Radio Survivor

It’s been a few years since the FCC reached consent decrees with CBS, Citadel and Clear Channel over illegal pay-for-play schemes, so you think that the major broadcasters would have learned their lesson. Apparently the warning didn’t get translated into Spanish. Yesterday the FCC released a new consent decree [PDF] with Spanish-language broadcaster Univision which requires the company to pay up a cool million dollars.

In a press release [PDF] the FCC says that “Univision radio stations or their employees secretly accepted payment from a record label in exchange for the radio stations giving more frequent airplay to the label’s artists, without making the disclosures to listeners required by section 507 of the Communications Act.” The Department of Justice coordinated with the Commission on the decree and accepted Univision’s plea on criminal charges that were to be filed.

Amongst the violations alleged by the government are several cases where program directors at Univision stations in El Paso, San Antonio, Los Angeles and Sacramento submitted fake invoices to Univision Music for supposed services that were never rendered, and then kept the proceeds. Univision Music Group was sold off two years ago by the broadcaster to the Universal Music Group.

Spanish-language broadcasting is one of the growth sectors in commercial radio broadcasting, and is also quite consolidated with most of the largest radio owners having a stake. For its part Univision owns 70 stations nationwide. While that doesn’t quite hold a candle to Clear Channel, it’s not too shabby either, giving the company a foothold in sixteen of the top Latino markets like Los Angeles, New York, Miami, San Jose/San Francisco, Chicago, Houston and Phoenix. So it should come as no surprise that the same slimy shenanigans would happen in this growing market. Latin music is big business and indie labels and acts pretty much no better chance of commercial radio airplay than their English-language counterparts.

One would like to think that this consent decree might result in a little more indie music hitting the Unvision owned stations, but I doubt it.

The union that represents what’s left of the radio broadcasting workforce has told the Federal Communications Commission to keep its current restrictions on how many radio stations an entity can own. The filing by the American Federation of Television and Radio Artists (AFTRA) is a reminder of how dramatically broadcast radio ownership has consolidated over the last 14 years:

“In 1996, the two largest U.S. radio group owners owned 62 and 53 stations, respectively. Today, Clear Channel Communications (Clear Channel) owns more than 800 stations, down from a high of about 1,100 in 2007. The second largest group, Cumulus Media, Inc. (Cumulus), owns about 400 stations today. The Clear Channel-Cumulus oligopoly represents a nationwide trend; the largest two radio station owners in a given market, on average, control 74 percent of the revenue. The largest one, on average, controls 46 percent.”

AFTRA adds that for radio, between the passage of the Telecommunications Act of 1996 and 2010, the number of commercial radio stations jumped by around 10 percent, while the number of station owners dropped by 40 percent.

The FCC is once again reviewing its media ownership rules. The present rule for radio is a bit complicated, but basically says that in big markets like New York or Los Angeles (45+ stations), an entity can own up to eight commercial licenses. Then the allowed number tapers down for lesser markets. In regions with 14 or fewer stations, an entity can own no more than five. The kicker is that there’s no limit on the number of commercial stations a company can own nationally. That’s why Clear Channel and Cumulus are what they now are. (more…)

With ace-consolidator Randy Michaels at the helm of Tribune Company it looks like he’s having a jolly good time installing his old Clear Channel pals into top positions at the bankrupt newspaper and broadcast company. On Monday Tribune announced that ex-Clear Channel CFO Jerry Kersting is now president of Tribune’s broadcasting division. This was followed today by the news that Clear Channel’s old VP of programming Sean Compton would be Tribune Broadcasting’s new president of programming.

Kersting replaces Ed Wilson, who Robert Feder notes,

was one of the few Tribune Co. execs without Clear Channel on his resume, having previously run Fox Television Network, NBC Enterprises and CBS Enterprises. By several accounts, he didn’t kowtow to Michaels, who moved up to CEO of Tribune Co. last December. “Ed was probably too strong for Randy,” one insider surmised. “Randy runs the show.”

Tribune has much bigger investments in TV than radio. In fact, it owns only one station, the news/talk station WGN-AM in Chicago, where back in March Michaels banned 112 words and phrases from being uttered on the station. Nevertheless it already looks like the plan is to perform some of the old Cheap Channel radio tricks on TV. The company is getting ready to give conservative talk radio host Bill Cunningham his own syndicated program on Tribune stations. And who do you think syndicates Cunningham’s radio program? Why, yes, that would be Clear Channel-owned Premiere Radio Networks. (Way to keep it in the family, Randy!)

