The WINNERS and LOSERS in today's radio climate

[cm454]

It seems to me, the programming people in this biz who are most likely going to continue to work, are those who have managed to turn themselves into a commodity.

I'm talking about actual ratings-getters, not board babysitters---which is what DJs have been systematically turned into over the last generation.

Yes, even the ratings-getters do get fired, layed off, etc. But, they have a much better chance of landing somewhere else.

That basically leaves morning jocks and talk hosts.

Granted, neither position is easy to do WELL, but they are beginning to look like the ONLY on-air positions given any respect any more. Regular jocks and newspeople are soooo de-emphasized. Worse than ever before.

Geeeeez, remember when you could actually survive as a time & temp jock?

 

[rickradio]

Geeeeez, remember when you could actually survive as a time & temp jock?

Well, at a lot of stations I worked at, that's all we were allowed to be.

 

[Basnya]

So the question remains: How do we turn it around? How to make radio viable again?

Why do morning shows and talk do so well ? Because they are entertaining!

Of course the music is important, but music is available from a lot of sources today.

There is still no substitute for an engaging, knowledgeable, personable, entertaining jock.

At least that's how I see it.

 

[FredRichards]

Local!!

Make sure your jocks (or voicetracks) are up to date. And, make sure they are talking around relevant things in the community.

Work with the air people to make sure they have have a connection to the communities, and can talk about things going on in the area. Also work with them to improve themselves as they are representatives to your station. Yeah, it's old school, but sit down with them once in a while and work with them, give them direction.

Get the public involved in PSAs, rather reading sheets of notebook paper. Have them come in and read their PSA in their own voice.

Local sports is not only a way to attract listeners, but I don't know a single (competent) broadcaster that can't double their billing for an evening hour by running local sports. Look at getting some stringers to call in the scores from other area games.

Weather should be local as well. If you have jocks cutting four forecasts 24 hours before the middle one runs, find another way to make your forecasts more accurate. If you're automated, for god sake try to keep things current. Nothing makes you loose credibility and become the laughing stock more than telling people "20% chance of rain", and there is a downpour outside.

If you're running news, and can't do a new newscast every hour, at least record several variations and put them into rotation, and do what you can to keep things current. Running the same 2 minute cast every half hour for six hours makes you sound like a schmuck.

Get your best advertisers and community service organizations linked together, and do a remote. Such as a Sport Goods shop (advertiser), and the Girl Scouts selling cookies from the WXXX remote van. Or something as simple as your Lowes store having the fire dept display smoke alarms. Or having the Lions Clubs look for donations of glasses at an advertiser that sells books and magazines.

You're paying announcers, so put them to work voicing content. An easy sell is the daily horoscope. Sell it on a 26 or 52 week contract to someone as an 10-sec billboard, 30-sec spot, horoscope, and 10-sec closing billboard. Make money on something that people are interested in. The same thing can be done with gardening tips, green energy, sports vignettes, or even AP's Today in History.

Be viewed in your community. If you're an oldies station you need to either be in a car show, or create a local car show. Country? Be at your county fair, or all the fairs in your service area.

Also, make sure that anything you do in the community that you "triple talk". Talk about what you're going to do. Talk about it when you're doing. And after you have done something in the community, spend the next week telling people what you did.... then move on to the next venue.

Look for the positive, and poll your non-radio friends in your community and ask them what it would take to tear them away from the competition, or get them back to radio (away from XM). Listen carefully, and don't try to defend yourself. Listen to what they say and after a few dozen conversations you'll zero in on something that will set you apart from the others.

There is so much you can do, but the those are just a few of the things I've recommended it clients. Enjoy!

 

[firepoint525]

While the idea of bringing in listeners to voice PSAs is appealing, it also works toward (slowly) making a station "jockless." Ditto with having the weather forecast read by a local meteorologist. The more of this type of thing that a station can "farm out," the less they need a live jock there in the "on-air" seat.

 

[LA_Guy]

The winners are the mostly clueless about radio fat cats like the Mayses. Lowry Mays will walk out of the CC buyout a billionaire. His two sons will likely split 160 million dollars between them. To them, broadcasting is an asset like a car. They'll probably put their proceeds into EXXON stock, and watch it soar because Exxon is gouging the rest of us.

