Radio Survivor

So, I guess now it’s my turn. What is Radio Survivor (the blog)? It’s all about the idea that radio is a hardy, useful, practical and proven medium with a lot of life left in it. A Radio Survivor (the person) is someone who continues to believe in the medium. A Radio Survivor is not a luddite clinging to her transistor radio while eschewing iPhones and netbooks, nor is he a retro fetishist stuck in the past. Rather, a Radio Survivor recognizes the simple power inherent in broadcast audio, which can be done inexpensively and bring people together in a community.

I’ve been a radio broadcaster working in college, community and public radio since 1989, with just one year off from May 1993 to May 1994. And while I’ve had some sporadic work in radio, most recently as a college station adviser, as Matthew emphasizes, my approach is more as a listener and enthusiast rather than an industry insider. Much of what is written about radio is for the industry insider, and is therefore concerned more with profits, ratings and staffing changes than with the place of the medium in our society and everyday lives. Also often missing from insider coverage is critical analysis that challenges the business orthodoxy.

I write for Radio Survivor because I wish to challenge myself and others to consider what radio can be, not just be content or discontented with how it is. We can recognize the damage wrought by consolidation without giving in and leaving the medium for dead. We can highlight the stations and places where innovation is happening and 21st century is in the making. We can encourage new or lost listeners to give radio a new chance.

Radio, as a medium, has a great chance to survive because of the internet, iPods and mobile phones, not in spite of them. Just because Clear Channel and its mostly bankrupt consolidating brethren were too busy buying up stations, firing staff and elminating local service to notice the internet revolution doesn’t mean that the internet has to kill radio. I believe that there is still an audience that pines for local news, information and culture that is still hard to find on the internet, that doesn’t require a monthly broadband bill or data package and is there in the car, in the home or a hundred miles away from the nearest wi-fi hotspot. And as internet access becomes more ubiquitous and less costly radio can still be a complementary part of our information environment.

That’s Radio Surviving.

Clear Channel has announced what the commercial radio giant calls a major step forward for radio advertising: technology that can “automatically and reliably insert any length of audio spot immediately after specific programming or commercial spots based entirely on content.” In blogoland that’s called “contextual,” or sometimes “semantic” advertising. Google Adsense and various Amazon widgets, which we use here at Radio Survivor, can scan the rest of our site and come up with relevant advertising content, based on what we’ve written.

This has its down sides. If you regularly read our site, you may have noted Google ads for the Survivor TV series on more than one occasion. Beyond the fact that that program uses the same title that we do, there’s not much similarity in context. But CA is generally regarded as a boon to the commercialized wing of the Internet. And CC is calling its innovation a big breakthough.

“We just leveled a very lucrative playing field,” declared Clear Channel CEO John Hogan. “This system took months to perfect, Clear Channel Radio is the only one who has it.”

The question is, in the Age of Clear Channel style terrestrial radio, where’s the context? I mean, we’re talking about radio stations that, with some notable exceptions, offer little variety in talk or music. Clear Channel’s press release gives some examples of how this contextual radio thing has already worked. Here’s number one:

“To support Wal-Mart’s exclusive retail sales contract for AC/DC’s highly anticipated Black Ice album last Fall, MediaVest and Clear Channel Radio devised a program where a Wal-Mart ad for the album would run immediately after an AC/DC song was played on a selection of 106 Rock AC and Album-Oriented Rock stations in 91 markets. If no AC/DC song was currently on the station’s playlist, the 30-second spot appeared after a song by a similar artist.”

Ok, but what’s not similar to AC/DC on a Clear Channel Adult Contemporary or Album-Oriented rock station? So basically the contextual ad will run when it hears “It’s a long way to the top,” or it will probably run to almost anything else on the schedule. That’s context? Here’s example number two: (more…)

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 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…)

On Friday the Wall Street Journal reported news that’s no surprise to radio industry watchers, that the third largest radio owners in the country, Citadel Communications, is about to declare bankruptcy in a deal pre-arranged with its creditors. The loudest critic of Citadel has been industry-insider Jerry Del Colliano who predicted last week that the company would declare Chapter 11 ahead of a January debt hearing.

Citadel used to be a player in small and mid-size markets–which are comparatively healthy–until buying the ABC radio network from Disney in 2006. That enormous purchase was worth $2.7 billion, with $1.6 billion of it in cash. The deal made it a much bigger nationwide player, especially in the largest markets, along with saddling the company with massive debt just before the commercial radio industry peaked and the economy tanked.

