The radio monster falls

It couldn’t happen to a nicer bunch of assholes*. Clear Channel, the radio monster, is looking to sell itself to go private, according to the Times. Why? Because the radio business sucks.

This is why I have not feared media consolidation. Clear Channel, the poster child for evil media conglomerates, bought up stations and sucked cash out of them but now there’s not much left to suck. Consolidation is the act of a dying industry. Well, broadcast won’t die. But it sure as hell won’t grow.

At an NAB/RTNDA panel yesterday in front of mainly local TV news execs, I said their salvation will be in being very local and in using the asset of broadcast, while it is still an asset, to drive people to new and local services online that take advantage of the disarray in the newspaper industry to lurch ahead of them in citizen collaboration for hyperlocal news and in hyperlocal and directory advertising to support it.

I think the same may be true of radio, which is ironic, being that Clear Channel, et al, leached the local out of the medium. As the value of broadcast licenses falls, I’ll bet we’ll start seeing the deconsolidation of some of these companies as radio and TV stations, like newspapers, are sold off one-by-one (see the post directly below). If the FCC had lifted crossownership restrictions, as Michael Powell tried to do a few years ago, those stations would have been bought up by newspapers, or vice versa. But now, with the value of both in free fall (see that post below), I’m not sure that local consolidation will pay anymore (see also the disintegrating Tribune Company, which did benefit from crossownership… until now).

So, to bring the parlor game to the radio business now, what would I do with Clear Channel? I’d plan on an imminent future when people will get their programming delivered to them by the internet and mobile and satellite and I’d use local promotional power to drive the business there. As I said above, I’d make some set of the stations very local and I’d use that to drive local businesses that grab marketshare of news, audience, and local advertising from panicked newspapers. Or I’d just sell to the next idiot.

* The real reason I’m happy to see the owners of Clear Channel retreat is because they fired Howard Stern and did not stand up for free speech and the First Amendment against the FCC and a tiny band of reputedly religious nuts.

  • The companies with which I work that are private are in MUCH better shape financially to do the types of things necessary to evolve to the digital world. I think this is the point for broadcasters, because you can’t invest in the future while trying to please Wall Street at the same time. It’s the old “two masters” thing (to say nothing of the handcuffs of Sarbanes-Oxley).

    Now it might be fair to say that taking a company private at this point is too late, but I think the jury is still out on that one. And I’m speaking about broadcasters, not newspapers, which are farther down the death spiral.

  • Taking companies private (a hot trend these days) to make them more profitable doesn’t seem logical. If the firm is in a weakening market why would being private help?

    Instead what we have seen is that firms are taken private using borrowed funds, then the treasuries or assets of the acquired firm are used to pay off the debt. As a final step the firm is hollowed out and spruced up with some accounting tricks to make the cash flow look better. Then it is put on the market again in a new IPO. Those involved in this maneuver make money on both sides of the deal.

    Kraft foods is in the news today – it’s a perfect example of this technique.

  • It should also be noted that Clear Channel was responsible for getting rid of Atlanta’s last “shock jocks” (96 Rock’s The Regular Guys) this week, thanks in no small part to their own antics. But even when they were allowed back from their previous exisle, Clear Channel made it clear that these guys couldn’t do the stuff that made them so popular in the first place. They didn’t want to “offend” the moralists that have essentially ruined that medium.

    Clear Channel thought they could have neutered show and still bring in the listeners. They were wrong. They’ll never admit to it, though, because it means taking a stand against those who have more in common with Taliban than anything even remotely related to the United States.

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  • Angelos

    Hey, I was just about to ask you about the junk, and I see you’ve gotten rid of it. What a pain.

    As I’ve said before in various comment threads, I gave up on radio long ago. When every station under XYZ ownership is the same, and they just pipe in the local weather and traffic, who needs it?

    We had a loaner Acura with XM for two weeks, while my wife’s car was in the shop, and even that didn’t grab me much, except for the extended range in the boonies when football or baseball playoffs were on (AM is useless where I live).

    I have home-burned CD mixes, and an iPod that plugs into my car deck. I’m going to let some moron at corporate, 5 states away, dictate what I listen to?

    The last of the radio-listeners will be winguts looking for hate-talk and handicap-bashing.

  • And the book banners with their Fundy religious agenda, who think they speak for God, but will take a fleet of TV cameras and local radio (Cox of course here in Atlanta) news reporters instead, the only folks still clueless enough to give ’em the time of day.

  • The radio stations actually have much more valuable assets than the newspapers: they’ve got towers and they’ve got radio spectrum. Trouble is those assets are being put to the wrong use.

    As you said, all the content – all of it – ought to be available on the Internet where it can be richer and more diverse than it is today. Local “stations” is certainly one way of providing a valuable focus.

    But the towers and radio spectrum should then be used for Internet access – not for dedicated programming. A stretched analogy is that we first got out Internet access over the phone and we now (some of us) get our phone service over the Internet.

    Today’s stations (whether individually owned or already consolidated) need to split horizontally so that the physical assets are put to their highest use (Internet access) and the content becomes available anywhere. The good news is that the physical assets are very valuable and can fund the redo of the content.

    AM towers are high and were built in a day when there were many fewer environmental and regulatory hurdles to cross in erecting tall structures. They’re also almost everywhere. Great locations for both mobile access and an alternative to the telco/cableco access monopoly.

    Blogged more about this here.

