Should corporations be allowed to own radio stations?

[oaktree]

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.

Ok, Number One Fan, since you didn't see me say anything about line one, let me state as an owner and a programmer through many years in very competitive markets, let me ask you this question: How many stations have YOU owned? How many have you operated as a cluster manager to demanding profitability for years? How many times have YOU programmed a radio station?

How many times have you been fired for programming that YOU thought was working, but failed?

I'd bet "None." That says something for you, because, quite honestly, I can't fault someone who just doesn't know the business and that is certainly excusable. No fault in that, but as our other colleagues have tried to point out, it's "Business" and you don't quite understand that.

How many times have you stood before a group of investors ... a small, but knowledgeable group in your community or city and done presentations with spreadsheets on how much of a "return on investment" they can expect by finanancing "your dream."

In case you didn't know, many of us don't use what little money "we" have to buy expensive radio stations ... we use "other people's money." That's why it's called "investing." And that's why you don't "roll the dice" and say, "well, it was a crapshoot."

Because you would be tossed out of a board room, conference room or bar so fast, it would make your head spin.

Sorry to be an "expert" and, actually, I appreciate the compliment ... because that's what YOU are getting paid "the big bucks" to be ... an expert in knowing your market, your business community, your "target" listeners, your potential listeners, your format options, your execution of that format, your infrastructure of staffing and technology, and then ... the business side as described above.

Right down to the last dollar projected each and every month.

Programming does matter ... but so does how much money you have in the bank every month to pay the people "that brung you to the dance."

I remember too well programming a radio station through syndication in a medium southern market in 1980. He went from number five to number one in two books (a year) and for another two more books in a row ... It was a hellish and demanding time programming that place to keep it on top of the heap, trust me. There was no such thing as "Internet monitoring" then.

On the very day he was contacted about renewing with my format, he informed us that he and his Dad had filed for bankruptcy. I was stunned. The station had it all. It was the best around. Huge signal, everything. Back then, you didn't have a Clear Channel to come in and bail out your standalone FM. You, literally, "stood alone." He couldn't get a buyer to pay near what he needed just to break even ... so, he bankrupted the station and, turned it off. "Can't run it anymore. I owe everybody. I didn't know how to sell ... I thought it would sell itself, we were that good."

I'm sure that Mississippi city and station are back and thriving with their 15 or so radio stations today. But I know how that guy felt.

There have, as David and Hamm will tell you, incredibly successful and crazy wonderful days...but I wanted to stress that until you can face the bad ones (and David will tell you that over half the stations in this country for 40 years or more don't make any money,) you're in for a hell of an awful rude awakening.

I'm not bragging. I'm just telling you that it's a tough "business" out there. And believe me, I've learned a LOT just by being here on this board for the past few months ... in both agreement and disagreement.

You will, too, in time.

 

[MACK184]

You are using the term corporation in an incorrect way. Almost all businesses from General Motors right down to Mr. Geenjeans' family farm is today some form of corporation. It is a legal form of protection. It doesn't indicate a level of evil or dishonesty. Most Mom & Pop radio stations that you seem to revere, were no doubt a corporation. Whether an LLC, or an "S" corp, or some other legal form of business incorporation. There are too many obstacles out there today for ANY business to not be some form of corporate entity. If you are simply operating a business as a "DBA", you the owner are liable for anything and everything. Somebody comes into your holy and pure radio station that you have as a private DBA, and slips and falls, and sues you. Well sonny boy, that person can attach virtually EVERYTHING you own to pay the judgement. Your house, car, personal bank accounts, any other personal property you might own, savings accounts set aside for your child's college fund, and of course your holy and pure radio station, untouched by corporate evil. EVERYTHING GONE. Now, of course, if you were a corporation, your personal worth could not be touched. But deep down inside you are happy, even though you are now homeless with the wind whistling thru your ears, because you were never part of an evil corporation. Come on! Understand a little about what you are talking about BEFORE you write. What you are really trying to say, is that ownership should be limited and controlled to a certain number of stations per group, as there were before Telecom '96. That is a reasonable opinion. Pursue that avenue for discussion. Not that radio stations should not be owned by a corporation.

 

[oaktree]

Good points...

If you are talking "consolidation" by corporations by up everything ... limiting the "buying choices" and then not doing what you perceive as "the right thing," many share your concerns about "diversity."

