WRXP: IS EMMIS ALLOWING IT TO FAIL???

[WRXPinsider]

There's a conspiracy theory going around up here that's so crazy, it could be true:

Emmis CEO Jeff Smulyan is trying to take the company private. The stock price is down to $1.96 (it's been dropping slowly); he's offering to buy outstanding shares at $2.40 per.

The lower Emmis' price falls, the more enthusiastic shareholders will be to cash out.

It's unfathomable that the team that oversaw the demise of CD101.9 and New York Chill would be allowed to stay employed, let alone destroy another radio station, but that's exactly what's happening. The brass here keeps telling us that success for WRXP is "just around the corner", but none of us underlings are drinking the punch. The station is offering a niche format that's gone as high as it could possibly go in the ratings. It's also an expensive station to run and is bleeding cash (although the OM, who has been best buds with the VP/GM since their days together at Clear Channel, is pocketing some obscenely serious $$$).

Smulyan could have stepped in long ago and laid down the law: improve things around here or the game is over and you're all toast. Nothing like that has happened, in fact, it's the opposite: the folks in Indiana are totally hands off, and the NYC tinkerers in charge are pretty much free to do as they please with WRXP.

We've joked that Smulyan is allowing them to fail, even supporting their failure, in order to drive down the stock price so he can successfully privatize Emmis. Once that's done, he'd sell the frequency to the highest bidder and pocket the winnings.

An improbable conspiracy theory? Insane? Paranoid? Unlikely? Maybe - but maybe not: what other reason could there be for the tolerance - and embrace - of such blatant failure???

 

[JimmyJames]

If they were allowed to do anything they please, logically RXP would be deeper in its music variety instead of narrowing.

Either way, RXP could be fixed. The question is why aren't they?

 

[TheBigA]

The thing I do with conspiracy theory is look for the holes.

The one I see is that he doesn't have to privatize to sell the station, and he owns enough stock that he'd pocket more cash from a station sale now than after privatization. The debt he's incurring to privatize will eat up almost all of the profits he'd see if he sold...especially at today's depressed prices. And from what I see, he'd definitely have to sell assets after privatization. Although it's in New York, the ratings of one station shouldn't have that much affect on stock price.

I support his desire to privatize. Wall Street is done with broadcasting. But if he also wants to cash out, he'd be better off doing what CC did, and sell out to an investment company.

 

[radioguy39nj]

Smulyan could be setting up Emmis' entire NY cluster for a sale. WRXP's travails have been well documented. WQHT and WRKS are doing OK but not as well as they used to.

IMHO, ESPN offered Emmis serious money for a LMA on 101.9. Smulyan turned it down, insisting WRXP would be a success. If ESPN were leasing 101.9, the station wouldn't be bleeding cash.

How long can any operator sustain a continuing cash drain on a class B NY FM?

 

[nd2023]

Hot 97 is their cash cow. Emmis was near bankruptcy over a decade ago when Hot 97 was a dance station, and they flipped it to hip hop. That saved them from going under back then. Not because dance was unsuccessful, but there was a format hole for hip hop and there are only so many frequencies...
If they wanted to lose more money, they could attempt to ruin their 2 successful stations in NYC rather than pour more money into WRXP.
No business wants to lose money or to have their stock price go down.

 

[davideduardo]

Hot 97 is their cash cow. Emmis was near bankruptcy over a decade ago when Hot 97 was a dance station, and they flipped it to hip hop. That saved them from going under back then. Not because dance was unsuccessful, but there was a format hole for hip hop and there are only so many frequencies...

Emmis was not even unprofitable when Hot transitioned from dance to Hip Hop, and it was certainly not near bankruptcy. Just as they did at Power 106 in LA... and as non-Emmis station WPOW in Miami did... they recognized the near-total decline of dance in their target demo and the corresponding increase in interest in hip hop and moved with the taste preferences.

Emmis was actually expanding in radio in this period, in the US and abroad.

And... Power 106 in LA is the cash cow. It's a bigger station in the biggest revenue market, generally billing about 50% or more over Hot.

