV shows I consider crap and don't watch, yet I'm not demanding changes at the corporate level to "make" them take off reality shows and put on something I like. Corporations are owned by shareholders (maybe your grandmother!) and run by people, as was stated.

 

[oaktree]

It's not about the audience. Or the community at large. It's not about news. Information. Entertainment. Or the weather forecast, for that matter.

It's about business. And making money to pay for those who work to make a radio station possible, successful (or failure), investors and/or stockholders.

Nothing else.

It's about corporations and LLC's. Always has been, always will be unless...

you're P B S ... the Public Broadcasting System -- paid by your tax dollars through the "Corporation" for Public Broadcasting.

Radio is not free. And dollars don't fall from trees or by turning a crank on the side of a building and watching dollar bills fly out.

Only in television does that happen ... ;D

It's about business.

 

[SirRoxalot]

Owned? or Pwned?

It's not about the audience. Or the community at large. It's not about news. Information. Entertainment. Or the weather forecast, for that matter.

It's about business. And making money to pay for those who work to make a radio station possible, successful (or failure), investors and/or stockholders.

It's tough to make money if you forget about the audience and the community at large. "Business" is about giving the people what they want at a fair price. In the case of radio, it's providing news, information, entertainment, the weather forecast, or whatever kind of programming will attract - and keep - listeners. The "fair price" part is about keeping spot loads at reasonable levels so the commercial sets don't become too much of a tune out factor. That means keeping rates up, and spot loads down so you can maximize income without alienating listeners.

One of the things that too many owners have forgotten - be they corporate or individuals - is that short term gains can mean long term losses. You have to look beyond the end of your nose if you intend to stay in the game.

 

[oaktree]

Let me put it this way as one who does this every day...

It's not about selling people. It's about selling productive, result-getting advertising to my clients every day, every week, every month.

Without getting results, based on people who may or may not listen to my station buying ... I don't get renewals.

When was the last time a store owner or business owner ever asked you what radio station you listen to? I bet it's been infrequent, a long time ago or not ever. He or she has no clue what you listen to or why. They just know they made the right advertising decision ... because that's what they care about, a profit and strong bottom-line.

Whether you like Swahili Disco or Country doesn't matter to them. It's what and how much you buy that counts.

In an Arbitron rated market, like I am (albeit a small one,) sales reps go from client to client with the book in hand trying to convince people of the horse-race rankings in the demos that make them look best. Sometimes they beat me, most times they don't.

PS - In your analogy about giving people news, weather, etc. ... of course you have to do those things. But that doesn't mean you make money from them. All of the stations I compete with do all of that. Some of us do more. Some of us make money ... a lot in this market of 26 radio stations don't make a dime. Fortunately, that's not our problem.

The reason? I know my station more than adequately serves the community and does a good "rated" job of it.

But most of all, I make more money on the bottom-line than many of my bigger competitors and that pleases my banker, first, my investor/partners second, and my family who puts up with my working very hard doing what I do, third.

Ever miss a paycheck as a jock? I have. And I swore never again. I found out why I didn't get paid on time. The owner wasn't making any money though "everyone" listened to us.

Now, put yourself in the same position.

You can't take ratings to the bank.

Only a deposit slip with lots of checks attached.

And advertisers don't talk "spots" anyway. They wouldn't know a spot set from an ROS (unless it runs at 2 a.m. and they see it on their monthly affidavit.)

They are buying service and results.

That's the name of the game. There are plenty of good radio stations not making money these days (ask Clear Channel) and plenty of bad radio stations making fortunes.

Again, how would you face the situation if you had the best programming on the planet and YOUR morning guy came to you and you handed him an empty pay envelope with the words, "Uh, the sales staff was so impressed that everyone listened...but we didn't sell S*** this month. Sorry."

I'd like to be the fly on that wall, believe me.

And that weather forecast, incidentally, isn't about "community service," either.

It's because I can sell the open, a close and a :30 in the middle ... and I can sell it every hour for a year. It makes $$$, though I realize, it means a part of one less Toby Keith record. And, oh yeah, everybody is fed up with long stop sets...including advertisers.

The people who aren't ... are listeners. It's been proven that they'll sit through two-minutes if it's done right five times an hour. The key is ... "Done Right." That 30 minute music sweet doesn't make me money. It's the 10 minutes after that does. That means a 2:30 break three times in a half hour for that 30 minute benefit to the listener ... and we're not unhappy with the results.

Granted, my morning guy's gotta say relevant things and not let a phone bit drag on for six minutes ... and the chit chat is toned down between the three in the morning ... but it happens and does ok.

And they get paid pretty well for following those simple rules. Not what the audience they think wants. What the audience tells them they want and the audience liking damn well what we do to reach them as we go about earning our keep with advertisers who buy because we're the best vehicle to advertise with because "we get results."

And that ... you can take to the bank.