  • LanceThruster

    I couldn’t agree more with the schadenfreude over Clear Channel eating dirt for messing with Howard. Radio could be valuable again with a viable product. When I’m listening to Sirius in my vanpool, I actually wince when the music hosts curse because they can since my van is full of wonderfully dignified ladies who I wouldn’t wish to offend for the world (I listen to Howard with an earpiece).

    Howard sounds much better just with the fewer commercial breaks. He was funny before the FCC crackdown, during, and in his new venue. However, terrestrial radio is FAR more convenient, portable in ways UNMATCHED by any of the other examples, is far more easily purchased, replaced, duplicated, shared, upgraded, and transported with certainty of *some* content at destination. Cable can outdo broadcast tv for a number of reasons, but there is no reason other than the limitation of the “blue” content in comedy material (it can handle it in “serious” or clinical discussions) that it should not be able to compete in other radio programming. Sirius News/Issues programming is pretty much cable tv w/o the pic and some intl feeds. Music is music and radio needs to learn to do some narrowcasting. I don’t know how many times I’ve given up on public radio because the quality is lacking and then I’ll hear some snippets of undeniably compelling radio during the pledge drive. Where the fudge are they hiding these gems when I want to listen? The other times, more often than not are the wee hours. Should only insomiacs be well informed and entertained? I think Air America could have done better and created more loyal, more informed listeners by presenting its audience with a block (30 to 50 min) of uninterrupted news/issues/info (even affirmations or a summary of the days battle plan for activists on the pressing issues) each night at the bedtime hour. Even uninterrupted they could do sponsor mentions (not full ads going both in and out of the block).

    I used to nod off listening to the soothing drone of radio preachers though I am an atheist because there was no consciousness-jolting commercial torture at volume amplified in relation to the content, just further soothing outro music as they quietly asked for more funds. Since they most likely got little response they now run the incessant audio infomercials that most likely garner similarly tepid responses but at least they’ll still pay to run in that time slot. So if the listener that is assumed to be at the other end of the frequency is treated like a garbage disposal, those that realize nothing is preferable to crap disappear to find other options.

    I feel that narrowcasting in a staggered rotation could pull in more listeners. Just as public radio’s ratings vary with the unique content for the timeslot, radio could target a loyal audience that would rather hear what they wanted one day or day-part a week, rather than hear the fraction of content they truly enjoy diluted with common-denominator fare they wait to finish until it’s their turn again. The rotation allows them to learn what listening times are most pleasing to them by providing their block in different slots. Plus, in the time slot they most find themselves able to tune in, it’s possible they’ll catch a block of something else they find worthwhile. I’ve discovered so much cool new music from Sirius when I gave up on broadcasting exposing me to it in an effective manner.

    Ownership of several local stations in addition to be part of a larger network could allow your format block to jump to different stations with each one blending the mix of blocks a little differently. Advertisers would bond with listeners with an approach more akin to Rose Parade sponsorships or PBS underwriters. Ad blocks could also be grouped sensibly in expected timeslots like things to do and see, sales and specials, with short brand loyalty reminder from larger sponsors. I’d be more likely to buy Coke if they had a 15 second spot reminding you their participation helps bring a pay radio type product than a 30-60 jingle that one gets sick of by the nth time even if it’s the best gol-darn jingle there ever was.

    On some other blog on the topic of Air America’s chapter 11, someone bitched about all the Oreck vacuum cleaner ads. I did not find them offensive or obnoxious, but informative the first few times I heard them though not needing a new vacuum for hardwood floors. If the ad went, “Hi I’m David Oreck” and went into details on the product in a brief manner, but then went on to explain that he understood it’s probable you’ve heard the ad multiple times and may not need/want a new vaccum, but told you of his support of the station/format you might be more receptive and appreciative. Furthermore, if the Oreck ads then link other sponsors simply by name on his ad (and rotated them as well). the product brand loyalty might be increased. Look at how Howard’s listeners were loyal to his brands. Oreck could say, “please consider these other fine products and services from Met-Life, Ford Motor Company, Joe’s Pizza throughout the city, and Sam’s tailor shop on 5th and Olive. Be listening at the top of the hour for a lunch special from Joe’s Pizza you won’t want to miss.” The ad devoted prinmarily to Ford Motor Company’s latest product or deal would also mention the participation of the Oreck Vacuum Company. Whatever the name for marketing campaigns with cross-promotions and shared ad-budgets (as when Coke helps the local grocery pay for ads to sell more Coke) could expand to totally non-related items based on the relation to the STATION and the listening enjoyment of the audience.

    Commercial time is not just something bought on a station but as a means to keep a station viable. They highlight that point by by helping to keep the content valueable to the listener by not destroying it through *their* commerce. Ads such as “this programming brought to you by New Line Entertainment who bring you the latest from George Clooney, as well as their co-sponsors from (lesser power players on down to Joe’s and Sam’s). If I like what New Line, or Clooney have to offer or even stand for, I’d be far more inclined to patronize merchants also part of this sponsorship. You don’t always have to be beaten over the head with what they’re selling, just that your patronage reaps rewards for the broadcasting outlets you value.

    It’s no accident that a good station’s best time for the audience is often after a format change when they’re bending over backward to give them the best product they can (lots of great music or programs before the flood of ads kills the golden goose – or at least hobbles it). Radio owners email me (name)[AT] I have 2 lifetime satellite subscriptions and I STILL want you to do better.