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The Death of Air America: It's the Ownership, Stupid!

Conservative commentators may be cackling about the failure of Air America radio, trying to make it into an indicator for both the inherent weakness of liberal-leaning radio and liberal politics. But any reasoned analysis of the radio industry demonstrates that neither is the case. Rush Limbaugh, in particular, and the rest of the nation’s most popular conservative hosts owe much of their success to first-mover advantages taken before and after the Telecom Act of 1996 completely changed the business of radio. The fact that they are politically conservative is less important than the cleverness, deviousness and luck of the companies that made it happen.

Fundamentally, Air America was a mediocre idea, poorly executed. Make that, disasterously executed. As former Crossfire co-host and current talk radio host Bill Press notes, Air America was insufficiently funded from the very beginning and

Even before its launch, it was taken over by a con artist who was later convicted on un-related charges of business fraud. Managers spent money lavishly on talent and studios, while generating little advertising income….

Except for Jon Sinton, few of their executives had ever worked in talk radio. In many ways, it was amateur hour from the beginning.

Putting aside even that inauspicious start, any new radio network started in 2004 would have faced an uphill battle, regardless of its political leanings. Simply put, timing was not on Air America’s side.

He'll trade you a 3-hour show for 15 minutes of ad time.

By comparison, let’s examine Premiere Radio Networks, which is the largest radio syndicate in the country. And while not explicitly conservative in the same way that Air America espoused itself as liberal, Premiere is home to the nation’s most highly-rated conservative hosts, including Rush Limbaugh, Sean Hannity and Glen Beck (along with liberal Randi Rhodes). There are many commentators who would argue that the success of Premiere and its roster of talent springs primarily from the sheer popularity of conservative views, especially on AM talk radio.

That may be how it looks today, but let’s turn back the clock to a time before AM talk equaled all-conservative, all the time. 1988 was the year when Rush Limbaugh’s program first went national with the support of former ABC Radio executive Edward McLaughlin’s newly founded EFM Media Management. While the radio business was stable, at the time AM radio was having a tougher go of it, relative to FM, which offered higher fidelity for music, the mainstay of radio programming for the last quarter century.

It’s a simple fact that Limbaugh’s program grew quickly, reaching a nationwide listenership of two million in 1990. But the question that doesn’t get asked so often is, how did he get there?

Bill Mann, a former contributor to Inside Radio, reminded us just last year:

[a] little-known practice in broadcast syndication called a “barter deal.” (Barter deals were briefly mentioned in Michael Wolff’s first-rate recent piece on Rush in Vanity Fair).

Here’s how a barter deal works: To launch the show, Limbaugh’s syndicator, Premiere Radio Networks [then EFM] — the same folks who syndicate wingnut du jour Glen Beck — gave Limbaugh’s three hours away — that’s right, no cash — to local radio stations, mostly in medium and smaller markets, back in the early 1990’s.

So, a local talk station got Rush’s show for zilch. In exchange, Premiere took for itself much of the local station’s available advertising time (roughly 15 minutes an hour) and packed the show with national ads it had already pre-sold.

So, imagine you’re a small operator of a local AM radio station in 1990. This is before the Telecom Act of 1996, so, in essence, most radio station owners are small. Also, this is before automation equipment was inexpensive enough to be cheaper than a DJ or operator’s hourly wage.

During drive time you might be doing pretty well with some local news and talk programming, supplemented with call-ins and network features. But during the midday, it’s a little rough. You could just play music, but nobody really listens to music on AM anymore. You’d like to have some entertaining talk programming, but talent costs money, and the ad revenue isn’t there yet. You could pick up some syndicated programming that might be cheaper than good local talent, but that, too, costs money up front that you’re not sure you have.

Then, along comes EFM or Premiere with a great deal for you. You get three hours of a popular talk program out of New York City from an established station with a nationwide reputation. And it won’t cost you one red cent. In exchange you just have to give up some of your (nearly nonexistent) ad inventory. What would you do?

I’m not sure who first said it, but it’s hard to deny: it’s hard to compete with free. In 2010 good ol’ Rushbo’s show isn’t quite so free anymore, but that’s only after building up a pretty good 21-year track record.

