(USA) AM Radio (mass shutdowns) - Tipping Point

[kfbkfb]

There are probably trend lines about the future of (USA) AM Radio:

Declines in the number of listeners (to the actual station, not HD/translator/stream).
Increases in the AM interference sources.
Increases in operating costs.
[other trends I don't know about because I'm only a radio listener, not involved in the business]

Has anyone graphed these trend lines to try to estimate the mass shutdown timeframe?


Kirk Bayne

 

[PTBoardOp94]

There's not good data to draw from for these items. Maybe if you were an executive of iHeartRadio you could put together enough data to make some estimates.

For example, suppose 1550 AM has an FM translator on 99.9 in a diary rated market. No one knows how much listening is to 1550, and how much is on 99.9.

Also, estimating RF noise is difficult because it varies a great deal. If I set my AM receiver next to my television, it will probably get worse reception than if I set it 20 feet away. But if Joe the Plumber doesn't know that or isn't willing to rearrange, he won't use AM radio much.

 

[Kelly A]

There are probably trend lines about the future of (USA) AM Radio:
Has anyone graphed these trend lines to try to estimate the mass shutdown timeframe?

Any trend data would still have to be purely from ratings on a station-by-station basis. Revenue isn't usually broken-out by individual stations, because in the case of group owners, their market or company revenues or Broadcast Cast Flow (BCF) numbers are combined. Expenses specifically for AM stations can't be averaged either, because there are so many variables. Is the land under the facilities owned, or leased? Utility costs can vary greatly, depending on the age of the transmission equipment and output power. Are there planned capital expenses related to the AM facility? Whatever that number is, would be amortized over something like a 20 year useful life period. The question on that data point is; will AM exist in 20 years?

I've never heard of any "mass shutdown" time-frame. At least right now, the FCC isn't getting involved with anything like that. As you've seen here; the Commission has allowed some virtual water wings, like allowing stations to go full-digital, or a companion FM translator, but that's about all they can do to bolster the AM side of the business.

There are some small to medium communities where AM is still alive and kicking, but no longer dominant due to increasing competition from smartphones, smart-speakers, and other in-car entertainment migration.

 

[kfbkfb]

I was thinking along the lines of the disappearance of both the compact cassette and VHS (both were the dominant audio and video formats for many years), then solely due to business reasons, they were taken off the market.

I doubt if the FCC would get involved in ordering a large number of AM stations off the air, the mass shutdowns would be due to business reasons.


Kirk Bayne

 

[boombox4]

I would wager that someone at one of the big radio companies has determined an approximate graph of the decline of AM. They must know the bigger picture, or have an idea of it, because it costs them money and they have to work around it. At least one of those companies, during the 'bloodbath' layoffs of January 2020, mentioned that the future was online and digital -- they seem to be envisioning a future where FM radio's days may even be numbered.

At the same time, no one knows the future, really. I doubt many in the radio business in 2005 knew that by 2020 their revenues would have declined by 50%. I was still working in the business at the time (early 2000's) and had access to the periodicals that were available in the hallway counter. I don't remember any prognostications that in 15 years there would be less money coming in. At that time, they were still a little worried about satellite -- but by 2005 much of that worry had abated.

I doubt many in radio could foresee in 2018 a pandemic taking a big swipe at their revenue chain just a year later.

 

[davideduardo]

I would wager that someone at one of the big radio companies has determined an approximate graph of the decline of AM. They must know the bigger picture, or have an idea of it, because it costs them money and they have to work around it. At least one of those companies, during the 'bloodbath' layoffs of January 2020, mentioned that the future was online and digital -- they seem to be envisioning a future where FM radio's days may even be numbered.

I doubt there is a generalized such plan anywhere. In some markets, AM remains quite viable and will for some years to come. In others, there have never been enough full market signals to withstand the growth of FM int he 70's and 80's, and so there may be only one or two even partially viable stations.

However, there are plenty of foreign language operators who can still make money with AM, and there are religious groups that find them useful. And we see iHeart buying AMs for specific uses, and even Salem has recently bought a pair.

Up until the end of 2019, radio revenues were flat from 2010 to the end of the decade in most markets. With an adjustment for inflation, of course they were off, but it is not off the 50% that you say.

 

[davideduardo]

I doubt if the FCC would get involved in ordering a large number of AM stations off the air, the mass shutdowns would be due to business reasons.

Since the band is not useful for anything else, there is no pressure to clean it out. And many translators depend on the AM to justify their existence. However, if the FCC allows the AM to go silent while the owner keeps the FM, I believe as many as 1200 or so AMs would choose to shut down

 

[boombox4]

I doubt there is a generalized such plan anywhere. In some markets, AM remains quite viable and will for some years to come. In others, there have never been enough full market signals to withstand the growth of FM int he 70's and 80's, and so there may be only one or two even partially viable stations.

