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Thread: Radio is in BIG trouble

  1. #1

    Radio is in BIG trouble

    Clear Channel announces massive job cuts. Citadel is on brink of bankruptcy. Others chains and small operators are cutting jobs as we speak. The drastic downturn in advertising, coupled with the unavailablity of working capital (credit), has hit the industry hard. Satellite Radio certainly hasn't helped. And, the overabundance of stations (14,000 plus), has split the pie even further.

    I have seen this day coming for years. I wish the FCC would allow some FM stations to go dark, like they do with AM. That way, say an owner has 1 AM and 7 FM stations in a market. Of the 7 FM stations, 2 are low powered class "A" stations that said owner cannot afford to put much effort into, and just throws something on the air to keep it out of the hands of a competitor. If this owner knew that the FCC would allow him to turn in the licenses of the 2 smaller stations (with the AM of course), and not have to fear that a competitor would be allowed to snatch them up, this person would go for it. That way, his overhead would be reduced, while at the same time affording the owner the chance to focus ever decreasing resources on making the remaining 5 stronger signal FM stations sound better and put out a better product.

    Just like GM needs to shed some brands, radio is going to have to "thin the heard", in order to survive in this new age.

  2. #2

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    Re: Radio is in BIG trouble

    Presumably the lower powered FMs have at least some audience, and why take that particular choice off the air, when it can at least remain on the air with a minimum of maintenance. What would make this a reality is if "localism" rules were reinstated, making said stations build separate studios in a suburb, or super-serve a bedroom community with no retail advertising base.

  3. #3
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    Re: Radio is in BIG trouble

    Quote Originally Posted by wpiv926
    .

    I have seen this day coming for years. I wish the FCC would allow some FM stations to go dark, like they do with AM. That way, say an owner has 1 AM and 7 FM stations in a market. Of the 7 FM stations, 2 are low powered class "A" stations that said owner cannot afford to put much effort into, and just throws something on the air to keep it out of the hands of a competitor. If this owner knew that the FCC would allow him to turn in the licenses of the 2 smaller stations (with the AM of course), and not have to fear that a competitor would be allowed to snatch them up, this person would go for it.
    AMs that go dark can open up the frequency for a new licensee... as long as they meet the current technical standards. So there is no difference. What is different is that the AMs that go dark are generally really bad facilites or in small unsustainable markets.

    And, as to A's in big markets... two of the top 10 in sales demos in LA are comboed A's... KRCD and KBUE. An A can do well, if the coverage is matched top the selected format.
    www.americanradiohistory.com
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  4. #4

    Re: Radio is in BIG trouble

    Clear Channel announces massive job cuts. Citadel is on brink of bankruptcy. Others chains and small operators are cutting jobs as we speak. The drastic downturn in advertising, coupled with the unavailablity of working capital (credit), has hit the industry hard. Satellite Radio certainly hasn't helped. And, the overabundance of stations (14,000 plus), has split the pie even further.


    From a business perspective the problem in no small part is due to the big boys buying all the competition because they could, and then proceeded to turn their own small world failures into great big, worse failures. The world spinning faster and faster could never come to an end as long as they kept gorging themselves. They were like kids who could not afford ice cream even after pooling their allowance. Chumps. Nobody could tell them that the top would spin for a time and then wobble to a stop. I guess it doesn't occur to anyone that they are the reason for their own downturn in advertising which results in an unavailability of working capital (not necessarily credit). They turned everything into canned prefabrication. To use a small scale analogy, how long did The Backstreet Boys last? Granted, The Monkees were also a prefabricated group, but they had a small coalition of greats writing for them. All that money to buy all the competition, and they could not afford quality air staff at some of the small town stations here and there. They drove their goodwill away.

    Satellite radio is not the problem, because technology and tradition can work together quite well. There is no such thing as "overabundance of stations" to real business people who know how to compete. Inductees in the Radio Hall of Fame are a testament to those facts. Those who live on are another small coalition of greats who have dedicated themselves to radio and its improvement. They hopped off the merry-go-round so that they could save radio, before the machinery totally malfunctioned and threw them off spinning into the dust with the big boys.

    The real estate dynamic markets could never come to an end either.
    No irony there.

  5. #5

    Re: Radio is in BIG trouble

    Quote Originally Posted by Silkie

    There is no such thing as "overabundance of stations" to real business people who know how to compete. Inductees in the Radio Hall of Fame are a testament to those facts. Those who live on are another small coalition of greats who have dedicated themselves to radio and its improvement. They hopped off the merry-go-round so that they could save radio, before the machinery totally malfunctioned and threw them off spinning into the dust with the big boys.
    That's an interesting re-writing of history. I lived through it, and I know it's not true. They hopped off the merry-go-round because their own personal greed got the better of them. They cashed out and retired to someplace warm.

    Those who left already knew they were in a declining business. They could see the FCC was over-licensing the spectrum, and were cutting back the power of once-great AM stations. They saw their market shares decline in the late 80s, and demanded ownership limits be increased to 12-12-12 in the early 90s. It has nothing to do with knowing how to compete. Many in the Radio Hall of Fame pioneered the programming techniques being used today. Syndication of talent, nationalization of formats, and cost cutting in programming were all being done long before consolidation. In fact, even if consolidation was reversed, they'd still continue. Just not under the same ownership.