 

[radioguy39nj]

Hot 97 is their cash cow. Emmis was near bankruptcy over a decade ago when Hot 97 was a dance station, and they flipped it to hip hop. That saved them from going under back then. Not because dance was unsuccessful, but there was a format hole for hip hop and there are only so many frequencies...

And... Power 106 in LA is the cash cow. It's a bigger station in the biggest revenue market, generally billing about 50% or more over Hot.

WOW! I didn't think an LA station would bill so much higher than NYC! How does this bode for Hot's outlook and Emmis' future in NY?

 

[davideduardo]

[WOW! I didn't think an LA station would bill so much higher than NYC! How does this bode for Hot's outlook and Emmis' future in NY?

The LA market bills significantly more than the NY market and has for quite a long time. Estimates for 2010 put LA at near $750 million, and NY at around $600 million.

 

[pjc1961]

The page linked below seems to give a pretty good detailed timeline for Emmis Communications:

http://www.fundinguniverse.com/comp...mmunications-Corporation-Company-History.html

Emmis appeared to be in bad financial shape (over-leveraged) in 1991 when they sold the Seattle Mariners baseball team for $120 million, reluctantly sold top-biller WFAN New York to Infinity Broadcasting for $70 million and sold off other radio properties.

As for Hot 97/WQHT, its format evolved from CHR/Dance-Rhythmic music to an Urban Contemporary format featuring rap & hip-hop music from the summer of 1993 to the spring of 1994, trying to take away some of 98.7 Kiss-FM/WRKS's audience. Emmis, by now financially recovered, wound up purchasing WRKS in December 1994 from Summit Communications, giving New York its first FM duopoly. Kiss-FM's format then became Urban AC.

PS As I'm sure David E. will tell you - well, he did while I was typing - the L.A. market overall has been outbilling the New York market for many years - perhaps he can give us a timeline of when L.A. overtook NYC. That being said, I don't think there'll be any effect on Emmis re: Hot 97 or Kiss-FM in NYC.

 

[davideduardo]

The page linked below seems to give a pretty good detailed timeline for Emmis Communications:

Indeed. A fairly accurate account based on the parts I am more familiar with. There are a couple of errors, an example of which would be saying that the stations they bought in Argentina in 1999 were both top rated when, in fact, the AM was well rated, but the FM was a no-show and Emmis converted it into #1 and the biggest cuming station in the Western Hemisphere.

Emmis appeared to be in bad financial shape (over-leveraged) in 1991 when they sold the Seattle Mariners baseball team for $120 million, reluctantly sold top-biller WFAN New York to Infinity Broadcasting for $70 million and sold off other radio properties.

That's a good snapshot. The previous poster insisted that Hot changed format because of the economic problems when, in fact, those problems occured before freestyle began its decline. Somwhere around '93 freestyle was seen by all as no longer viable as a format base and that's when a number of stations focusing on it moved towards hip hop. In other words, the change in music tastes were totally independent of the Emmis issues.[/quote]

PS As I'm sure David E. will tell you - well, he did while I was typing - the L.A. market overall has been outbilling the New York market for many years - perhaps he can give us a timeline of when L.A. overtook NYC. That being said, I don't think there'll be any effect on Emmis re: Hot 97 or Kiss-FM in NYC.

Per Duncan's American Radio 1975-2002 trending book, LA overtook NY in billings in 1980 and has been ahead since then. Not only, as you say, does it not affect Hot or Kiss, but the prices paid for those stations were set with the knowledge of the fact that LA is the top billing market.

 

[leethalweapon]

Just curious, how are you "experts" defining failure? Everytime I come here, I see that there is always someone here saying that this station is a failure. While nowhere near the levels of WLTW or WCBS, the cume (to me) seems fairly solid. While always looking to improve the product and audience share, I would say 2.2 million listeners a week is still a good figure. Yes?

 

[TheBigA]

In and of itself, yes. If this was Buffalo or Albany, it would be great. But in NYC, even 2 million is underperforming. I agree that saying it's a failure is overstating the case. They may feel it's an artistic failure, because it could be doing a better job with the format. But it was getting better numbers with smooth jazz, and that's not saying much.