However, there are plenty of foreign language operators who can still make money with AM, and there are religious groups that find them useful. And we see iHeart buying AMs for specific uses, and even Salem has recently bought a pair.

Up until the end of 2019, radio revenues were flat from 2010 to the end of the decade in most markets. With an adjustment for inflation, of course they were off, but it is not off the 50% that you say.

In some markets, like San Diego, it was down by about 35%, from $220 million in 2005 to $141 million in 2019. Still a substantial drop. The drop in value of radio stations, of course, is a related matter.

I hope your prognosis is true, though. I don't want to see the AM band clear out -- or the FM band either, for that matter. For example, although I have had some misgivings about the quality of some "news" I've heard on BIN since they were launched, I applaud IHeart for making use of their AM facilities and trying to make AM relevant in the US. They probably wouldn't have started a BIN network if they had to dedicate their FMs in the same markets to it.

 

[davideduardo]

In some markets, like San Diego, it was down by about 35%, from $220 million in 2005 to $141 million in 2019. Still a substantial drop. The drop in value of radio stations, of course, is a related matter.

Remember that many sectors of the economy did not recover fully from the 2008 era of "the perfect storm" where we had a huge recession, the introduction of the Smartphone and the start of the PPM all in a 24 month period.

The most impactful was the decrease in PUR (Persons Using Radio) from around 18 to 20, depending on the market, to around 11 or 12 when the PPM came out. That loss of as much as 40% of the AQH persons caused agencies to reduce rates that were based on Grips, since nearly very station declined in proportion to the PPM massacre of TSL.

 

[boombox4]

Understood, but it's still a substantial drop in revenue either way, and radio has been taking a big hit. When accounted for inflation, the drop in San Diego I mentioned earlier is probably closer to 50% than 35%, as the value of a dollar was about 36% higher in 2005 than it is now.

It seems that the internet has changed the revenue picture -- not just for radio, but in all forms of mass media. I keep reading that advertising dollars are down because there are so many places to advertise. All that competition.

 

[sdwulfdawg]

In some markets, like San Diego, it was down by about 35%, from $220 million in 2005 to $141 million in 2019. Still a substantial drop. The drop in value of radio stations, of course, is a related matter.

I hope your prognosis is true, though. I don't want to see the AM band clear out -- or the FM band either, for that matter. For example, although I have had some misgivings about the quality of some "news" I've heard on BIN since they were launched, I applaud IHeart for making use of their AM facilities and trying to make AM relevant in the US. They probably wouldn't have started a BIN network if they had to dedicate their FMs in the same markets to it.

Understood, but it's still a substantial drop in revenue either way, and radio has been taking a big hit. When accounted for inflation, the drop in San Diego I mentioned earlier is probably closer to 50% than 35%, as the value of a dollar was about 36% higher in 2005 than it is now.

It seems that the internet has changed the revenue picture -- not just for radio, but in all forms of mass media. I keep reading that advertising dollars are down because there are so many places to advertise. All that competition.

":Category killers" do have a habit of disappearing at the drop of a pin. Remember "Air America" which was going to take over the world, NBC's "News and Information Service" many years ago?

 

[boombox4]

sdwulfdawg said:
"":Category killers" do have a habit of disappearing at the drop of a pin. Remember "Air America" which was going to take over the world, NBC's "News and Information Service" many years ago?"

I personally was surprised Air America didn't do better than it did. I don't recall NBC's News and Information Service... but maybe that says something about it in itself...

 

[Kelly A]

I personally was surprised Air America didn't do better than it did. I don't recall NBC's News and Information Service... but maybe that says something about it in itself...

Air America was an example of poor execution at the wrong time. With the exception of Stephanie Miller and maybe Mike Regan, all the other hosts were not radio people, and it showed.

Successful right-wing hosts like Limbaugh started out in radio, with advance knowledge how to present themselves to attract an audience. That, and it's been clear that left-wing consumers are generally less likely to focus on one particular form of media, let alone certain hosts.

 

[davideduardo]

sdwulfdawg said:
"":Category killers" do have a habit of disappearing at the drop of a pin. Remember "Air America" which was going to take over the world, NBC's "News and Information Service" many years ago?"

I personally was surprised Air America didn't do better than it did. I don't recall NBC's News and Information Service... but maybe that says something about it in itself...

Air America is easier to remember as it was just recently on... 2004 to 2010 IIRC. The NBC network ran in the later 70's and tried to offer "all news" for medium or smaller markets. Stations did not do well as most people want more local and not as much national and the formula was just not appealing.