The losers are the rest of us! The hard working people who have lost their jobs because of the greed and incompetance of a few. The people who still have jobs but now are doing the work of three or four people-frustrated because they can no longer be the best they can be. The newcomers who go into radio with a passion-only to have that gutted out of their bodies the way a fisherman guts a fish! The listeners-who aren't as stupid as the fat cats believed and know they're being conned when their favorite personality suddenly disappears and is replaced with a voice tracked robotoid that has a completely different accent then their area, can't pronnounce most of their names and locations and talks about nothing local at all!

Can it be fixed? I don't know. Listeners are leaving radio for alternate media in droves. No one under 30 listens to AM at all-and the median age listening to FM gets a year older every year. Should we try? Absolutely! But first the $cumbag consolidators need to be thrown out to the dogs where they belong. It can't be fixed with them still in power. Let them cash out so radio can 'bottom out'. Besides, why should we work hard just so they can prostitute it again? They will, given the chance.

 

[MickJ]

The winners are the mostly clueless about radio fat cats like the Mayses. Lowry Mays will walk out of the CC buyout a billionaire. His two sons will likely split 160 million dollars between them.

I have no doubt that you’re passionate about radio and very well-intentioned but you simply misunderstand the wealth creation process.

Yes, Lowry Mays will have at least a billion dollars when or if this deal closes. But he had TWO billion back in 2000. Wealth creation involves risk and most of his bets have paid off. But Clear Channel’s purchase of other companies that catapulted it into the biggest radio company did not pay off for him.

To them, broadcasting is an asset like a car. They'll probably put their proceeds into EXXON stock, and watch it soar because Exxon is gouging the rest of us.

Exxon is very profitable but the stock is quite possibly fully valued. If you think otherwise, buy whatever you can. You don’t need to be wealthy, it’s only about $85 share, the cost of dinner for two. It’s not as though only a few are allowed to buy stock.

But first the $cumbag consolidators need to be thrown out to the dogs where they belong. It can't be fixed with them still in power. Let them cash out so radio can 'bottom out'. Besides, why should we work hard just so they can prostitute it again? They will, given the chance.

I know you won’t believe this but radio would be in trouble even if deregulation had never occurred. Newspapers are being gutted faster than radio stations and they aren’t even regulated. It’s technology my friend.

Because of all the new pipelines such as Internet, satellite and portable music systems, the value of FCC licenses has declined. So the value of air personalities who can get a large audience will increase. So if you’re good, very good, you have a bright future in radio. But the value of the second and third stringers is less than ever. You can complain about the constraints of program directors all you want but let me ask you this: Do you think the top tier radio personalities, those very wealthy few who win Marconi awards, never suffered lousy program directors? They did and they prevailed.

Put aside your bitterness and prevail, my friend, or you will be consumed.

 

[FredRichards]

While the idea of bringing in listeners to voice PSAs is appealing, it also works toward (slowly) making a station "jockless." Ditto with having the weather forecast read by a local meteorologist. The more of this type of thing that a station can "farm out," the less they need a live jock there in the "on-air" seat.

Sorry, I can't agree to that.... unless PSAs and weather are the only thing jocks are good for. I've heard a few markets where that could apply.

On the contrary, PSAs are best read by the public for several reasons. First, a different voice. Second, as soon as that person leaves your prod studio, they are going to call everyone they know and say to listen for them. That's a lot of potential new ears! Third, people respect you most when they have invested in you. If they give you a piece of paper with their hand scribbled bake sale info on it, your station is worth that piece of paper. But when they are recorded, and see the work you do to get them on the air, the goodwill is priceless. Part of the game is community recognition.

On weather, yeah, your jocks could read it, especially live. But if they record it, it's best to produce it with the best skill you have, with clear articulation, and detail. None of the generalized crap you hear on tracked stations from the day before.

There is plenty for "jocks" to do. The stations I've worked with have not had to get rid of anyone because of lack of reading the weather or PSAs.

The job as a manager or consultant is organizing the labor (jock) into the most productive positions of being the creative talent that feeds the mic around the format, and crafts the elements that you put in your file servers. Like a military unit, everyone knows the mission, and every person is essential to success.