As the Clear Channel mafia readies to work its magic on Tribune Broadcasting they have a head start since the company’s already in bankruptcy. It got there the same way Clear Channel drove itself into debt — buying up stations–and newspapers–left and right using borrowed money. Only a private equity sale payday would complete the circle.

In advance of its upcoming biannual review of media ownership rules, the Federal Communications Commission is holding a series of workshops on the issue. These workshops are less formal and expansive than hearings, and tend to be focused on a smaller array of topics.

On April 20 the Commission’s Media Bureau will host a panel on “benefits and harms of newspaper/broadcast cross-ownership and the impact these combinations have on competition and diversity in the media marketplace” [PDF announcement]. The primary concern is with TV-newspaper cross-ownership because it’s more restricted by the FCC than radio cross-ownership, and because TV and newspapers are significant sources of local news. However, radio is still a source of news and public affairs programming, and so newspaper-radio combinations will also be discussed in the panel.

Currently bankrupt Tribune company–headed by former Clear Channel CEO Randy Michaels–has been one of the most prominent supporters of loosening or eliminating restrictions on television-newspaper cross-ownership. In fact, the company was so confident that the Bush-era FCC would undo cross-ownership rules that it went on a massive debt-leveraged buying spree, snatching up newspapers and broadcast stations. Only the changes didn’t quite pan out, and so the heavily indebted company was bought out and saddled with even more debt by real estate tycoon Sam Zell. Now companies like Tribune are crying that eliminating the few remaining ownership regulations are the only way to save the broadcast and newspaper businesses.

I predict we’ll hear that argument raised at the Tampa workshop, along with the media reform argument that maybe the newspaper and broadcast businesses wouldn’t be in such rotten shape if the largest companies hadn’t gone on a credit-fueled shopping spree.

With the national broadband plan taking center stage right now, I don’t expect we’ll see much major action on media ownership from the Commission too soon. But since Tribune, Clear Channel and their indebted brethren will be pushing hard to eliminate even the few remaining constraints on radio ownership, we’ll be sure to cover it here at RadioSurvivor.

Last week I told you how former-Clear Channel Charm School president and current Tribune CEO Radio Randy Michaels identified 119 words and phrases that are no good for his company’s flagship station WGN-AM. Well, this week Radio Randy’s follow-up was to double-down and confront the station’s staff about how the list got leaked outside the station.

Once again Chicago media blogger Robert Feder has his ear to the ground:

On the subject of leaks, Michaels asked individual staffers: “What do you think should happen to people who do that?” He directed much of his ire at Charlie Meyerson, the WGN news director who circulated the memo, blaming Meyerson for mishandling his directive.

You can take the boy out of Clear Channel…

George Carlin only ever identified seven words you couldn’t say on the radio. Tribune CEO Randy Michaels–formerly of Clear Channel–has identified a full 119 of ‘em that he recently banned from being used on the company’s flagship news/talk station in Chicago WGN-AM. None of these words or phrases would get a station in trouble with the FCC. It’s just that Michaels and WGN news director Charlie Myerson think that using “flee” to mean “run away” or saying “bare naked” makes the announcer “sound like you’re reading, instead of talking.”

Chicago media blogger Robert Feder leaked the internal memo announcing the verboten verbiage, taking Myerson and Michaels to task for this “petty and insulting micromanaging of subordinates.” See the full list at Feder’s blog.

My guess is that Radio Randy just started the list as a way to get his mental juices flowing, and once he hit 50 figured it was too great not to share. You know, it’s difficult to be the CEO of a bankrupt media empire, and sometimes you just have to show the troops that you’re thinking about their world, too. Maybe next he’ll sign up to do an episode of Undercover Boss.

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.

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.

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As I said in my introduction to our subjective and opinionated review of radio in the 2000s, I still think it was darn near impossible to predict how the medium of radio would end up at the beginning of 2010. Sure, the seeds for satellite radio, HD radio, low-power FM, internet radio and MP3s were already planted by the turn of the century. But home broadband–nevermind wireless or mobile–was a relatively exclusive luxury. MP3 players were lucky to sport enough memory to hold about a hundred minutes of music and weren’t integrated into cell phones. Satellites for Sirius and XM were launched, and HD Radio was being experimented with, but no stations were on the air. Clear Channel was flying high for more than $90 a share.