But the story doesn’t end there. In 1997 Jacor communications, then an owner of 66 radio stations, bought EFM. 20 of Jacor stations were AM stations in major markets. And guess what show they’d soon be airing if they weren’t already? Yes, the Rush Limbaugh Show. Though not a significant boost to Rush’s overall listenership, the deal foreshadowed the growing relationship between owning stations and owning content.

The benefit of this arrangement wasn’t lost on the new #1 in radio ownership, Clear Channel, which bought Jacor just a year later and merged syndication operations into Premiere. At that time Clear Channel only had 625 stations, but would go on to own over 1200 at its peak. While Limbaugh didn’t necessarily need the boost of these extra stations–he was already heard in almost every market in the country–the deal certainly opened up opportunities for future Premiere hosts like Hannity and Beck.

Now, lets look back at Air America, which started 16 years into Limbaugh’s reign, and six years after the full merger of Jacor, Premiere and EFM into Clear Channel. How do you compete with the nation’s largest radio station owner and syndicator? That’s like asking, how do you compete with Microsoft Windows? Sure, Apple’s been a good competitor for Windows, but it’s success relies heavily on products like iPods and iPhones. And how many other significant desktop operating system competitors are there?

Sure, maybe Air America could have tried the same strategy that EFM did with Limbaugh and give away their programming. The trick worked the first time around, and maybe there were enough stations out there ready to take the deal. But you can’t just wish 2004 into being 1988. EFM and Limbaugh had the distinct advantage of not having to make deals with companies like Clear Channel, Cumulus or Entercom. They built that business from the grassroots on a mixture of cleverness, conniving, business savvy and Limbaugh’s talent as a radio entertainer, taking advantage of weakness in the AM radio marketplace. To trot out another tired cliche: lightning doesn’t strike twice.

Air America’s chances of success as a new nationwide radio network weren’t good from the start, whether it was liberal, conservative, centrist, fascist or socialist. For all intents and purposes, today’s other top conservative talkers started out with access to several hundred AM stations owned by their syndicator’s parent company right out of the gate. Air America had to start from scratch, owning a total of zero stations, with each deal with each station costing time and money.

At the same time, there’s arguably more nationally syndicated liberal-leaning talk on commercial radio than there was in 2004. In part this is because Air America lost hosts like Randi Rhodes, and never cornered the market on liberal talk in the first place. Many stations that were Air America affiliates ended up building a roster of liberal talk programming alongside AA’s offerings. Chicago’s “Progressive Talk” WCPT tells its listeners:

WCPT AM&FM is not Air America and we are not going away. Although Air America became a generic term for the “ Progressive Talk” format, we are a locally-owned radio station that is committed to a voice that speaks about issues which are vital to Americans as well as balancing the Chicago radio dial. …

Programs such as Bill Press, Stephanie Miller, Ed Schultz and Thom Hartmann come from other sources. That’s why virtually all of our current programming will continue to be heard….

Air America’s failure is nothing more than the failure of one radio experiment, nothing more and nothing less. Commercial broadcast radio has been a tough business since the likes of Clear Channel squeeze the life out of it beginning in 1996. The kind of success Air America was hoping for required ownership, and they were eight years too late for that.


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3 Responses to The Death of Air America: It's the Ownership, Stupid!

  1. Helen Yamamoto January 25, 2010 at 2:34 pm #

    Great article!

  2. fgoodwin February 4, 2010 at 1:14 pm #

    Denial isn’t just a river in Egypt.

    You can spin Air America’s failure anyway you want. The fact is, if they had had a listening audeince, advertisers would’ve bought more ad time.

    It wasn’t a failure of management or the business mdel — they simply didn’t have an audience.

  3. Paul Riismandel February 4, 2010 at 1:20 pm #

    fgoodwin: well, that begs the question: “how do you get an audience?”

    Audiences don’t just appear out of thin air. How many critically acclaimed movies, shows, books and plays failed to find an audience, or only found an audience years or decades after they first appeared?

    Rush Limbaugh found an audience partially because his management went out and gave away his show to hundreds of stations.

    I’m not a big fan of Air American arguing that somehow they were wronged or were a diamond in the rough. Rather, I’m arguing that one of biggest factors affecting success in American radio is who owns your distributor and how many stations do they own.

    Ownership = Audience, pure and simple. It doesn’t guarantee success, but the leg up it gives any program is too enormous to be denied.

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