 

[davideduardo]

The winners are the mostly clueless about radio fat cats like the Mayses. Lowry Mays will walk out of the CC buyout a billionaire. His two sons will likely split 160 million dollars between them. To them, broadcasting is an asset like a car. They'll probably put their proceeds into EXXON stock, and watch it soar because Exxon is gouging the rest of us.

Let's look at this rationally. Exxon shares are in the $90 range, each. Each share earned about $7 last year, or about an 8% return. That means that Exxon shareholders, for every dollar invested at today's prices, earned about 8 cents. Or, in another way of seeing it, about what your average home mortgage pays in interest. Of course, a lot of the earnings have to be reinvested, as oil is not a renewable resorce, so Exxon has to find new energy sources, which cost money.

Over time, Exxon has been a good investment, but so has General Electric or DuPont. They are not making excessive profits (unless you thing 8 cents return on each dollar of share worth is excessive). They make huge total profits, but they are a huge company. WalMart makes more than the neighborhood ma and pa store because it is bigger, too. Neither WalMart nor Exxon is gouging anyone, and in all liklihood, Exxon shares are at the top of their range since petroleum is so expensive that alternative energy is starting to look very attractive.

No one under 30 listens to AM at all

That's not true. Few under-30's listen compared to 55+, but they do listen. In fact, using LA as an example, the AM band cumes 20% of all persons in 18-34 as of Fall, 2007.

-and the median age listening to FM gets a year older every year. [/quote]

In the last 10 years, the average age for FM listeners in the same market has moved from 37 to 40, or 0.3 years per calendar year. This is pretty close to the change in age in America and in the market. The LA market age in 1998 was 38, and it is now it is 41. So, actually, indexed against the market age, FM is slighly younger, and AM is considerably older.

Should we try? Absolutely! But first the $cumbag consolidators need to be thrown out to the dogs where they belong. It can't be fixed with them still in power. Let them cash out so radio can 'bottom out'. Besides, why should we work hard just so they can prostitute it again? They will, given the chance.

You are shooting the wrong person. The problems in radio are caused by an explosion of alternative media, and things like video games, iPods and texting telephones. Consolidation has helped the industry, which was bleeding so badly that half of all stations lost money in 1996!

 

[firepoint525]

Fred, you and I may be referring to slightly different things. When I was production director at a small station, we brought in girl scouts to promote cookie sales, and things like that. But when a church submitted a revival announcement, we just simply read it over the air. I didn't like even giving the temperature when I read the weather forecast over our automated FM station, even it were to air just 10-15 minutes after I recorded it. So I just read the forecast and omitted the temperature. When the weather was nice, we would only receive updates over the wire about once every six hours. And of course, we would receive PSAs in the mail, usually on reel-to-reel tape back in those days (early '90s), and we would just dub those off to carts, and play them over the air.

The difference between then and now is that stations use more and more of these tricks to avoid needing announcers. The Jack-FM here in Nashville has their "average listener" come in, and read announcements. If the organization promoting the event wants to come in and record themselves, that is fine. Advertisers cut their own spots all the time. But even on that automated FM station a decade and a half ago, my voice tracks only played four times an hour. That was enough, but they would probably play even less now.

 

[cm454]

I know you won’t believe this but radio would be in trouble even if deregulation had never occurred. Newspapers are being gutted faster than radio stations and they aren’t even regulated. It’s technology my friend.

True, but at a time when radio should have been bracing for a fight, it disarmed itself by gutting the programming. The big consolidators decided to cut corners on the assembly line with reckless disregard for the nuance of the product.

If you took over a food manufacturer, would you immeidately start buying the cheapest ingredients--irrespective to quality--just to enhance the bottom line? Would you cheapen the product?

Likely not. If you did, you would risk losing your customers---all because you wanted to gain profit by "cutting" instead of growing.

Very short-sighted business model typically doomed to failure--unless it was doen to inflate the bottom line for short-term resale purposes.

 

[12 In a Row]

Lots of excellent comments on the Business of Radio.

No matter what, it's a business that has bleeding long before 96. There is only so much revenue to go around.
Only the monster signals, exceptional programming and talent will survive and thrive. Such is the case in any business.

I find it hard to believe if the big companies hadn't taken over, the past owners would have continued to pour money down the hole.

