Where're The Listeners?

[DavidKaye]

GM tried to maximize profits by cutting quality. Radio is firing its local on-air talent. Both diminish customer desire to have their product.

You have your customers mixed up here. GM's customers are drivers. Radio's customers are not listeners. Radio's customers are advertisers. GM has to bring its costs down in order to bring in drivers. Radio has to bring its costs down in order to bring in advertisers. GM is doing it by laying off some workers. Radio is doing it by laying off some DJs.

 

[Zeb Norris]

You obviously haven't been very connected to broadcast radio lately from inside, but many groups will be dropping streaming soon.

Really bad guess there guru. He's in the biz now and has been for years.

When talking about the health of radio many people, even those "in" the industry, are missing the forest for the trees. I was talking with the PD of a fairly major market the other day and mentioned the likelihood that several big groups will be forced to declare bankruptcy this year. He was stunned. He ought not have been.

Operationally, radio is an advertising business. But in the big picture, it's more like real estate speculation. I started in the biz in 1976. Since that time, the value of stations has consistently risen; sometime dramatically as was the case after the mid 90's de-reg.

But with CBS selling those stations in Denver for less than 1/4th of what they paid for them, the era of rising values has come to a screeching halt. If your stations are worth a fraction of what you thought they were, the bulk of the "profit" of owning them just evaporated. Furthermore, those station values provided the leverage to either keep expanding, or at the very least provide operating capital. But now banks are more cautious in lending; if you have no equity, you'll have a very hard time getting a loan. This is not a time when it's easy to get an unsecured loan.

So owners are cutting costs. Entertainment? That's not on their minds... they're a bit distracted by trying to not lose their shirts.

 

[radioman148]

>>the era of rising values has come to a screeching halt>>

I'd say that's a major understatement.

 

[LKellerIII]

You obviously haven't been very connected to broadcast radio lately from inside, but many groups will be dropping streaming soon.

Really bad guess there guru. He's in the biz now and has been for years.

When talking about the health of radio many people, even those "in" the industry, are missing the forest for the trees. I was talking with the PD of a fairly major market the other day and mentioned the likelihood that several big groups will be forced to declare bankruptcy this year. He was stunned. He ought not have been.

Operationally, radio is an advertising business. But in the big picture, it's more like real estate speculation. I started in the biz in 1976. Since that time, the value of stations has consistently risen; sometime dramatically as was the case after the mid 90's de-reg.

But with CBS selling those stations in Denver for less than 1/4th of what they paid for them, the era of rising values has come to a screeching halt. If your stations are worth a fraction of what you thought they were, the bulk of the "profit" of owning them just evaporated. Furthermore, those station values provided the leverage to either keep expanding, or at the very least provide operating capital. But now banks are more cautious in lending; if you have no equity, you'll have a very hard time getting a loan. This is not a time when it's easy to get an unsecured loan.

So owners are cutting costs. Entertainment? That's not on their minds... they're a bit distracted by trying to not lose their shirts.

Sad...so it looks like the proper analogy (if you need one) is not GM, it's home values.

 

[SFStatic]

<GM tried to maximize profits by cutting quality. Radio is firing its local on-air talent. Both diminish customer desire to have their product.
[/quote]

You have your customers mixed up here. GM's customers are drivers. Radio's customers are not listeners. Radio's customers are advertisers. GM has to bring its costs down in order to bring in drivers. Radio has to bring its costs down in order to bring in advertisers. GM is doing it by laying off some workers. Radio is doing it by laying off some DJs.>


[/quote]

I disagree. This is one of the things that makes broadcasting an unique business. The listeners ARE radio's customers, and so are the advertisers. You have to attract the first set of customers into the store by good programming, then you rent their ears to the advertisers for a fee. (Credit to Radio 101 seminar creator Chris Lytle for the rent the ears part).If you don't satisfy and keep the listeners as customers, you will have no numbers and therefore a tough time getting paid advertisers.

 

[TVradioguru]

Really bad guess there guru. He's in the biz now and has been for years.

Perhaps, but based on his/her comment about the growing health of streaming "radio", clearly not knowing that many groups will be discontinuing streaming because of the negative revenue impact, it appeared that he/she wasn't in a position to know the latest. Maybe Dead isn't in a management or finance position to be in those discussions, but trust me..With the ever-growing costs, taxes and fees, streaming is going to fade out over the next couple years. I wouldn't hang my promise of the future on Public Internet based streaming as a solid business model.

