Who Killed Radio's Mom and Pops

[TheBigA]

Re: Who Killed Radio

Corporate broadcasters were so busy flipping radio properties for higher and higher prices, they had little interest in using the nineties to put some of their profit into R&D and try to anticipate what was coming in the age of digitization.

I don't know about that. It depends on the company. But I know a lot of stations that had been the backwater of technology under their old owners. When the big corporate owners came in, they spent lots of money on physical plant. For the first time, studios had computers, tape recorders were replaced with digital workstations, and automation systems were bought. In fact, all that investment in new technologies is exactly what made traditional DJs and production staff obsolete.

They never worked to make their product better and more essential --in fact, in some cases, they resisted the idea

Once again, maybe you can be specific. What I remember from that time was a growth on the part of programming people to improve their product through better research. It seemed like every month, another huge research study was done to aid programmers in making their stations more responsive to listeners. Now on air folks who resented research or interference didn't like any of this. They wanted to be able to say and do what they wanted, regardless of what the audience wanted. I remember a long period of conflict between programmers and on-air staffers over what should go on the air. That hasn't changed.

All I know is that it wasn't the fault of the horse that the automobile was invented and became the dominant form of transportation. You can blame the horses, and their greedy owners all day. But what really happened is that something better came along. Radio is still extremely popular. More than 94% of the public uses old style radio every day. The popularity of its use is not reflected in stock price because stock price isn't based on usage, but profitability. And the programming isn't really the problem, as clearly demonstrated by the PPM studies. If you look at the research, and look at all the facts, it's obvious that radio isn't dead, but simply sharing the audience with many more devices. That's not going to change, no matter what happens. No one will be throwing away their cell phones or computers because some radio station hires more staff or spends more money. So radio has to adjust its expenses to fit in the current marketplace. That's the reality of the situation. Learn to live with it. The radio folks in the 1940s learned to live with it when TV came along. That's the exact same situation now.

 

[Goat Rodeo Cowboy]

Picking up on what Kinetic posted:

Some people cry for the return of the fairness doctrine. That does nothing for the business condition of radio. That cry is about politics and social justice... not about radio.

Some people cry out for the return of licensed technicians on duty at all hours. That does little or nothing for the business condition of radio. The stability and reliability of electronic equipment today does more for us than the presence of a person who feels sentenced to an 8-hour term in jail.

Some people cry our for "live and local" which has some kind of nostalgic ring to it, but good talent can pre-record content in a distant studio and make it better than a lot of what is done by "jailed to an 8-hour sentence" folk sitting near the tower.

But here is where Kinetic hit the nail on the head. Own it because you want to operate it, not because you want to "flip" it as they say in the real estate business. I can remember when the FCC considered "trafficking" an activity to be dealt with though a "death sentence"... not death for the owner, but death for the ability of the owner to keep a license. One of my early employers built a dinky little station in his dinky little home town. It was a big success.... party because the owner had the personality to just lean on people and bully them into buying advertising. His second dinky little station was in my dinky little hometown and I tried to run it and I couldn't bully people into buying advertising. The owner soon had his application pending for his fourth or fifth Construction Permit when rumors got back to the FCC that there had been a secret deal all along to sell the second station of someone in my town.

That was an era when the FCC developed a policy unless there was a death in the family or financial conditions for the owner on the edge of bankruptcy, you were going to keep any license you obtained for a minimum of three years. Any observable pattern of acquiring stations with the intention of reselling them rather than an intention to operate them over the long haul would severely tarnish your standing with the FCC.

That FCC policy kept a lot of "riff raff" out of the industry. Today we live in a political climate and philosophy climate that says government should keep it's nose out of such business thinking. "It's none of the government's business whether I intend to keep an investment or resell an investment!" It is possible that broadcasting (including TV) needs some kind of external conscience sitting on it's shoulder at all times demanding demanding commitment to long term operations focused on operating profit, to the exclusion of short-term capital gains profit. But I also know that it is probably impossible to ever reduce such a concept to a written law that is equitable and enforceable.