 

[number one fan]

Oaktree sez: I'm an expert. You're not. I'm right. You're wrong. I do this. You don't. Everything I say is right.

Sorry. You do make some good points but I don't buy all of it.

Apparently you think programming doesn't matter. Typical sales mentality.

You also think advertisers keeping buying because they get "results." That's Bull! Unless merchants ask and keep asking (and you're right, they mostly don't ask) they have no way of knowing they are getting customers from radio (or any other advertising they do). They know their business is doing OK, well or very well. They know they advertise. But they have no way to demonstrate a cause and effect connection between those two statements. Neither do you as a sales rep.

Books don't sell. Most merchants don't have a clue what those numbers mean; neither do most sales reps. The numbers are kaka anyway because people write down whatever they please in those diaries (but that's another subject). Merchants buy because: (1) They're friends with your boss. (2) They like you. (3) They listen to your station and assume everyone else does. (4) Once upon a time they asked some friends what they listen to and somebody mentioned your station, so they assume everyone listens. (5) You let them be in the commercial and/or you mention their name more than you mention anything about their business or what they sell (known as inflating their ego). (6) A friend said "I heard you on the radio" once.

If local business people made rational buying decisions and could see and evaluate results, sales types would not need to spend so much time and energy networking, sucking up, tap dancing and letting merchants run bad ads.

It's amazing how many people in radio are sure they know what they are doing and everybody has such a poor batting average.

 

[davideduardo]

You also think advertisers keeping buying because they get "results." That's Bull!

Most local direct advertisers, such as those in Oak's market, use only one medium, and based ont he content they know pretty fast if the ad works or not. Over time, they know what to feature in ads, and how to talk to local consumers. Some local ads, by big market standards, sound bush league. But in smaller communities, spots voiced by the client who also lives in town work. Spots that are folksy work. Spots that say "I'm here" work.

In larger markets, there is a high percentage of agency multimedia campaigns. And the advertisers have metrics to track sales vs. ad expenditures. While they may not be able to say which medium produced most sales, multimedia campaigns are based on the synergy of different advertising vehicles working together, from radio and tv to point of purchase.

Books don't sell. Most merchants don't have a clue what those numbers mean; neither do most sales reps.

And ratings based selling is not the way to deal with local accounts. Agencies buy multiple stations and different media. They use ratings to establish price.

The numbers are kaka anyway because people write down whatever they please in those diaries (but that's another subject).

And how many diary reviews in Beltsville, Laurel or Columbia have you done to see how diarykeepers write down listening. None, I suspect. The fact is that the diary, in its day, was a very good measurement device. Today, we have the roll out of the People Meter, which tracks listening without recall, diaries or intervention.

Merchants buy because: (1) They're friends with your boss. (2) They like you. (3) They listen to your station and assume everyone else does.

Relationships and trust have a lot to do with all kinds of selling, from packaging supplies to advertising. The fact is, advertisers are a lot brighter than you think. In small businesses, the money spent on advertising is also money the owner could take home. If they choose to spend on media, it is because they have found advertising, in the end, causes more money to come in.

 

[hammondo]

NUMBER 1 FAN SAID; "You also think advertisers keeping buying because they get "results." That's Bull!"

WELL Sir....If steaks come from "BULL" YOU are correct!!!

I really don't think our "batting average" was bad.

In the markets in Indiana where I did business it was about relationships and trust. I ONLY sold out 36% (2 station) arbitron share when I sold to national farm advertisers. The LOCAL merchants already KNEW MY stations could sell well for them.

I COULD NEVER lie. I'd be out of business, because the prevous genius who owned the stations made a habit out of lying.

(trying to remember 1980)....I had 240 advertisers on an am and seperately programmed fm (the only 2 stations in the county and the east and west adjacent counties) About 25 of them did their own ads, because people recognized WHO THEY WERE and told them about their ad in the coffee shop or in Church. We sold Tanner jingles and annual contracts to about 36 more. Also, we did TELEPHONE SALES of boosters for high school games (and other stuff) that grossed me nearly 2k per month. I paid a local lady 30% commission and she HAPPILY sold/billed/collected, even during her twenty thousand dollar Decembers.

NOTE; today there are 5 more competitors that I had.

NOTE: When advertisers of mine sold "specific products" they generally SOLD OUT! The previous station owner swindled the local Sears manager. HE HATED MY AM STATION. We gave the Sears manager just 12 FREE if he bought 12 ads, so he could TEST US. He hated us so much, he laughed at doing this.

WELL - We sold him out of 200 GARBAGE CANS (the next day) in 3 hours. I later thanked him for an annual contract and becoming our first charter Cubs baseball sponsor.

Both Oaktree and David are correct. It IS about business. I swear I could play music - any kind of music BACKWARDS and people would STILL listen to the stations I had BECAUSE of the LOCAL connection we provided.