 

[davideduardo]

Air America was an example of poor execution at the wrong time. With the exception of Stephanie Miller and maybe Mike Regan, all the other hosts were not radio people, and it showed.

Successful right-wing hosts like Limbaugh started out in radio, with advance knowledge how to present themselves to attract an audience. That, and it's been clear that left-wing consumers are generally less likely to focus on one particular form of media, let alone certain hosts.

Another poster a day or two ago suggested what I think is an even more precise reason for a liberal network to have failed: liberals are often motivated by different focal points, such as environment, immigration, labor, civil rights, foreign affairs.

That's a lot of subjects, and there could have been the same issue that makes health shows so hit-and-miss: I'm interested in the ailments and diseases that affect me, but not in the ones that don't so if a show is about something I don't have and don't worry about, it is boring.

 

[Kent]

Air America was an example of poor execution at the wrong time. With the exception of Stephanie Miller and maybe Mike Regan, all the other hosts were not radio people, and it showed.

Randi Rhodes was also a radio person with over 20 years broadcasting experience when she was picked up by Air America.

A friend of mine who owned stations said he carried Ed Schultz, which was popular in his conservative small town, and was interested in adding Al Franken to his lineup. Air America, however, refused unless he carried additional programming from the network. I don't think it required him to carry the entire network, but it wouldn't let him just add one program. As he didn't have enough space in his lineup and wasn't sure the other programs would fly, he declined to make any further effort to deal with them.

I worked at a cluster that included two talk stations when Air America launched, and we had a handful of calls requesting that we carry Franken. Of course, we had just been sold to Cumulus, and we had gotten a new operations manager shortly before the sale. He felt like our talk stations were already too diverse and that our niche was conservative. So, even if Air America would've let us carry one show, it wasn't going to happen.

Some Air America shows had potential and interest, at least in the beginning. Who knows if they would've made it, but they probably would've lasted longer if they'd allowed an a la carte approach.

 

[TheBigA]

There are probably trend lines about the future of (USA) AM Radio:

What we're seeing is the demise of small daytimers especially if they don't have an FM translator. That's about it. Some stations have petitioned the FCC to shut down their AM and devote all resources to the translator. So far, no decision as far as I know.

Cumulus & iHeart have each turned in some licenses. One recent station lost its antenna in a storm, and they opted not to replace it and shut the station down.

 

[semoochie]

sdwulfdawg said:
"":Category killers" do have a habit of disappearing at the drop of a pin. Remember "Air America" which was going to take over the world, NBC's "News and Information Service" many years ago?"

I personally was surprised Air America didn't do better than it did. I don't recall NBC's News and Information Service... but maybe that says something about it in itself...

NBC's short-lived News and Information Service(NIS)debuted on the first day of the 1976 Republican National Convention. It can be credited with the temporary market expansion of the All News format that lasted nearly a decade. Its biggest problem was the fact that the network didn't commit any of its "owned and operated" AM stations to it, only some FMs, at a point when FM was "not quite ready for prime time". In Portland, KYXI was a consistent top ten performer for several years and kept the format until 1984, bolstered by the success of its AOR FM, at a time when AOR was 18-24 and they were alone in the format.

 

[Theater of My Mind]

Let's apply math to some of the basics that are known.

People develop lifelong listening preferences in their teens so someone who grew up with FM radio as their main source of music when they were, say, 15 will probably still consider radio important for the rest of their lives, even if they've added streaming apps to the mix in the meantime.

When did streaming really start taking over for young people? Well Spotify was a little late to enter the scene since iTunes and others were already well-established by the time it launched in the U.S. But its debut probably marks a turning point so let's use 2011 which also coincides with a major growth period for smartphones and high speed internet.

Someone who was 15 in 2011 is 25 today. The radio advertising demo currently goes up to 55. That gives FM radio roughly another 30 years before is really starts to lose relevance. After that we're looking at a quickly multiplying number of people who grew up with non-radio sources for music and entertainment in their formative years. That's my rough take on it anyway, and it's not like I think it will be like a cliff but a quickly accelerating slope that has already begun its gradual descent.

For AM, let's ballpark the turning point year as 1981 for the sake of argument. That's 40 years ago. Someone who was 15 years old then is 55 now and that would put AM on the path to its final decline using the logic I presented. It seems to be happening.

 

[kfbkfb]

For example, suppose 1550 AM has an FM translator on 99.9 in a diary rated market. No one knows how much listening is to 1550, and how much is on 99.9.

Does the PPM system allow for different PPM codes to be embedded in the (original) AM signal and HD/Translator/Stream signals (or even up to 4 different PPM codes so the AM, HD, Translator and Stream content can be individually rated)?


Kirk Bayne