When talking about the health of radio many people, even those "in" the industry, are missing the forest for the trees. I was talking with the PD of a fairly major market the other day and mentioned the likelihood that several big groups will be forced to declare bankruptcy this year. He was stunned. He ought not have been.

Really! Where did you get your crystal ball from? Why spend time on this forum when you could be rich and famous predicting the future?

Without going into details, suffice it to say that I work in the upper levels at a major broadcast group. We watch our competition and peers like a hawk, especially those who have shareholders and the associated available financial data. I've not seen a single large TV or radio group close to bankruptsy.

You are however absolutely correct that the value of properties when previously purchased at 10-17 times cash flow, have dropped significantly. But depending on the area, chances are so has your home accordingly (assuming you own a house or property).
Again I sound like a skipping CD here, but being down 10% is tough but it could be worse and is for many brick-and-mortar businesses.

Operationally, radio is an advertising business. But in the big picture, it's more like real estate speculation. I started in the biz in 1976. Since that time, the value of stations has consistently risen; sometime dramatically as was the case after the mid 90's de-reg.

So owners are cutting costs. Entertainment? That's not on their minds... they're a bit distracted by trying to not lose their shirts.

I agree with with your comments with the qualifier being only Private Equity firms treat broadcast properties speculatively. PE firms have purchased radio/TV groups with the idea of operating them in the cheap then spinning several or all as values climb. Just for the record I don't agree with that model and am glad to see these organizations in some form of distress. That being said, all indications are that these same PE firms have the cash and financing reserves to wait out the storm, but they're going to dump the broadcast properties at the first opportunity.

 

[Zeb Norris]

Guru,

I already AM rich. I made a killing in California Real Estate.

I don't have a crystal ball, but there's a difference between a "likelihood" and a sure thing.

Furthermore, I simply don't agree with you that the loss of as much as 75% or more of the equity owners thought they had is not a problem, nor would many others. Losing 60 million in equity on 3 FMs is a problem. CBS had to really need that cash.

Look, my comments weren't intended to be anything other than informational. I wasn't attacking you or anyone else.

I'm sure you're smart and knowledgeable.

Have a nice day.

 

[DeadAudicy]

Perhaps, but based on his/her comment about the growing health of streaming "radio", clearly not knowing that many groups will be discontinuing streaming because of the negative revenue impact, it appeared that he/she wasn't in a position to know the latest.

Well, although streaming specifically wasn't in my part of the discussion thus far, I'll allow it lurks on the edge of it (my peripheral references to online radio were not to station website streaming), but it's not really germane to the larger discussion, let alone to whether I can parley wisely.

My position is that much, if not most, of radio is not up to competing with new media content availablity. You seem to think it is, and will enjoy success thus.

My position is that the revenue/compensation/talent/ratings/revenue spiral is gaining momentum downward -- maybe for good reason -- and at the same time competing platforms are cutting fiercely into user choices. Your immediate comment in a way supports that view (insert Bartles & James tagline): If radio cannot monetize presence online or otherwise on-device, then they cannot participate. Where is the success in that? Whether they can or not, they need a better content model than the typical.

Maybe Dead isn't in a management or finance position to be in those discussions

Also, I'm not a chef, but I make a killer rotisserie pork Bourbon glaze. There is simply too much information on any industry at any level available anywhere any time, to be unaware of information you seem to feel is exclusive to your part of the process. Also, if someone is in an industry for a few decades, someone learns a thing or two about it beyond the pathway to someone's office. Would you disagree?

 

[landtuna]

<GM tried to maximize profits by cutting quality. Radio is firing its local on-air talent. Both diminish customer desire to have their product.

You have your customers mixed up here. GM's customers are drivers. Radio's customers are not listeners. Radio's customers are advertisers. GM has to bring its costs down in order to bring in drivers. Radio has to bring its costs down in order to bring in advertisers. GM is doing it by laying off some workers. Radio is doing it by laying off some DJs.>


[/quote]

I disagree. This is one of the things that makes broadcasting an unique business. The listeners ARE radio's customers, and so are the advertisers. You have to attract the first set of customers into the store by good programming, then you rent their ears to the advertisers for a fee. (Credit to Radio 101 seminar creator Chris Lytle for the rent the ears part).If you don't satisfy and keep the listeners as customers, you will have no numbers and therefore a tough time getting paid advertisers.
[/quote]

Thanks Static. Love your "rent their ears" quote.