 

[redneckriviera]

Great posts from both kinetic and GRC. The easing of the "trafficking" rules, more-or-less concurrent with raising the ownership caps from 7 to 12 to 18 back in the eighties, were intended to make radio more attractive as an investment--more liquid and more mass. Not sure whether the commission was aware how these rule changes would change the face of radio ownership, but I doubt it.

BTW, the most recent tabulation I've seen (12/08) showed only about 50 commercial radio companies owning 20 or more radio stations. Including, of course, Clear Channel & Cumulus & Citadel & CBS, the 50 companies collectively owned around 3,000 stations--meaning that the other 7,000 commercial radio stations in America are owned by companies with fewer than 20.

So maybe the role of "corporate radio" isn't quite what it appears to be. Certainly in major markets those four companies--The Big C's--play an enormous role, and control maybe 40 percent of all industry revenue. But the sheer bulk of the nation's radio outlets are not owned & operated by the big companies.

 

[jackandcoke]

Great posts from both kinetic and GRC. The easing of the "trafficking" rules, more-or-less concurrent with raising the ownership caps from 7 to 12 to 18 back in the eighties, were intended to make radio more attractive as an investment--more liquid and more mass. Not sure whether the commission was aware how these rule changes would change the face of radio ownership, but I doubt it.

BTW, the most recent tabulation I've seen (12/08) showed only about 50 commercial radio companies owning 20 or more radio stations. Including, of course, Clear Channel & Cumulus & Citadel & CBS, the 50 companies collectively owned around 3,000 stations--meaning that the other 7,000 commercial radio stations in America are owned by companies with fewer than 20.

So maybe the role of "corporate radio" isn't quite what it appears to be. Certainly in major markets those four companies--The Big C's--play an enormous role, and control maybe 40 percent of all industry revenue. But the sheer bulk of the nation's radio outlets are not owned & operated by the big companies.

I'd guess that the "Big C's" would say that the 1500-or-so that they own are the ones that are worth a shit. Or were.

But it does bring up an interesting point. If we're really only talking about a couple dozen companies, breaking up the oligopolies by forcing divestiture to a lowered cap of say, 24 licenses, wouldn't be all that problematic. By my count only 11 companies own 50 stations or more, so if the FCC decided to start the process by setting the cap at 50, it could involve pushing two tables together at the Gaithersburg Applebee's and telling the gathered CEOs to starting selling off their dogs.

And at this point, most of them have plenty of dogs and nearly all of them desperately need the cash!

 

[TheBigA]

So maybe the role of "corporate radio" isn't quite what it appears to be. Certainly in major markets those four companies--The Big C's--play an enormous role, and control maybe 40 percent of all industry revenue. But the sheer bulk of the nation's radio outlets are not owned & operated by the big companies.

That is factually correct, and a point I've been making for a very long time. The generalization that radio sucks or is only one way ignores the fact that the majority of stations aren't owned by the big companies, and FCC regulations limit the percentage of market revenue they can control. Today, every market also has a number of non-commercial radio stations, so those who dislike the commercial world have alternatives.

If we're really only talking about a couple dozen companies, breaking up the oligopolies by forcing divestiture to a lowered cap of say, 24 licenses, wouldn't be all that problematic.

It doesn't matter if it's "problematic" or not. It's simply not going to happen. Because that would bring us back to about where the FCC was heading in 1994. Forcing radio to operate under 1994 rules is NOT going to change the habits of the public. They like their cell phones and computers. There are tons of new mass transit rules that have forced private industry out of the transportation business. Last I checked, not many people have given up their cars. So re-regulation won't make radio better, and it won't improve its profitability. It's just give those who are bitter and angry a sense of justice. Then everyone moves on and the product stays the same. That's what always happens.

 

[TheBigA]

The easing of the "trafficking" rules, more-or-less concurrent with raising the ownership caps from 7 to 12 to 18 back in the eighties, were intended to make radio more attractive as an investment--more liquid and more mass.

