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10 Years Later, Radio’s Business as Usual

I'm interested in how the competitive landscape has changed since the last big ownership rules change in 1996. BIA Financial Networks prepared the accompanying chart for me showing revenue and station holdings of the top 25 groups today vs. 10 years ago.

(click thumbnail)Ten Years LaterI’m interested in how the competitive landscape has changed since the last big ownership rules change in 1996. BIA Financial Networks prepared the accompanying chart for me showing revenue and station holdings of the top 25 groups today vs. 10 years ago. Take a good look; it’ll shift again soon as Clear Channel starts to shed assets.

The numbers in this chart are fun to look at but aren’t in much dispute. What generates heat is whether these changes have benefited commercial radio.

I asked Mark Fratrik, vice president of BIAfn, for his thoughts. “I think consolidation has been a net positive to the industry,” he wrote back in an e-mail. “We often forget the difficult position radio was in the 1990s, and the strength moving through the decade.”

Many people would disagree with Fratrik’s conclusion. The discussion of consolidation’s impact is back in the headlines now that regulators are again considering whether to ease ownership strictures.

Stark disagreement

The Future of Music Coalition recently said, “Contrary to the claims of commercial broadcasters, radio consolidation has had profound and negative effects on this democratic media.” It argues that rapid consolidation after the Telecom Act of 1996 has led to loss of localism, less competition, fewer viewpoints and less diversity in programming and that “the overwhelming majority of niche musical formats like classical, jazz, Americana, bluegrass, new rock and folk, where they exist, are programmed almost exclusively by smaller station groups.”

FMC says the top four station owners have almost half of the listeners, and the top 10 owners have almost two-thirds; ownership by individuals actually living in a station’s community has declined by almost a third in a decade; 15 formats make up three-quarters of commercial programming; formats with different names can overlap up to 80 percent in terms of songs played; and across 155 markets, listenership has declined over 14 years, a 22 percent drop since its peak in 1989. “The consolidation allowed by the Telecom Act has failed to reverse this trend,” FMC said.

NAB scoffed and quotes BIAfn statistics suggesting the opposite. The broadcast association says the number of general programming formats provided by local stations increased by 7.5 percent since 2001; markets of all sizes saw substantial increases in the average number of specific formats provided, with an average 22.2 percent increase since 2001; and across all markets since 1996, the number of general and specific programming formats has increased by 16 percent and 36.4 percent, respectively.

It also argues that in six years the number of Spanish-language radio stations increased by 45.5 percent; Asian-language stations have also increased, “demonstrating radio’s ability to respond to niche markets”; and that urban stations targeting the African-American community have “soared” in the last decade, with programming including urban/talk, urban AC, urban CHR, urban/jazz, rhythm and blues and urban/gospel.

NAB’s Dennis Wharton also slammed the FMC, saying it has a “long history of producing questionable research and dubious data to fulfill its agenda-driven mission.” He argued that “free local radio has more format diversity than at any time in its rich history.” HD Radio, he said, will boost that even more.

Complex reality

I do believe radio often is tarred unfairly with a very broad, dark brush. Plenty of what we do well is overlooked in sweeping condemnations of this “old medium.” That’s why I’m glad the new NAB president is so proactive, talking us up. I’m also glad of the growing diversity in ethnic-oriented programming.

However, based on what I hear myself on commercial radio and what I am told constantly by friends, business observers and even radio insiders, the FMC’s argument is closer to the truth of how consumers see radio. I wish NAB would acknowledge these perceptions and address them rather than tainting critics with overly broad brushstrokes of its own.

Radio has long suffered the consequences of not acknowledging our programming failings. I’m sorry, but truly innovative radio programming is rare, and risk-takers are not rewarded. Ours is an industry that plays things safe. “Hits of the ’80s, ’90s and Today” are not innovative, even if delivered in Spanish.

Do your friends know that you work in radio? They probably ask you about it. So when was the last time someone stopped you to ask with excitement about something really new on their local radio dial? If your friends are like mine, they ask you more about satellite radio; or they wonder, “Why does radio in this town stink”?

That’s sad. I’d like our leaders to acknowledge this truth and act on it. As Steve Morris of Arbitron recently said, though he was referring to online initiatives: “You are in the entertainment business. Don’t be afraid to be bold.”

Programming innovation comes in the presence of competition; so trends in ownership are important. As to what the big companies will do on that front, Mark Fratrik of BIAfn says, “As radio faces more competition going forward, it still needs to be part of stronger corporations. I do not, however, expect to see any big groups beyond the 75–300 station range that so many of the major groups fall into. That seems to be large enough to enjoy the efficiencies of scale with providers of services (e.g., equipment manufacturers, Arbitron), but not too large to not keep effective control over the markets in which they operate.”

He’s probably right about that. But will a pullback from the era of a 1,200-station supergroup translate to more programming innovation? Doubtful.

We stated in the RW editorial last time that our industry has been a survivor over many years because it generated strong consumer loyalty, had a lock on listeners in certain environments and produced interesting content. But we are gambling away our market loyalty month by month, and our lock on office and car listening is gone. The content weapon remains, but we aren’t using it fully.