This story appeared in Radio World's preview coverage of the 2017 NAB Show.
The business landscape for U.S. radio executives has changed a good deal since they gathered in Las Vegas a year ago, though the challenges are plenty familiar.
The revenue rankings of commercial groups are being given a good shake by the combination of Entercom and CBS Radio. That transaction is historic, with a legacy broadcaster stepping back from an industry it helped create; the merger also will create a bigger No. 2 from what had been the second- and fourth-largest radio companies.
“What has emerged (assuming the deal goes through and gets regulatory approval) is a stronger radio industry,” blogged Mark Fratrik, senior vice president and chief economist of research firm BIA/Kelsey. “The combined Entercom-CBS Radio group would be closer to the size of the industry leader — iHeartMedia — which only can foster the radio industry’s ability to compete against its many new competitors.”
Among online radio brands, Spotify’s surge in awareness is reflected in a slide from “The Infinite Dial 2017” report by Edison Research and Triton Digital. Pandora remains the top source.
In some ways, the business could use that kind of jazzing. There have been plenty of headlines focusing on debt burdens, such as “Cumulus Media Blocked on Proposed Debt Restructuring” (Wall Street Journal) and “iHeartMedia CEO Bob Pittman’s Efforts May Not Be Enough to Avoid Looming Bankruptcy” (Variety). And the competitors Fratrik mentioned have made themselves felt, with over-the-air revenue continuing to hover last year rather than grow, even with a hot presidential election.
Nevertheless radio has a story to tell, and there’s evidence it’s being heard.
Some 82 percent of adults tuned into AM/FM in their primary car in the past month, according to Edison Research and Triton Digital. Radio’s digital ad income continues to climb, and the Radio Advertising Bureau emphasizes that radio is the country’s top reach medium, reaching 247.4 million weekly based on Nielsen data.
All of this provides a nice context for AdWeek’s headline “Reach Is the New Black: Advertising’s Mass Reawakening,” subtitled “Narrow targeting has its uses, but TV and radio offer greater impact.”
FAN AT THE COMMISSION
The merger of Entercom and CBS Radio will affect the competitive landscape for U.S. commercial radio, as seen in a graphic from BIA/Kelsey.
Helping radio feel some mojo again is the presence of an unabashed fan on the eighth floor of The Portals building in Washington. Ajit Pai helped do away with frustrating public file requirements and now has been elevated to chairman by a Republican president whose dynamic headline-making cannot obscure his business mindset.
How long has it been since people heard a chairman of the Federal Communications Commission sing radio’s praises so frequently, as Pai has: “Wherever I go, I always try to visit some radio broadcasters if I can, because I think what they do is so unique, it’s so local, it’s so social, it’s increasingly mobile too.”
Don’t look for him to implement an FM chip mandate, but there are plenty of deregulatory issues to be explored. The Trump/Pai combination has given rise to talk of whether the commission might do away with “subcaps” limiting how many stations a company can own in the same service in one market. Perhaps it will kill rules about cross-ownership, too, rules Pai has criticized.
“Our media ownership regulations, like any regulations, have to match the realities of the modern marketplace,” Pai told Radio World last month. “In this area in particular, some of our rules have become yellowed with age. The core of them, as you know, were created in 1975, and anybody sentient would recognize that the marketplace has changed dramatically since then.” Perhaps the FCC might even consider easing the main studio rules. It’s an issue that Pai said he’ll look at “with particular care.”
In AM revitalization, broadcasters are watching to see when the next translator windows will open and whether the FCC might further tweak technical rules, including nighttime protections for legacy clear-channel AMs. The commission did recently give AMs more flexibility in locating FM translators.
However, broadcasters also are keeping an eye on efforts to reform the federal tax code. “Ad tax deductibility is shaping up as a potential big fight,” National Association of Broadcasters President/CEO Gordon Smith told Inside Radio recently. And facility managers have concerns about the TV spectrum “repack” process, which the NAB believes will bring “unprecedented logistical and operational challenges” and may force bystander FMs to move antennas or reduce power temporarily.
A CONNECTED WORLD
Meanwhile, the diversification of radio’s universe of mobile and home audio platforms continues.
The “Infinite Dial 2017” report by Edison Research and Triton Digital indicates that online radio listening keeps growing, particularly in younger demographics. An estimated 140 million people listen weekly to AM/FM stations online or to streamed content available only on the Internet; those folks are spending more than 14 hours per week with it now. More people are using cellphones to stream in the car, too.
Podcasting’s remarkable second chapter is now a multi-year trend. It is a good example of a platform that can offer both competition and opportunity. An estimated 42 million people age 12+ have listened to a podcast in the past week — 15 percent of the population compared to 7 percent four years ago. Many in radio embrace podcasting because of its compatibility with radio programs and talent.
Much of that listening happens on the road; yet AM/FM radio remains the number one audio source in the car, according to Infinite Dial, while the categories of online radio, satellite and podcasts, though growing in the car, still trail OTA radio, CD players and personal music there. And making waves at home are “smart speaker” systems — Amazon Alexa and Google Home — though the number of owners is relatively small right now.
What technical issues will radio be talking about, coming out of the spring show?
Technologists are worrying about how Nielsen captures headphone listening in PPM markets. They’re figuring out how to use drones to inspect towers and measure antenna performance.
They’re talking about studio “virtualization” and exploring expanded uses of metadata. They’re studying hybrid radio to make listening more of a two-way digital experience; they’re moving more urgently from the disappearing ISDN infrastructure. They’re repointing or replacing thousands of dishes to capture feeds from the AMC-18 satellite. And they’re focusing on cybersecurity thanks to hacks on streaming STLs and predictions of a world that soon will have 50 billion connected devices.
That list, of course, barely brushes the surface. Expect to read more about these trends and many others in coming issues.
Paul McLane is editor in chief of Radio World. A version of this story appeared in the NAB Show Daily News; it is copyright NAB.