Maybe. The real problem was that the FCC had over-licensed the spectrum. Too many radio stations were cutting station shares. One needed more than just two stations in a market to give you the same audience share you had before 1982. And they needed to encourage companies to buy the failing AM stations. So maybe that's what you mean about making radio a more attractive investment. What would it take to cause a company to buy a radio station it knew was going to be a boat anchor? The answer is the ability to buy more of the cash cows to help pay for the loser.

This talk about forcing divestiture brings us back to the problem radio had in 1994: No one wants to buy these boat anchors. You don't see MicroSoft or Google or any successful companies looking to buy radio stations. Everyone wants out. No one's buying. Now we REALLY have a situation where the government needs to encourage investment, specifically from women and minorities. That's what they're doing on Capitol Hill right now. THAT is the next step in legislation. It won't lead to better programming, but it'll mean more diversity of ownership. What will the rallying cry of angry former radio employees be when their new enemies are small, locally run minority companies funded by federal loans? Loads of new Inner City Broadcastings and Univisions. Start thinking about it now, because that's the next step.

 

[justula]

At the heart of this is it's all about convenience.

If radio is the most convenient form of technology for people to get what they want when they want, no killing of the radio star happens. If other forms of technology provide that like the Internet and iPods, it is radio's to lose.

 

[TheBigA]

At the heart of this is it's all about convenience.

If radio is the most convenient form of technology for people to get what they want when they want, no killing of the radio star happens. If other forms of technology provide that like the Internet and iPods, it is radio's to lose.

I'd add that it's about convenience and cost.

Most folks don't want to pay for content. Sure you have the extreme music fans, and they will pay for what they want. But the vast majority don't want to pay. I feel a point will come where the internet will get too expensive, between royalty fees and other motivations. That's when radio has a chance for another life.

 

[TheBigA]

Own it because you want to operate it, not because you want to "flip" it as they say in the real estate business. I can remember when the FCC considered "trafficking" an activity to be dealt with though a "death sentence"... not death for the owner, but death for the ability of the owner to keep a license.

That attitude was kept in the 96 Act. Stations that bought more stations were expected to own them for a certain length of time. It may have been at least three years. It's in the law now. Certainly companies like CC and CBS were not making short term purchases. They fully intended to own for a while. Regarding Citadel, I think Forstmann had a make or break decision back in 2005. Either sell the company at a profit at that point, or grow it bigger. By 2005, they had owned it for 4 years, which was within the law to sell. They chose instead to grow the company and buy ABC. Bad decision. They should have learned from Westwood One's purchase of NBC Radio, which was almost as bad.

I don't know any of the current owners who see themselves as short termers. Those types of people, like Sillerman and Bass, cashed out a long time ago. The Mays family could have walked away after the company went private. They didn't. They don't need the money. The folks in there now are lifers, for better or worse. Certainly the Dickeys aren't going away. They're looking for bargains right now.

But all this ignores the next generation of owners, who will be minorities, using federal money and tax incentives. There is a group on Cap Hill now working on such a bill. They will probably be required to retain ownership for 3 years, like all the rest. Then they'll do what Cook Inlet did 20 years ago, and sell at a huge profit. So they use their minority status to get a sweetheart deal, sit on the property for 3 years, then cash out. How is that an improvement?

 

[justula]

So where do we come to the idea that it is an industry failure that to be a broadcaster today if we don't do it exactly like we did it in 1936 or 1948 or 1960 or 1972?

One source is the overvaluing of experience, an erroneous choice for an industry that's constantly evolving like radio. There's this really stupid notion that you are best at what you have done the longest. Why then do we have these stories of Wall Street executives who at age 45 detest the career choice they made at 22?

Or in your example of someone who insists we must do it like we did in 1972, is that someone with 37 years of experience or 1 year of experience repeated 37 times?