 

[PTBoardOp94]

If you took over a food manufacturer, would you immeidately start buying the cheapest ingredients--irrespective to quality--just to enhance the bottom line? Would you cheapen the product?

Likely not. If you did, you would risk losing your customers---all because you wanted to gain profit by "cutting" instead of growing.

Not exactly. See Sodexho. They based their business on cutting costs, and grew it that way.

 

[LA_Guy]

Schlitz beer

If you took over a food manufacturer, would you immeidately start buying the cheapest ingredients--irrespective to quality--just to enhance the bottom line? Would you cheapen the product?

Likely not. If you did, you would risk losing your customers---all because you wanted to gain profit by "cutting" instead of growing.

Not exactly. See Sodexho. They based their business on cutting costs, and grew it that way.

It doesn't always work. In fact, most of the time it doesn't work! Do you remember Schlitz beer? Schlitz was the #2 beer in the USA as late as 1976 (Budweiser was #1). BUT...Schlitz got greedy and cut corners in their brewing process to save money (of course)....and making the beer taste like crap. The public abandoned the inferior tasting Schlitz in droves until in 1982 the brewery was acquired and essentially went out of business. Six years to go from #2 to totally out of the running. Sound familiar?

It's EXACTLY what's happening to radio!

FIRST OFF, DON'T BLAME OTHER MEDIA, AS SO MANY HERE SEEM TO ALWAYS DO! IN THE PAST RADIO HELD ITS OWN AGAINST THEM BY GROWING AND EVOLVING!

The consolidators and their greed have killed radio, just like the brewers of Schlitz killed it with their greed. Radio has NOT evolved! Radio has NOT grown! For the first time ever, radio has NOT fought back against new media (such as Ipods and Internet radio)-instead they have 'rolled over' and LET the new media take over!
Today, Internet advertising TOPS radio advertising dollar for dollar! Clear Channel's billboard division made MORE MONEY last quarter then radio did! Why? Because radio rolled over and LET IT HAPPEN! Because, instead of taking on the threats head on, instead radio "pulled a Schlitz"-ALLOWING the newer media to take away audience and advertising.

And as Bruce Springsteen says: "and they ain't coming back".

Look, you can't cut and cut and cut-cheapening your product ad nauseum-and then expect it to have the vitality to fight against an encroacher! Instead, you have to have a "war chest" so you can FIGHT that threat! Radio cashed in their war chest years ago-it was probably the first thing that the consolidators squandered (a rainy day fund? What do we need THAT for?).

It's a well known fact that the Internet has taken time and money primarily from two industries-TV and radio. At least TV seems to want to do something about it-hence the ability to watch most prime time shows on the 'net. Radio has done practically NOTHING to respond-except stream their stations (mostly in lousy quality streams) and WITHOUT the commericals!

Today's radio has become a game of musical chairs,. The consolidators stave off the inevitable by cutting and cutting-cheapening their product and making it even MORE vulnerable! The more vulnerable it becomes, the less audience and advertising they have...and on and on.

Dick Ferguson (former head of Cox Radio) saw radio like it was a military exercise. Each part of radio was a 'hill'. In military jargon, hills are good things-they allow you a great vantage point to see the enemy (coming) from-and a great place to shoot at them from as well! There is the news hill, the traffic hill, the personality hill, the music hill, etc, etc.

Once you 'own' a hill, you need to defend it from the enemy (other stations and media). Of course, the enemy is trying to TAKE that hill from you, so they can have its advantages! Taking a hill requires more resources then defending it (which is why so many lives were lost on D-Day during WWII). In the past, radio defended their hills from new media such as TV, movies, 8 tracks and cassettes (and even FM!) by both fighting back and changing/evolving. Look at how AM radio reacted to FM's encroachment of their music formats. They EVOLVED, by making new formats such as all news, all sports, news/talk and talk. It cost time and money to adapt and yes, some stations felt the pain of loss of revenue while doing so. But as they say "no pain, no gain". Problem is, today's consolidators react to the enemy "climbing the hills" by ABANDONING them! They RUN from the challenges! They believe that by CUTTING it will make them strong! Well fellas, it won't-any more then the bloodletters of ancient times made their patients better!