 

[JimmyJames]

I still think a good solid triple A like The Peak would work well for RXP. It couldn't do any worse. Or a solid modern rocker. I think they could pick one of those and still have a diverse, interesting rock product.

 

[MarcR]

In and of itself, yes. If this was Buffalo or Albany, it would be great. But in NYC, even 2 million is underperforming. I agree that saying it's a failure is overstating the case. They may feel it's an artistic failure, because it could be doing a better job with the format. But it was getting better numbers with smooth jazz, and that's not saying much.

I think that stations in New York City above the 2 million cume mark are, at the very least, viable, while those falling below it aren't.

 

[TheBigA]

I think that stations in New York City above the 2 million cume mark are, at the very least, viable, while those falling below it aren't.

I agree...my word was "underperforming."

So the cume is OK, but the share is terrible. And stations usually sell share.

 

[radiojomo]

I've seen stations do worse. RXP is definately not failing. Emmis and the people at the station seem to be trying to their best to improve the station but it obviously takes time to see results.

 

[mjb1124]

So the cume is OK, but the share is terrible.

Which means that a significant amount of people are listening to the station, but tune out when they play something that doesn't fit their tastes. I'd at least like to believe that much of the cume is coming from people who want to hear alternative rock, and tune out when they hear GNR or Dire Straits. I guess in all fairness, some of the cume might also come from classic rock fans who tune in occasionally when they hear those artists. But I think that whatever cume they'd lose by dropping them would be made up for with more listener loyalty.

By the way, they're doing the Definitive 1019 countdown again on Labor Day weekend, but this time it's apparently restricted to the last three decades. Should be interesting to see how it turns out this year.

 

[WNTIRadio]

They should do a straight up AAA. Q-104, WDHA, every rock station in CT and Long Island is playing enough Guns n Friggin Roses to choke a horse. To me, when RXP was announced, I thought it would be the station to get away from that overplayed stuff.

A well balanced, gold-based AAA could work well to get the females in from Lite and Fresh who are tired of Lady GaGa and Delilah. But tossing in the Talking Heads around Godsmack and Linkin Park sounds like a train wreck to me.

Step 1: Pick a format. Are you rock, modern rock, AAA or **** rock?

Step 2: Stick to chosen format for more than a month without tweaking constantly.

Step 3: Review numbers from that month, do call out research and a few auditorium tests of your P1's to find out what they like and dislike.

Step 4: Adjust chosen format, but not too far off the deep end.

Step 5: Put Pinfield on in the afternoon. Is that really the voice you want to hear when you wake up? It's like having Scottso whisper in your ear, but with 1/10 the talent. And talented as he was, everyone was smart enough to put Scottso on in the afternoon because who wants to hear that first thing in the morning and also, Muni's appetite for libations probably meant he was going to bed at 4:30, not waking up

 

[TheBigA]

The thing about this format is it's:

1) Extremely fragmented

2) Extremely personalized

3) Extremely critical and impatient

This is an audience that knows what it wants, wants it now, wants it their way, and if it doesn't get it, leaves angrily and in disgust. They have no shortage of places to get personalized music services, and radio can be just so damned frustrating. On the other hand, give them what they want, and they'll be happy. But there are no compromises. And it looks like this station wants to compromise and attract fringes of other formats, which will alienate the core.

Personally, I would not want to program to this audience. To me, the downside is worse than the upside. But Emmis seems willing to take the risk. There are places where this is working, and I am often surprised by who owns some of the most successful stations in this format.

 

[mjb1124]

I really don't think the Alternative audience is that hard to program to. You just need to have an understanding of what fits into the alternative/indie category, while also having a sense of what's accessible to the average listener. I mean, you're obviously not going to attract the hipsters. But I think you could still find an audience of people that have one foot in the mainstream, but are looking for something a bit more eclectic and challenging than, say, Nickelback. You should have a little bit of a sense of adventurousness, but not go too crazy playing all kinds of obscure music. It's all about finding a balance.