It's particularly funny when dealing with ad agencies where some proclaim 39 is the new 65. You don't see many past a certain age, the majority have moved on as independent consultants. You then hear how those people market themselves, typically saying they've been in the business 20+ years. So what? So you delivered for radio stations 37 years. How do I know you can deliver for this one in this format on this type of device? You may have gotten lucky.

In the past years of those spaced every 12 apart of 1936, 1948, 1960, 1972, elders were respected. Not nowadays, not by 12 year olds, not by Gen Y'ers. If you're not with the times, they'll tell it to your face.

 

[adma]

Though honestly, a big problem I find with a thread like this is the impression I get that virtually nobody participating is under the age of 60--or at least, they might as well be 60 plus.

And on top of that, I get very little sense of "rock"; or at least of anything that belonged to the era that the Beatles begat--which, considering that it was through rock et al that radio became something to "aspire to" for boomers or whatever, is a little odd. And demographically dangerous. Indeed, I'm almost left with the impression that whatever rock begat is now viewed as an artifice that was, through corrupt payola systems and youth-obsessed media "on the take", forced upon Americans much like any goody-goody liberal cultural programming--and that the rise of country over the past generation was some kind of "necessary corrective"...

 

[Goat Rodeo Cowboy]

Though honestly, a big problem I find with a thread like this is the impression I get that virtually nobody participating is under the age of 60--or at least, they might as well be 60 plus.

And on top of that, I get very little sense of "rock"; or at least of anything that belonged to the era that the Beatles begat--which, considering that it was through rock et al that radio became something to "aspire to" for boomers or whatever, is a little odd.

Guilty as charged.

You can take out your lipstick and write on the wall just above your computer: "GRC is at least 60 years old."\

Has his brain died or gone on strike? If I were voicing a Podcast would it sound like an old man? Does any of that make any difference in this thread... this conversation?

If we could spend a bit more energy on dealing with concepts and logic rather than attacking the abilities, the motives, the mindsets of other writers, we might reduce all this input into some useful, practical, valid thinking.

About the question on "rock"..... that strikes me as a puzzling bit of input on our topic.

We are according to the Subject Line discussing the premise that radio stations owned by "Mom and Pop", radio stations where a person's name rather than a corporate title is commonly associated with the radio station. (Mom and Pop will probably find it legally prudent to be incorporated, but instead of being referred to by a corporate name, the station will be known by people in the area served as Tom's operation, Mel's station, Charlie's little beehive, Carl's circus out there at the edge of town.

We are discussing whether major significant portions of the programming need to be birthed from floorspace that can be located somewhere in the service area, or from floorspace in NYC, LA or Dallas, TX.

We are discussing whether a Man and Pop that wants to survive should continue to cling to the idea that RADIO IS MUSIC and MUSIC IS RADIO, or whether the time has come to surrender the music franchise to iPod and friends.

And then we are struggling (it is an HONEST struggle) with defining the metes and bounds of "What is a Mom and Pop operation". Some of us would restrict that term to stations that an entrepreneurial person or couple could actually acquire for a price equal to or less than what it costs to own a fast-food restaurant, a convenience store, an Ace Hardware, a beauty salon with tanning beds, or maybe a Harley Davidson dealership. Let's assume for a moment that Ted Turner or Warren Buffet or Jerry Jones of the Dallas Cowboys decides to buy, not in a corporate structure, but personally as a unincorporated proprietorship, an FM station in Memphis or Kansas City or Seattle or Denver and it turns out the "price of entry" is $18 or $20 Million, I DON'T see that as what most of us call a Mom and Pop station.

