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Pandora selling its FM station in Rapid City, SD

jimbo said:
Pandora is taking a 50 percent loss on the sale having bought KXMZ for 600k in June 2015 and selling it for 300k.
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Barely a drop in the bucket.

This is a company that lost $344 million last year.
 
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They just sold Ticketfly at a big loss too. Rumors of CEO Tim Westergren's head is on the chopping block.

Everyone talks about iHeart & Cumulus being on the ropes, but both Pandora and Spotify have been doing some desperate things lately.

Things don't seem to be rosy in the land of digital radio. Free streaming doesn't appear to be working as a business model.
 
This may get some push back, but can we look at it from a different angle? Look at ALL of the dollars being LOST by just these four companies listed above in BigA's post. How can "we" have four of the biggest names in music media (and obviously many others down the chain) in so much trouble and there not be even a sliver of a solution? We all know there are many bright business people in America that would love to attempt to solve this puzzle, but has anyone even been able to make a dent in the problems?

I know revenue is coming in. Radio is not dead. I know we are dealing with a "debt" issue and most of the big mistakes were make at the closing table when stations were bought at crazy prices and multiples. Revenues are going to become tougher as the local market's local connection and dollars disappear and current agency dollars dwindle as online transforms how we buy everything.

Perhaps radio needs to start looking at itself differently. The FCC probably will screw with things and hold back a major overhaul of frequencies, like they have with AM. FM is also now so hard to listen too with so much static and so many overlapping signals and yet in-car and at-home digital music services cannot continue to invest billions and never make a profit. Seems to me that any one who takes any top position in any of these "big" companies cannot win and will suffer similar fate to what may happen to Westergren. Is the damage so massive that there really is NO HOPE?
 
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In the case of iHeart and Cumulus, as you noted, the reason is very clear, the companies are a collection of assets compiled, using debt, at very high prices and radio ad revenue fell significantly and is only rising slowly to its prior peak. The debt service is choking off free cash flow. Minus the debt costs, those companies are probably generating cash.

Spotify and Pandora have no significant revenue. Basically every dollar they spend on salary, bandwidth and licensing is a lost dollar.

I think radio is already looking at itself differently, especially iHeart. The company has basically reorganized itself around its digital platform. At some point, both it and Cumulus will be restructured financially and the resultant companies should be in better shape.
 
Tibbs4 said:
Perhaps radio needs to start looking at itself differently.
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The problems of all four companies aren't radio problems. They're business problems. The public is using OTA radio without any regard for the business problems, just as they're using free streaming. Some say streaming is the future, and it will replace over the air. But not if the companies that stream can't stay in business. The reason I combined those two platforms is some think OTA is the only platform in trouble. They're wrong. Both OTA and streaming have business problems to settle. But the public isn't affected by either.

However, what I can see is that the solution for the streaming business is replacing free streaming with subscription streaming. That's the model the music business wants to see. They control the content. That will put streaming on a par with satellite. The monthly price will probably be about the same. Users will have the choice between subscription streaming or free OTA radio. Then the public will have to make a decision.
 
I think the online world is still trying to figure out how to monetize itself in the most effective way. The various platforms of support at the moment are primarily a rehash of something that worked in another venue (very logical to do this). There might be some silver bullet out there that works on a level that can sustain costs in a manner that allows for profit and effectiveness outside the subscription model but we haven't found that yet. The trick is effort and value that permits a profit. It seems the effort cannot produce the results that can command the price that can allow a profit for these companies at this point. It's like being stuck in snow and ice in your car, the wheels are spinning but you're never getting where you need to be. We need to discover that tow truck that can get it all moving toward profit and sustainability. Online is still a very young platform or should I say media, when compared to the others. And like most 'new' venues, it takes time, thinking outside the box and innovation to learn the best way to profit versus the effort to produce it.

As for radio, there's much room for innovation but there are already proven methods for success. Radio is simply reeling from what I felt was the buying frenzy that happened and how companies dealt with that debt load. This will work itself out in time. Considering the options for the consumer, radio has fared very well as new competition has been added to the mix. It is certainly much more difficult than it was a few decades ago to run a profitable radio station but radio continues to learn how to evolve as the consumer evolves in their use of media. Things have certainly changed but I'm not buying that burial plot for radio yet.
 