 

[DavidKaye]

I disagree. This is one of the things that makes broadcasting an unique business. The listeners ARE radio's customers, and so are the advertisers. You have to attract the first set of customers into the store by good programming, then you rent their ears to the advertisers for a fee. (Credit to Radio 101 seminar creator Chris Lytle for the rent the ears part).If you don't satisfy and keep the listeners as customers, you will have no numbers and therefore a tough time getting paid advertisers.

You can disagree all you want, but a customer is someone who buys a product or service from a company. Listeners get radio for free. They're not buying anything from the station.

Here's an example that shows that listeners are not the customers: Time-brokered stations do not have many listeners, but they make money because program producers think they can make money by buying time and running programs. Sometimes the program producers luck out and make money, but a lot of times they don't. KDIA 1640 has a full 24/7 schedule of program producers willing to buy their time, but show me the last time KDIA has shown ratings. http://www.kdia.com/

A commercial radio station will not survive unless it serves the needs of the advertisers. This means they must sell their service at a reasonable price. In today's deflation, broadcasters have to be very careful to give a good value to their advertisers. This may mean cutting back on air staff. The average listener is not going to care whether there's a DJ or an automation system between 8 and midnight.

 

[TVradioguru]

Well said David!

 

[landtuna]

You can disagree all you want, but a customer is someone who buys a product or service from a company. Listeners get radio for free. They're not buying anything from the station.

Listeners "buy" with their attendance and "pay" for their entertainment by listening. Without listeners there is no radio station - at least not for long.

Here's an example that shows that listeners are not the customers: Time-brokered stations do not have many listeners.....

Fortunately, time-brokered stations are not the norm (yet) nor are they long-lived. There is nothing that will kill an audience quicker than non-stop commercials for questionable products.

A commercial radio station will not survive unless it serves the needs of the advertisers. This means they must sell their service at a reasonable price. In today's deflation, broadcasters have to be very careful to give a good value to their advertisers. This may mean cutting back on air staff. The average listener is not going to care whether there's a DJ or an automation system between 8 and midnight.

The station must first serve the needs of its audience or it won't have advertisers. Obviously, it's audiences' demo's will then determine what price it can sell it's services for. One questionable way to dis-serve its audience is to remove the people that give the station its personality. Contrary to your opinion, most listeners do care who is hosting, even during times of low listener numbers.

 

[TVradioguru]

Well I for one have seen, and paid for, research in several major and medium markets. Other than the few well known syndicated talent around, only about 30-35% of radio listeners can name a local jock, nor do they really care whether they're on or not.

You may think that staffing with local personalities makes a difference to modern listeners but unfortunately it's been proven that they really don't care anymore. The old days of the Wolfman, Charlie Tuna, Gary Owens, whomever, are over. Unless your name is Stern (yes people still think he's on the air) or Limbaugh, very few know who you even exist.

 

[TVradioguru]

Well I for one have seen, and paid for, research in several major and medium markets. Other than the few well known syndicated talent around, only about 30-35% of radio listeners can name a local jock, nor do they really care whether they're on or not.

You may think that staffing with local personalities makes a difference to modern listeners but unfortunately it's been proven that they really don't care anymore. The old days of the Wolfman, Charlie Tuna, Gary Owens, whomever, are over. Unless your name is Stern (yes people still think he's on the air) or Limbaugh, very few know you even exist.

 

[DavidKaye]

Listeners "buy" with their attendance and "pay" for their entertainment by listening. Without listeners there is no radio station - at least not for long.

This is one of the most preposterous things I've ever heard. The audience "pays" for their entertainment by listening?

Fortunately, time-brokered stations are not the norm (yet) nor are they long-lived. There is nothing that will kill an audience quicker than non-stop commercials for questionable products.

Boy, do I have examples that show you are wrong wrong wrong.

Infomercials: First of all, Clear Channel owns both KNEW and KKGN. They have similar signals on regional channels with transmitters located within sight of each other. So, they're generally comparable. KNEW and KKGN have similar ratings, but KNEW puts on a lot of infomercials. Apparently infomercials are not driving away the KNEW audience.

Shortlived Brokered Stations: Au contraire, if the Bay Area is any indication, the time brokered format is one of the most successful formats of all. KEST 1450 has been brokered continuously since about 1973. That's 36 years -- that's longer than the current KFOG format, and the formats of most other Bay Area stations. But KEST is not an exception. There's KVTO 1400. They've been brokered for, what, 25 years?