The problem is ... why did Clear Channel come to town with checkbooks open in the first place?

Because they bailed out failing "corporations" who weren't making any money and were ready to take the offer that Clear Channel offered because "there was a better way ..."

I can name you 18 of them in this market, alone ... And it's not just Clear Channel. Pick a "corporate conglomerate" ... any of them.

The rules don't say that a radio station "has" to make money. But a "conglomerate" big enough to spread those expenses around from a centralized location sure can ... and that's why they paid the premium, because they knew that with their built-in programming, economies-of-scale, conglomerate sales of more than two or three more stations at a time by a single rep, controlled expenses, technology (voice tracking) and more ... they could make what the "single" players couldn't.

Can you blame them?

Not many could afford, with that competition, go back, now, as "single station" entities anymore. It would be very hard to survive.

 

[gr8oldies]

Corporate owners are having their issues with competition from iPods, gameboys, the internet, sattelite radio and even more shoppers and ad publications than ever. Mom and pop would be screwed competing with not only every other radio station but all of those sources as well.

 

[oaktree]

Bingo! I think you've hit the nail squarely on the head. Don't forget television and cable. I'm seeing buys in cable that are cheaper than small market AM. I'm also seeing lots of "agency rate card" prices being sold locally (or bonussed, wink, wink) for less than half the rate card...an accepted practice, it seems.

Inflate the rates all you want, but we turn the other cheek when we "toss in those few bonus spots" and think we've really made a deal. What started out as a $30 spot quickly gets run down to an $8 spot pretty quickly. How many times I've heard a rep say, "but if I don't give away two bonuses a day ... ROS (as long as it's 6a to 7p) ... I'd "lose the buy" to brand X or whoever.

So, I send them to McDonalds to ask that since they dropped a Quarter Pounder from $2.79 to $1.99 ... if I could pay them $1.99 get one for free if they bought a week's worth.

How many times did McDonalds do that? Nada. Some reps are going hungry ... and some are still waiting in line Yet, radio (and cable) does it all the time.

I'd rather sell all night for a dollar-a-holler than give away "bonuses." It's still inventory and that's all I have.

And the agencies aren't any better...

 

[Lopaka]

Were things really that intolerable under the 7 station ownership rule? Remember--capitalism REQUIRES competition in order to function. No competition, no capitalism, and no capitalism means it is impossible to serve the public interest. I have no problem with corporations controlling stations, they just need to be limited to a rational number of stations.

 

[davideduardo]

Were things really that intolerable under the 7 station ownership rule? Remember--capitalism REQUIRES competition in order to function. No competition, no capitalism, and no capitalism means it is impossible to serve the public interest. I have no problem with corporations controlling stations, they just need to be limited to a rational number of stations.

The 7 & 7 rule was restrictive in a number of ways.

1. Even the largest companies had trouble getting financing, as there was too much exposure in each of the markets (that is, a ratings problem in one market could tank earnings and ability to pay loans)
2. There was no economy of scale to provide health care and other benefits (ask any small business owner about health care costs for small companies)
3. There was no in-company career path; to progress, you changed employer.
4. The best talent in smaller markets got grabbed in the big ones. Turnover was very high.

With over 13,000 stations in the US, and no company owning even 5% today, there is no monopoly.

 

[DouglasB]

As much as we would like to believe that radio is an art form, it's actually a business. Once we can wrap out heads around that truth, questions like this become inconsequential and superflous.

 

[Lopaka]

13,000 stations nationwide, true, but stations are exposed to competition only in the markets that they serve, thus, there is no competition in the sense that Capitalism actually does require. Even in a huge market like NYC or LA enough of the stations are controlled by two or three licensees that the term and the reality of competition is meaningless. Return to the 7 station ownership rule might appear harsh, but it makes sense, it is needed. One cannot expect the blessings of capitalism if one does not follow the requirements of the system.

 

[hammondo]

Lopaka, I totally disagree with you.

You said; "stations are exposed to competition only in the markets that they serve, thus, there is no competition in the sense that Capitalism actually does require."
---- So why have Arbitron?

You said; Even in a huge market like NYC or LA enough of the stations are controlled by two or three licensees that the term and the reality of competition is meaningless.

---- I don't believe that its' quite that cut and dry. Example; Chicago. WGN an AM- the ONLY radio station Tribune Company owns, successfully competes with CC, CBS, and a boatload of others.