They say that those who ignore the lessons of history will make those same mistakes over again-and today's radio is pulling a 'Schlitz'. Hopefully, one company will come to their senses and try another approach. Once successful, all the others will play "follow the leader" (just like they always do) and things will get better....

BUT..don't hold your breath.....

 

[SirRoxalot]

CON-solidation

Consolidation has helped the industry, which was bleeding so badly that half of all stations lost money in 1996!

David, you've quoted this statistic before. Where does it come from?

If radio was doing so poorly back in 1996, why did the consolidators pay so much for radio stations? The consolidators are the ones that pushed prices up. There were a lot of operators who got out because the consolidators offered them so much money that they could make more off the interest than they made operating the stations.

How many stations intentionally lost money as a tax write-off? IIRC, there was an FCC regulation that stations who lost money for 3 consecutive years were in danger of losing their licenses at renewal time. I don't recall that happening very often.

Consolidation has not helped the industry. It's a shell game that took stockholders for a ride, and they've finally caught on to the game. That's why stock prices have dropped. This "correction" in company values is long overdue.

What the consolidators have done is kill the creativity and value-added programming that radio relied on to stave off earlier challenges from TV, records, 8-tracks, cassettes, CDs, and now MP3 files.

 

[12 In a Row]

The landscape is different now than even 10 years ago.

The News Hill-Internet & Cable News Channels
The Weather Hill-Internet and Cable
The Sports Hill-Sports Radio is still good at this one
The Music Hill-the rest of the newest technology.

With a few exceptions, radio gave up it's news credibility years ago.
Imagine re-broadcasting a local TV station newscast, or CNN Headline News.
You are telling your listeners, THEY do it better than we can.

If there were any great ideas on how to turn it around, you would think someone would have thought of it by now.
Since I love the business, I'm holding out hope!

 

[MickJ]

I know you won’t believe this but radio would be in trouble even if deregulation had never occurred. Newspapers are being gutted faster than radio stations and they aren’t even regulated. It’s technology my friend.

True, but at a time when radio should have been bracing for a fight, it disarmed itself by gutting the programming. The big consolidators decided to cut corners on the assembly line with reckless disregard for the nuance of the product.

I agree with you, cm454. But the fate of the budgets was sealed when the prices paid for these stations later proved to be too high. It will take a lot more financial pain (distress sales of stations at lower prices) for new owners to be able to afford to re-invest in programming.

Business is not as rational as people think it is. Owners can be emotional and the desire to be the first to get big caused them to overpay. Again, it would be easy for me to criticize them but this is all in hindsight.
They screwed up. They aren't the first and they won't be the last.

 

[davideduardo]

Re: CON-solidation

David, you've quoted this statistic before. Where does it come from?

Prior to the FCC taking up consolidation, the NAB and a group of broadcasters who wanted larger ownership caps did an audited survey of radio stations and showed, just as statistics had shown back to the 50's, that half of US stations were not profitable.

For about 3 decades, from the 50's to the early 80's, stations had to file annual financial reports with the FCC. The reports, falsification of which could have been a candor issue and result in license revocation, were published by market and state. Half of all stations did not make money then... over all those years.

If radio was doing so poorly back in 1996, why did the consolidators pay so much for radio stations?

Supply and demand. There was only one big chance to build clusters, and the good facilities got premium prices. Of course, so many were paid for with stock or via merger, so the values were mostly paper values.

The consolidators are the ones that pushed prices up. There were a lot of operators who got out because the consolidators offered them so much money that they could make more off the interest than they made operating the stations.

They did not push prices up that much. Multiples only increased by a few points... like from 15 x cash flow to 18 to 20 times cash flow after consolidation. They are coming down now because of the economy as much as radio's lower growth rates.

How many stations intentionally lost money as a tax write-off?

I've never seen an intentional write off in radio. All business expenses are deductable, so there is no reason to create losses.

IIRC, there was an FCC regulation that stations who lost money for 3 consecutive years were in danger of losing their licenses at renewal time. I don't recall that happening very often.

I never heard of such a regulation. There was a regulation on trading station before 3 years, the normal license period. Trading faster was called trafficing, and the FCC would approve a distress sale, but the licensee had a big mark against it if it wanted to buy again.