KFAX has been brokered since 1960 when their all-news format failed and they struggled to find something. That's nearly 50 years with the same format! I think that means that KFAX has had the same format longest of all Bay Area stations!

 

[LKellerIII]

Some months ago, a few of us who grew up in LA were reminiscing about day-timer KTYM - 'K-Time in the Daytime" was their moniker then. They were a brokered station for at least 3 decades, possibly as long as 40 years. They're now billed as a gospel and religious station, but I wouldn't be surprised if it was brokered religious programming.

Some of their programming in the 1960s was great - Art Laboe bought a lot of time to sell his "Oldies but Goodies" records on KTYM. Later, Laboe moved to the monster 1090 signal (XEPRS, post Wolfman).

A local Soul DJ named Godfrey broadcast on KTYM from a south LA record store to push his live Dance Party shows.

I'm sure their ratings were minimal, but the station obviously made money for many years...probably still does. I remember KTYM quite fondly.

http://www.ktym.com/

 

[SFStatic]

Brokered religious isn't such a problem, since a lot of those stations never get any ratings compared to regular commercial stations. KNEW and KKGN may appear to have similar ratings, but when you break out the weekend numbers, where the brokered shows are, KNEW is down in the basement with KTRB, while KKGN does much better. The brokered programming cut the ratings at KNEW from better than a 1 share on weekends to a .1.

What 'guru' says about listeners knowing talent is true, but not the point. Listeners can tell that a personality is live and local, and you tend to get more listening and more loyal patrons for your paid clients. Some places where they are still live and local beat 2007 revenues in 2008, and are beating 2008 in 2009.

Read what Kent Cooper said about major market sellers in Tom Taylor's column here on Radio-Info today.

 

[TVradioguru]

What 'guru' says about listeners knowing talent is true, but not the point. Listeners can tell that a personality is live and local, and you tend to get more listening and more loyal patrons for your paid clients. Some places where they are still live and local beat 2007 revenues in 2008, and are beating 2008 in 2009.

Perhaps but what are the margins?

For the sake of discussion let's say you have mid-range talent making $500K annually (plus add 20% for benefits) in PM drive. Right now you have $750K in net revenues for this particular station 6AM-Mid. It's safe to assume that if you broke it out, just the PM drive portion of your total revenues on a good year would be in the range of $325K annually. That means your PM drive runs negative $175K. Sure without a PM drive host you may not command the same rate to attain the $325K without the talent, but you gain a much better margin because your expense is cut in half. Advertisers will still buy PM drive and even at a lower rate, without the big salary contributing to four of an eighteen hour broadcast day.

 

[DavidKaye]

What 'guru' says about listeners knowing talent is true, but not the point. Listeners can tell that a personality is live and local, and you tend to get more listening and more loyal patrons for your paid clients.

I have an excellent ear for automation, and I have been very surprised to know that KOIT was live and local during the daytime. I had thought they were automated 24/7 until Tom Saunders retired one day, and at the end of his shift he played a really old promo from when he was a rock DJ. And then he said goodbye. Since then, I've heard Bobby Ocean on KOIT and realized that he was live. But the other DJ? I haven't a clue whether they're live or not. And KOIT is highly rated, so I doubt that most listeners care.

Sorry about that. I'm all for preserving DJ jobs, but if it doesn't matter to the listener, it doesn't matter.

 

[LKellerIII]

I don't think that most listeners can tell the difference between live and local and voice-tracked any longer.

Jocks don't give time or temperature checks anymore, or read live commercial copy. A few take phone calls from "listeners," but we all know those can be pre-recorded. You can tell the jock is live is he makes jokes with the Traffic reporter, but that's about it.

If you contend that program content from the DJ brings loyalty, I'd agree with that - at least with the small minority of listeners who pay attention. But I'd still contend that a well produced VTed show with some actual content will bring that loyalty. It has little or nothing to do with whether or not the jock is live.

My wife is probably the typical radio listener - she picks stations based on what kind of music she's interested in at the moment, but pays very little attention - it's just background sound to her.

The other day I was in the car with her when I Heard It Through the Grapevine (Marvin Gaye) came on. I changed the station, and bitched about how sick I was of that song because it has been in heavy rotation for (what?)...probably 2 decades.

She just laughed and looked at me like I'd lost my mind.