Tibbs4 said:
I know revenue is coming in. Radio is not dead. I know we are dealing with a "debt" issue and most of the big mistakes were make at the closing table when stations were bought at crazy prices and multiples. Revenues are going to become tougher as the local market's local connection and dollars disappear and current agency dollars dwindle as online transforms how we buy everything.
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There's the real problem. We seem to be plunging into a future in which retail -- except for cars -- is largely controlled by two companies, Amazon and Walmart -- neither of which do much advertising on traditional media like radio. I'm in newspapers, and I remember the dread that greeted Walmart's coming to our area. They had a reputation of advertising heavily in the local newspapers to build up the opening of the new store, then cutting ad spending to a trickle -- or ending it completely -- once the store was up and running. That is exactly what happened to the paper I was with at the time. Now that Amazon is getting into groceries with its acquisition of Whole Foods, what will Walmart's response be? Standalone supermarkets instead of the current placement of grocery aisles as an afterthought in store built to move clothing and electronics?

Whatever the specifics, a retail future dominated by two mega-corporations that don't believe in radio (or print) advertising can't be good for advertiser-supported media.
 
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That is an excellent point. Amazon and Walmart are taking chunks of business away from the independents and smaller chains. I have seen what were once pretty successful small town radio stations and newspapers struggle because of the chain stores and franchises (Walmart, Dollar General, Family Dollar, fast food, pharmacies and such). While franchises might be locally owned, advertising locally is rare as a franchisee pays a percentage of revenue for advertising that is typically handled by an agency that does not allocate dollars to a stand alone newspaper or radio station. The issue is the mom and pop's profit margin is slim enough that losing 10-15% of business can put them in the red.

It's those that are not dependent entirely on the local market that threaten the sustainability of radio and print primarily. When advertising a national brand through non-local venues is enough, the local media flounders. You are likely well aware of the fast food offerings not via local media but national media.

I do not see Walmart or Amazon taking all the business or even the bulk of it. I think they'll level out and the expansion is due to a need to always show an increase. They might very well see that leveling out on the horizon. Even so, they can account for enough business that can wipe out the business where the difference between profit and loss are pretty close together. And I suspect Amazon and Walmart might become a part of what a local business might do at some point (think a wholesale side to eliminate regional distributors). There's a certain percentage of consumers that find online shopping a hassle or want to see and touch an item before buying without shouldering the burden of returning it if it is not what they thought it was. A local business might serve this group via Amazon and/or Walmart being their catalog of merchandise, more or less.

I do see an increase in online instigated sales. At this point, the advantage of radio, TV and print is in the value of creating awareness of online sites.
 
Which leads to a question -- why would someone need to hear about a sale or a new product via a secondary media like Radio or a Newspaper when they can find out about it online, directly, at the online retailer itself?

And as for Pandora and Spotify, has anyone figured out the workable subscription price needed to keep them afloat? For a lot of people, there's always other music options (OTA radio, Cable music channels, Mp3s on your phone, YouTube, etc.). Will the masses who listen presently to Pandora and Spotify pay what people presently pay for Sirius and other subscription services?
 
To answer your question, not everyone is online and of those that are, how do they know where to find the online information? Radio and TV are still the best ways to drive online traffic. More Americans are still reached by radio and TV each week as in percentage of the total population. I'm not trying to discount online influence, it is substantial but not yet what broadcast media enjoys.

I did a study of online listening to college radio and found that numbers were dismal. When a college of over 11,000 can only manage 500 listening sessions a week on a well programmed online station run by the college students themselves and well promoted on campus, you have to wonder why they can't achieve greater than 750 listening hours in a week. For most, a show getting about 10 listeners at a time is doing quite well.

The best excuses I can think of are: with over the air going to college usually means moving away from home so you have to develop new listening habits. Online you don't have to. On line is not geographic based. And there are just so many options plus no central location to find all the offerings. With on air, it's it's not found on the dial, that's it or in other words, the limited options mean more people listen to any given on air station than the online counterpart. From studies I have seen, many listeners online prefer to listen to streams of over the air stations because they feel connected to the community where they live and work. They say they miss that on an online only station. That begs the question as to why there are not more online stations targeting certain geographic locations? Is it the high cost of building awareness and staying top of mind?