Consolidation has not helped the industry. It's a shell game that took stockholders for a ride, and they've finally caught on to the game. That's why stock prices have dropped. This "correction" in company values is long overdue.

Stock prices have dropped for the same reason that Yahoo was down 80% in the last 6 or so years. The market is soft, and the slower growth and traditional sectors are down a lot. The market is almost a separate dynamic, but it punishes slow growth today.

Without consolidation, radio would probably be worse off, since one of the issues supporting consolidation was that radio companies could not get financing (too small and to exposed in too few markets), get decent benefits for its employees, etc.

What the consolidators have done is kill the creativity and value-added programming that radio relied on to stave off earlier challenges from TV, records, 8-tracks, cassettes, CDs, and now MP3 files.

Too many stations, and much more competition for the same revenue are the real causes.

 

[SirRoxalot]

Electric Kool-Aid Acid Test

Prior to the FCC taking up consolidation, the NAB and a group of broadcasters who wanted larger ownership caps did an audited survey of radio stations and showed, just as statistics had shown back to the 50's, that half of US stations were not profitable.

For about 3 decades, from the 50's to the early 80's, stations had to file annual financial reports with the FCC. The reports, falsification of which could have been a candor issue and result in license revocation, were published by market and state. Half of all stations did not make money then... over all those years.

So, the folks who WANTED consolidation came up with numbers that showed that half of US stations were not profitable - yet those owners continued to operate under the old ownership caps? I guess that means that half the owners in radio operated those stations out of the goodness of their hearts? Puh-lease. It's VERY possible to live very nicely off a radio property that "doesn't make a profit".

I've never seen an intentional write off in radio. All business expenses are deductable, so there is no reason to create losses.

You're obviously not familiar with Gordon Brown, or a number of others who "lost" money on their radio stations when it was convenient, while their other businesses thrived. The VALUE of those properties grew, however, and they sold at a very tidy profit that more than made up for the paper losses over previous years.

Stock prices have dropped for the same reason that Yahoo was down 80% in the last 6 or so years. The market is soft, and the slower growth and traditional sectors are down a lot. The market is almost a separate dynamic, but it punishes slow growth today.

Without consolidation, radio would probably be worse off, since one of the issues supporting consolidation was that radio companies could not get financing (too small and to exposed in too few markets), get decent benefits for its employees, etc.

Yahoo has dropped because Google is kicking its butt, just like radio is getting killed by "new media" because the concept of radio as a "music delivery system" instead of a programmed entertainment system is flawed. Eliminate the programming that goes with the music, and you have the state of radio that we're seeing today. Those stations that continue to concentrate on live, local, relevant programming are the market leaders in virtually EVERY MARKET IN THE COUNTRY. The return of WCBS-FM amply demonstrated what a return to programming that's responsive to LISTENERS can do.

BTW, most of the people I know who have been in the business for 20 years or more had better benefits before consolidation than they have now. The "company run" health scam is the worst offender of all.

Too many stations, and much more competition for the same revenue are the real causes.

Ah, the "too many channels" canard...

If "too many stations" is the real cause, then why are people bidding billions of dollars on new bandwidth being opened up so they can deliver music, video, and additional data streams? Satellite radio was born to offer hundreds of additional channels. Major broadcasters embraced the technically-flawed IBOC system because it promised "more channels".

As far as "too much competition" is concerned, radio opened itself up to competition from "new media" by trying to emulate "new media" with its "Jack" formats and putting the radio station "on shuffle". The lack of value-added programming reduced the differentiation between radio and "new media", allowing "new media" to compete head-on without having to invest in compelling local content.

The flaws in your theories are becoming more evident daily, as the value of radio properties drop, the numbers of listeners falls, and dissatisfaction with radio as a medium grows among both listeners and advertisers. THAT'S quantifiable in numerous surveys, too.

 

[firepoint525]

With a few exceptions, radio gave up it's news credibility years ago.
Imagine re-broadcasting a local TV station newscast, or CNN Headline News.
You are telling your listeners, THEY do it better than we can.

Don't laugh, but we used to have stations here in Nashville doing both. One was a simulcast of Headline News, and the other a repeater of a local television station's newscast and other programming. But the TV station owned the radio station in question (at the time).