Where does it fit into this conversation whether we give Rock music a proper seat at the table? I would offer the suggestion that before we debate which categories of music belong on the Mom and Pop station, we would determine whether music of ANY KIND will define the future of a radio station beginning today and spanning a seven year business plan reaching out to the year 2015 or so. Maybe the future depends on developing a talent/personality so compelling he/she can dethrone Limbaugh in that time frame. Maybe the future depends on developing a feature collection that will leave NPR in the shade. Maybe the future depends on finding a space-age equivalent of Jean Shepherd or Arthur Godfrey or Walter Cronkite. But maybe you are onto something. A group of Mom and Pops should set up a boarding academy where we would nurture young people in hopes of find the next Beatles which this station cooperative would exclusively own.

 

[jackandcoke]

What we're really talking about when we say "mom & pop," I think, are small town radio stations. I'll agree, for instance, that Jerry Lee's WBEB in Philadelphia with its $30 million a year in billing doesn't qualify. And even Pat Sajak's (an ex-jock at Nashville's WSM-AM in its AC days) little AM stations in Annapolis and Westminster, Maryland are questionable, if only because both towns are part of metropolitan Baltimore (though in Sajak's defense, both WNAV & WTTR are really well-programmed community-focused local radio stations, each super-serving those towns).

There are still thousands of small town radio stations and/or small clusters run by owner-operators. Consolidation has put other thousands of small town stations in the hands of smaller regional groups that have too often modeled themselves after the mega-owners, but "mom & pop" stations are still plentiful.

Not sure I agree with adma about rock's place in the future of radio, though I certainly agree that songs from 45 years ago have probably run their course or soon will. Current-based rock ("indie," or "alternative," "active," "new rock," "modern rock") targeting 12-24 or 18-34 populations may play an important role in reinvigorating radio's younger end.

That may be fodder for another thread, though. Theoretically, at least, this thread is supposedly focused on a specific company structure involving individual or family ownership. Right?

 

[TheBigA]

A group of Mom and Pops should set up a boarding academy where we would nurture young people in hopes of find the next Beatles which this station cooperative would exclusively own.

Hmmm. Not exactly a mom & pop business, if you get my drift. And not exactly the current radio model either. More like what radio used to be, when Bing Crosby recorded for Columbia Records, and did radio for co-owned CBS. BUT it's not a mom & pop business. Because great music isn't limited by geography. And it shouldn't be. Great music is a national thing. Or even a worldwide thing. Sure it has its roots locally, but as Sam Phillips discovered, sooner or later you have to sell out to the big guys. You simply can't keep 'em down on the farm after they've seen Paree.

 

[Goat Rodeo Cowboy]

A group of Mom and Pops should set up a boarding academy where we would nurture young people in hopes of find the next Beatles which this station cooperative would exclusively own.

Hmmm. Not exactly a mom & pop business, if you get my drift. And not exactly the current radio model either. More like what radio used to be, when Bing Crosby recorded for Columbia Records, and did radio for co-owned CBS. BUT it's not a mom & pop business.

That was certainly a stretch on my part.... in an effort to knock the rust off some of our thinking around here.

jackandcoke sized up the situation in a way that parallels what I am thinking.... Mom and Pop as a description of a "radio model" to use your term tends to be small market radio. One of my favorite illustrations to describe the difference when talking with someone who does not have a broadcasting background is to set the stage with an observation about automobiles. Circa 1960 in this country there was an effort by the automobile industry to develop a small car. We had been through the horsepower race and the comfort race and cars had gotten bigger and bigger. At first the simply made the car small. And they were stinkers. Falcons. Chevettes. Was the Plymouth of that genre the Valiant? Volkswagen and then Corvair was an effort to say: The engine should be in the rear. Finally the automotive geniuses said: In a small car, the engine and the drive-wheels, the traction wheels, need to be at the same end of the car, and the engine belongs up front for various reasons including safety. Then we went through a period where they went with front wheel drive for everything..... Cadillac and Lincoln included. Back in the 70s GM had that neat motorhome that used front wheel drive. After a while the geniuses realized that vehicles over a certain size, a certain weight were best served by a rear wheel drive. So we can say that generally, large heavy cars and smaller light cars have a different "business model".