If online Pandora and Spotify listeners will have to pay to listen and/or deal with a commercial load that might actually have to mimic over the air radio, will people pay or deal with commercials in numbers they currently enjoy. I personally think not. I think the threshold of pay to listening is probably what Sirius has managed to achieve. I could be wrong. Who would have thought people would pay for cable TV or for that matter buy water back when those ideas were hatched?
 
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TheBigA said:
From Tom Taylor's newsletter today:

Recode - “Pandora CEO Tim Westergren to step down."
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Hmmm, possible power play by John Malone and Liberty Media? I understand Liberty/SiriusXM's 19 percent "strategic investment" in Pandora bought Malone three seats on the Pandora board of directors, including the chairman's seat. Could this be Malone at work through a puppet on the board?
 
b-turner said:
To answer your question, not everyone is online and of those that are, how do they know where to find the online information? Radio and TV are still the best ways to drive online traffic. More Americans are still reached by radio and TV each week as in percentage of the total population. I'm not trying to discount online influence, it is substantial but not yet what broadcast media enjoys.

I did a study of online listening to college radio and found that numbers were dismal. When a college of over 11,000 can only manage 500 listening sessions a week on a well programmed online station run by the college students themselves and well promoted on campus, you have to wonder why they can't achieve greater than 750 listening hours in a week. For most, a show getting about 10 listeners at a time is doing quite well.

The best excuses I can think of are: with over the air going to college usually means moving away from home so you have to develop new listening habits. Online you don't have to. On line is not geographic based. And there are just so many options plus no central location to find all the offerings. With on air, it's it's not found on the dial, that's it or in other words, the limited options mean more people listen to any given on air station than the online counterpart. From studies I have seen, many listeners online prefer to listen to streams of over the air stations because they feel connected to the community where they live and work. They say they miss that on an online only station. That begs the question as to why there are not more online stations targeting certain geographic locations? Is it the high cost of building awareness and staying top of mind?

If online Pandora and Spotify listeners will have to pay to listen and/or deal with a commercial load that might actually have to mimic over the air radio, will people pay or deal with commercials in numbers they currently enjoy. I personally think not. I think the threshold of pay to listening is probably what Sirius has managed to achieve. I could be wrong. Who would have thought people would pay for cable TV or for that matter buy water back when those ideas were hatched?
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I probably didn't word my comment well... I was referring more to the advertising aspect than the entertainment aspect of broadcasting, and how online retail could bypass broadcasting and other media completely.

When it comes to products, a lot of people immediately do a search online when wanting to buy a product. They go to Amazon, and hit the search box. They go to EBay, and hit the search box. They may go to Google or Bing and hit the search box, and find information and pricing on products that way. It was something that was not easily done before the internet.

This is reflected in Amazon (and other online retailers) taking up to 10% of all retail sales. How many ads does Amazon take out on radio or even TV? I can't recall any since the 1990's. It's the same with EBay and other online retailers.

If right now an increasing number of people are using online searches to find things they are looking for -- be it books, clothes, furniture, auto parts, etc. -- and if that percentage of consumers increases, what will that leave for advertising to broadcasting and other traditional media? I'm sure there will always be a place for advertising, but I can't help but think that the way people shop online is giving advertising less and less importance, at least in the traditional way we're still used to seeing it.
 
CTListener said:
Hmmm, possible power play by John Malone and Liberty Media? I understand Liberty/SiriusXM's 19 percent "strategic investment" in Pandora bought Malone three seats on the Pandora board of directors, including the chairman's seat. Could this be Malone at work through a puppet on the board?
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Or just Tim's sense that his creation is no longer his personal baby once he accepts someone else's money. That's a hard lesson to learn.

He had a chance this past year to try and make Pandora what he wanted it to be, and it didn't work. So he sold out, and it's time to go.
 
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I get what you are saying boombox4. I suppose the saving grace of non-online media is exactness in advertising. I have noticed the internet is full of copycats. To get the right results from a search, it sometimes needs to be specific. Just simple awareness is a problem. The value I see in advertising in radio, for example, is building awareness (to do a search, you have to know what you are searching for) and the exactness of the search. By this I mean you can search travel websites or X brand travel website. Sure, you can pay to be first in results of a search but so can your competitor, but would top of mind awareness be a better option through non-online venues the typical computer user uses?
 
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