  6. #6

    Re: Radio is in BIG trouble

    Quote Originally Posted by TheBigA
    That's an interesting re-writing of history. I lived through it, and I know it's not true. They hopped off the merry-go-round because their own personal greed got the better of them. They cashed out and retired to someplace warm.
    Somebody offers you so much money that you can simply bank it - after taxes - and get more in interest than you can earn running your radio station. What do you do? Turn it down?

    Of course they cashed out and retired to someplace warm. They couldn't figure out how the new owners would handle the massive debt service, but assumed that they had a plan. After all, they convince a bank to lend them the money to buy the property. I doubt that most of the people who "cashed out" anticipated that the talent that made the stations so valuable would be the first casualties of new ownership.

    It's hard to stomach a corporate apologist like you castigating those guys for "personal greed". They sold something tangible at a value set by the buyer. The greed of corporate honchos taking multi-million dollar salaries and bonuses while cutting thousands of jobs of people who created the product that gave the company value seems a lot more heinous to me.
    Did I forget that <<sarcasm>> tag again?

  7. #7

    Re: Radio is in BIG trouble

    Quote Originally Posted by SirRoxalot

    Somebody offers you so much money that you can simply bank it - after taxes - and get more in interest than you can earn running your radio station. What do you do? Turn it down?
    If you care about the art of radio, yes. Art has no price. It's priceless, or should be.

    Quote Originally Posted by SirRoxalot

    It's hard to stomach a corporate apologist like you castigating those guys for "personal greed".
    I'm not "an apologist." I'm a realist. I didn't castigate them. I just had the courage to speak honestly.

    I'm not re-writing history, because I was there, and know what the motivations were at the time. And I can safely say that had de-regulation not happened, and all owners had retained their stations, we'd be in exactly the same place we are now.

  8. #8

    Re: Radio is in BIG trouble

    And I can safely say that had de-regulation not happened, and all owners had retained their stations, we'd be in exactly the same place we are now.
    How is this possible? If we had a limit of one AM, one FM, and one TV in a market, the whole concept of cluster selling becomes that much more difficult. Setting up one station to "flank" another is nearly impossible.

    Certainly, that doesn't prevent stations from running Lia and Blair Garner for half of their broadcast day, nor does it prevent them from tracking talent from another of their 22 stations in other markets.

    I guess it depends on your perception of where we are.
    "Its music what makes a radio station, and at Live FM, we play the last music around."
    After receiving that copy, I quit the VO industry.

  9. #9

    Re: Radio is in BIG trouble

    Quote Originally Posted by PTBoardOp94

    Certainly, that doesn't prevent stations from running Lia and Blair Garner for half of their broadcast day, nor does it prevent them from tracking talent from another of their 22 stations in other markets.

    I guess it depends on your perception of where we are.
    Exactly. Before deregulation, you had LMAs. So they would be even more prevalent now.

    Stations would LMA flankers and you'd have companies setting up cluster sales operations outside of stations. Some have taken place in the years after deregulation.

    Even if you restrict ownership to 7-7-7, stations can carry syndicated shows from outside companies they don't own. Lots of stations do that now.

  10. #10

    Priceless

    Quote Originally Posted by TheBigA
    Quote Originally Posted by SirRoxalot

    Somebody offers you so much money that you can simply bank it - after taxes - and get more in interest than you can earn running your radio station. What do you do? Turn it down?
    If you care about the art of radio, yes. Art has no price. It's priceless, or should be.
    NOW you tell us radio is an "art"? How do you manage to squeeze "art" into your corporate spreadsheet? How is it that the "priceless" aspect of the "art of radio" wasn't included in the purchase price when the consolidators were figuring the operating costs for the stations they overpaid for?

    Just where does the "art" reside? In the automation system? The engineering staff? Management? It certainly can't come from the "talent", because that's the "expense" that's getting cut most by the consolidators. You certainly wouldn't cut something "priceless", would you?

    Quote Originally Posted by TheBigA
    I'm not re-writing history, because I was there, and know what the motivations were at the time. And I can safely say that had de-regulation not happened, and all owners had retained their stations, we'd be in exactly the same place we are now.
    You're not the only one who was there. A lot of the people on these boards were there, and saw what happened. Some people sold out because the price was too hard to resist. Some sold out because the "big boys" had already come to town and gotten a foothold, and hit them with a double whammy of offering a lot of money, while driving down rate in the market with their existing stations to add to the pressure to sell. The consolidators figured that they could get the rate back up when they had a big enough cluster to dictate to advertisers.

    Had deregulation not happened, the amount of debt on those stations wouldn't have been near the current levels. More revenue could go to operations instead of debt service. More competition would force more owners to try to win instead of putting a lot of resources into a few stations, and using the rest as computer or satellite fed flankers and spoilers. More stations would be targeted at their original city of license instead of rimshots of bigger markets. In other words, we'd have what financiers call a "diversified portfolio" of owners. Some would win, some might lose, but station values would have remained a lot more realistic than they were a couple of years ago. The fact that station values are coming back to reality is part of what's killing the consolidators now.
    Did I forget that <<sarcasm>> tag again?

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