If someone ever wastes a day by going back and reading my grain elevator full of posts on Radio-Info, if you keep in mind that I am a rabid warrior that large market metro radio stations and rural/localized mom and pop radio stations really function not only under different business models, but maybe in completely different industries!

There is a lot of resistance to accepting that radical concept. Maybe it's a bad, defective concept. Then again, maybe that concept could be the salvation of a lot a radio in this country.

I read Jerry Del Colliano's daily blog/rant where he is begging people to adopt a new paradigm. Some of the concepts he dangles out there as part of the future make sense in metro markets including some smaller metro markets. I spend a little time every day trying to visualize what would be a practical implementation of his ideas in a real Mom and Pop market.

 

[TheBigA]

I read Jerry Del Colliano's daily blog/rant where he is begging people to adopt a new paradigm.

Jerry's problem is he's schizophrenic. He wants stations to adopt a new paradigm. But he wants them to retain the old one. You can't do both. He doesn't understand that. He also can't let go of his hatred of CC. They could cure cancer, and he'd find a problem with it.

I spend a little time every day trying to visualize what would be a practical implementation of his ideas in a real Mom and Pop market.

That's the problem...they're impractical in that application. Mom & pop by definition means small staffing. What he wants is for these stations to be owned by mom&pops, and retain their bloated staffing in order to keep all the live & local programming, create the new podcasts, and the mobile content. You need staff for that, staff costs money, and mom&pop don't have money.

 

[adma]

Not sure I agree with adma about rock's place in the future of radio, though I certainly agree that songs from 45 years ago have probably run their course or soon will. Current-based rock ("indie," or "alternative," "active," "new rock," "modern rock") targeting 12-24 or 18-34 populations may play an important role in reinvigorating radio's younger end.

Actually, I'm not really making a statement on behalf of rock-and-what-it-begat's place in the future of radio (nb: the "and-what-it-begat" takes such things as hip-hop, etc into account). My statement is a reminder that has more to do with its place in radio's relatively recent past, i.e. how radio's positive associations to those of boomer and Xer age was soooo overwhelmingly wrapped up in the "rock thing"...to the point where it was practically and paradoxically at the expense of radio qua radio itself. They were into the Beatles, Led Zep, U2; not into Dan Ingram or Rick Dees or Scott Shannon. A treacherous situation, since it ultimately leads away from the radio platform...and what a lot of you are asserting on behalf of mom & pops seems retrograde cornpone by comparison.

And it isn't something that can be fixed through playing current-based rock, either; because frankly, given today's media alternatives, the only "reinvigorated younger end" you're going to draw is along the lines of teen dads and backwoods simpletons. And even the teen dads might still wind up outnumbered by their Lucky-in-King-Of-The-Hill-esque fathers and uncles...

 

[gr8oldies]

I've read Jerry Del Colliano's article about what he would do to fix Clearf Channel and a few of his ideas make sense, particularly localizing management and itg's decision making ability, and I'd even go so far as his idea of making the best performing GM the CEO. He does talk about 80% local programming on all stations and i don't see how that's realistic. (We're taking Bob and Tom away because you need to hear Ed and Flip). There just are no easy answers and the folks who are waiting for the FCC or Congresss to redistribute those licenses to "more deserving" owners so we can all get back to jocking are always going to be dissapointed.

 

[TheBigA]

I've read Jerry Del Colliano's article about what he would do to fix Clearf Channel and a few of his ideas make sense, particularly localizing management and itg's decision making ability, and I'd even go so far as his idea of making the best performing GM the CEO.

The system was once even more decentralized, but that didn't seem to work. People who worked at a CC station in one region complained that their friends in other regions got things they didn't get. As for turning a GM into a CEO, there are a couple levels of bureaucracy between them. If you were a successful GM, would you really want to be thrown into a lion's den? I wouldn't.

There just are no easy answers and the folks who are waiting for the FCC or Congresss to redistribute those licenses to "more deserving" owners so we can all get back to jocking are always going to be dissapointed.

You're exactly right.