Will small market broadcasters benefit?

[Groove1670]

A interesting article from one of the publishers of a newsletter predicts in a couple years one or both of the national radio groups will do away with all local talent and sales staff. Each station group will have a tech advisor and a admin person. local sales turnover is high, and syndicated programming works for them.

Right now their debt load is too high, and more cuts will be needed.

This will be an excellent opportunity for medium and small stations (groups) to serve their local market.

Hopefully, better days are ahead for the small broadcaster.

 

[TomT]

Well, yes, to some extent. We've gained/regained clients as employees leave or are fired from the local cluster.

But rate cutting; bad, poorly executed programming doesn't help radio maintain its share of either local direct or national spot.

 

[Radio-X]

Local sales staff turnover? Or just local sales?

Because it seems like both is the case now. Being a salesperson in a local cluster is a tough deal. Problem is these companies aren't wanting to/can't pay for an experienced group of "account executives", so you get basically schmucks who have never worked sales before and are being asked by local shop owners "Why should I even bother advertising on the radio"

When most of your sales people give your potential clients a wide-eyed dumbfounded response then quit 3-6 months later, you shouldn't be shocked as to why sales are down!

I'm not saying that all sales folks are idiots, and many can transition into the radio industry just fine. But the lenders and the suits need to remember the ancient Chinese proverb:

"Garbage in, garbage out"​

If you just send a green salesperson out there with little-to-no mentorship or experience and pay them peanuts, one should expect lower sales! Ditto with on-air staff...if you're trying to be the free alternative to sat. radio, you're just tightening the noose around your own neck.

Getting rid of local on-air talent entirely would just be the equivalent of kicking the chair out from under itself. It will end up with the company hanging itself.

But what do I know? I got out of the industry just as it was showing the classic signs of killing itself. Not too far off from finishing my MBA, and these companies look stupider than ever after learning more of the business side of it.

Big Radio is cutting off its nose to spite its face!

Radio-X

 

[TheBigA]

But what do I know? I got out of the industry just as it was showing the classic signs of killing itself. Not too far off from finishing my MBA, and these companies look stupider than ever after learning more of the business side of it.

What did your MBA class teach you about flooding a market? Putting too many outlets selling at the same customers? That's what happened to radio after Docket 80-90. Radio was once a fixed industry. A limited number of radio stations in a market. Then that limit went away. More radio stations than a marlet could support. Then add satellite, internet, cellular, and a bunch of other services, all reaching the same size market, beating them with the same messages. THEN remove local retail. Replace it with national chain stores. All advertising decisions being made at company headquarters. Take that to your MBA class and ask them how to solve that problem.

I used to work in the liquor business. The county set the number of liquor stores in a town. Then the laws changed, and grocery and convenience stores could sell beer and wine. That drove the price down. Then chain liquor stores came in. Drive the prices down. The family liquor stores couldn't compete, because the chains bought quantity at lower prices. Quality service went down. Sound familiar? Competition drives down prices, but that drives down quality. So advertisers can buy spots at lower prices, but radio stations have to cut their operating budget.

 

[SaltyDog]

What did your MBA class teach you about flooding a market? Putting too many outlets selling at the same customers? That's what happened to radio after Docket 80-90.

When Docket 80-90 happened I remember co-workers asking me how these new competitors expected to fit in economically and me explaining to them that economics had nothing to do with it. When engineers could figure out how to shoehorn another signal into a market, they would and an owner would build it and try to sell it to someone else later. The someone else would get financing and attempt to figure it all out later.

After 80-90, consolidation made sense to me. The problem is that they not only consolidated operations, they did so with loads of debt which was necessary if they were going to acquire the stations fast enough to beat other consolidators. So with admittedly 20/20 hindsight, it seems like the consolidators were forced to cut expenses to service debt just at the time when they should have been investing in content. I wonder, if the government limited consolidators' ability to use debt to acquire stations, would that have made a difference?

 

[TheBigA]

I wonder, if the government limited consolidators' ability to use debt to acquire stations, would that have made a difference?

How could they do that? Even today, with the unwillingness of banks to loan money, you have investment companies (another pre-consolidation creation) that provides money for companies unable to get standard credit.

The debt didn't prevent investment in content. In fact, consolidation is what led to a huge increase in talent salaries. Not everyone benefited, but those who did became rich. Never before could talent commend 6-figure and even 7-figure salaries. Poor Dick Clark had to start his own company and do TV work to make the same money Rush Limbaugh made strictly on radio.

The big problem with Docket 80-90 was driving down share size. That is what led to the cut of ad rates, and what caused radio companies to want to buy more stations in the market. They needed more stations to attain the same numbers. As I said in my previous post, when you put too many liquor stores in the same area, it drives down the price. Good for consumers, but bad for owners.

 

[ChiefOperator]

Just a few thoughts, as BigA said, the loss of local business. This is huge. We now see national chains buying and little consideration is given to small market. That was not the case when corner shops existed. I think the loss of local stores is really a major hit to smaller broadcasters.

 

[TheBigA]

I think the loss of local stores is really a major hit to smaller broadcasters.

The one and only exception is car dealerships. The dealer associations made sure to retain some control of their ad budgets. You don't see that with other businesses. Sure, there are major national campaigns, and you see national branding on network shows. But the local dealers are doing major ad buys to get customers to their member showrooms.