Anyone taking a broad view of the radio industry in 2000 could certainly see a lot of balls being thrust up into to the air, but it would have taken a psychic to predict where they would land. Nevertheless, for all of the churn we can say very safely that audio-focused content is alive and well.

It’s become clear to me that we Radio Survivors do consider radio to be greater than just the traditional electromagnetic broadcast medium. While we included the RF-based college radio, pubic radio, LPFM, HD Radio and satellite radio in our review, we also touched upon internet radio, Pandora and digital downloads. I believe we are first and foremost fans of terrestrial broadcast radio, but that does not cause us to ignore or discount new audio media. Nor does it cause it us to claim that they are not, in essence, radio services.

The homogenization and delocalization of the broadcast dial caused listeners to seek alternative places to hear more interesting and diverse content. At the same time the popularity of MP3 players and Pandora shows that people were also looking for customization.
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At end of the first decade of the 21st century there are more audio entertainment options available than any time before. Even if traditional broadcast radio has a case of the doldrums, the viability of radio-like media has never been stronger. Satellite radio is one medium that entered the scene, although its long-term prognosis is still hazy.

By 2000 the perception that commercial radio had seriously declined in quality was widely held. Even listeners unaware of the massive consolidation in the industry perceived the tightening of playlists, more repetition, the inability to talk to a live DJ and make a request and an increase in commercials.

Then, with what seemed like perfect timing, two companies emerged on the scene to offer up a new radio service that promised a real alternative: satellite radio. Americans were already accustomed to receiving television by direct broadcast satellite. But satellite radio would be different. Where satellite TV mostly offered a cable-like service with the same channel, the new satellite radio companies–XM and Sirius–would offer up scores of new radio channels produced and programmed by the companies themselves.

Both companies vowed that their music channels would represent a return to the values of progressive rock radio, with programs hosted by live DJs choosing music according to their informed tastes. By the time both services were live in 2003, there were countless press profiles marveling at Sirius and XM’s array of narrow program genres and guru-like hosts. Home entertainment magazine Sound and Vision ran a lengthy cover story in June 2003 that asked “What’s so great about satellite radio?” The question was answered by four hosts from each of the services. Remarks by Lou Brutus, programmer for the XM freeform-revival station “Special X” were characteristic:

I don’t care how many CDs you have, there’s never been anything like Special X. It could be the day-to-day stuff that falls under the umbrella of “weirdness,” where you might hear “What’s He Building in There?” from Tom Waits, followed by William Shatner singing “Lucy in the Sky with Diamonds,” followed by a 28-minute Jack Kerouac piece… The people at XM are thinking all of this stuff out and putting it together in coherent neighborhoods of sound, for lack of a better term. When radio is done right, I think it’s the most personal medium of them all. *

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At the start of the decade the nation’s largest owner of radio stations, Clear Channel Communications, was flying high with a stock price over $90 a share in January, 2000. While public interest advocates and media reformers continued to batter the company with criticism over its tactics, Wall Street was still in love with the profits the company was generating. But the love affair wouldn’t make it through the rest of the decade.

Indeed, by the standards of the 1980s and 1990s acquisition and merger-driven economy, Clear Channel’s formula looked like genius. Aggressively search the country’s radio markets looking for clusters of stations ready to be snatched up. In each market buy as many stations as you can, up to the legal limit. Then fire redundant staff, combine studios and other business departments–into the same building if at all possible. Replace as many on-air hosts as possible with syndicated or voice-tracked programming. Finally, sell ad packages for groups of stations at market-beating prices that smaller groups or mom-and-pop operations can’t possibly match.

The method was so successful that the nation’s other largest radio companies followed the pied piper down that same path.

To anyone who didn’t actually listen to radio, especially commercial radio, the Clear Channel way looked like a sure bet. But radio listeners knew better, and voted with their ears. More commercials per hour, no local requests, nationwide playlists, radio contests that sound local but covered the whole nation — it all added up to stations that just didn’t sound as good as they used to. So listeners went elsewhere: iPods, satellite radio, internet radio. (more…)