Various reports attribute responsibility to the overall decline in the radio industry, combined with the loss of two major personalities: Paul Harvey, who died in March, and Sean Hannity who was lured to Clear Channel’s Premiere Radio Network. Certainly these events didn’t help Citadel along. But I side with Del Colliano in attributing the true responsibility to the disease of consolidation. Well, that and lame-brained business practices, like cutting off non-Citadel stations from carrying ABC network news, and the typical consolidator practice of firing local personnel and moving to voice tracking.

At this point in the economic crisis I am having a much harder time swallowing the line that radio is a uniquely dying business than I did even in 2006. Instead, the largest radio owners were a perverse type of innovator, way ahead of the curve in hollowing out their own companies by taking on mammoth quantities of debt based on the pipe dream that the industry–and the economy–would only continue on a steep upward climb. They weren’t alone, as we all know, since real estate, banking, insurance and other industries would follow in their tracks some 12 – 18 months later.
Frankly, the situation isn’t that different for newspapers–where the owners of companies like Tribune took on massive crippling debt in order to acquire and consolidate. Different industries with slightly different modus operandi, but otherwise the same disease of greed and consolidation.

Without a doubt the loosening of radio ownership rules in the Telecomm Act of 1996 provided the perfect storm for the creation of Clear Channel and Citadel, but that is not the only impetus. Indeed, the same investors and financial managers taking tokes off the same pipe filled with greed who created radio’s consolidated wasteland are those who who also engineered the financial collapse of 2008. Each had their own set of wet-kisses from Washington in the form of relaxed regulations, lax regulators and overheated enthusiasm. But the root cause is the same.

Unfortunately there’s nothing unique about the Citadel bankruptcy; it might as well be Chrysler. The radio lover’s best hope is a fire sale that might return some of these stations to local ownership.

Down down down. Clear Channel and Cumulus’ third quarter earnings dropped 19 and 18.5 percent respectively compared to Q3 of 2008. Clear Channel reported revenues of $660.6 million in the third quarter of 2009 and $813.4 million for the same in 2008.

Cumulus’ net  revenues sank from $80.0 million last year  to $65.1 million this year, “primarily due to the impact the current economic recession has had across our entire station platform and industry at large,” the company explained.

Let’s see, how about  CBS Radio . . . Looks like revenue dropped there too: 318.9 million this Q3, 392.5 last Q3. But CBS CEO Leslie Moonves summed up the release with some happy talk:

“The operating environment for our businesses continues to improve and we are finishing the year with strong momentum. So far this year, each quarter has been better than the one before, with the third quarter showing significant improvement over the second, just as we expected. Going forward, we have many reasons for optimism as we look to 2010.”

It would be more accurate to say that this year each quarter has been progressively less horrible for radio. It’s unclear where the silver lining is to be found. We would be happy to have it pointed out to us.

Tough times necessitate creativity, not to mention a little bit of compassion. Not to be left behind the National Association of Broadcasters serves up both by offering what it’s euphemistically calling a “free agent rate” [scroll down to the bottom] which gives discounted registration of only $179 to its upcoming Radio Show convention. Radio magazine is little more direct in reporting that the discount is for unemployed broadcasters. Looking to avoid that word, the NAB instead likes to say that the rate is intended for “[r]adio broadcasters who are currently between jobs.”

Not to nit-pick, but to actually say someone is between jobs implies that there’s another one on the horizon. But given the way that the largest radio consolidators like Clear Channel and Cumulus have been laying off staff, it doesn’t seem like there’s too many radio jobs left waiting for all those “free agents,” unless we include operating the wireless intercom at the drive-through.

Somewhat ironically, the only Cumulus employees at the Radio Show might be those new “free agents” since, according to Jerry Del Colliano [scroll about half-way down], the company has forbidden its staff from attending. Whereas the newly “free” Clear Channel broadcasters will have the great pleasure of listening to their former boss, CEO Mark Mays, at the “Super Session Breakfast.” What a way to start the day! At 7:30 AM it just might be most tolerable with a hangover from the previous night keeping the B.S. obscured in a post-alcohol haze.

I hope you, dear reader, understand that I’m aiming my snark at the Scrooge McDucks running (or ruining) the likes of Clear Channel, Cumulus and the NAB. I intend no fun at the expense of the unlucky broadcasters unceremoniously kicked to the curb by Mr. Mays and Mr. Dickey. If these guys keep up their current mode of business, the “free agents” at the NAB Radio Show will outnumber the working broadcasters two to one, and they’ll have to pay the unemployed guys the $179 to show up.

The audacity to fire thousands of personnel and then magnanimously offer them a $120 discount to attend your industry’s biggest trade show exemplifies the attitude, misplaced priorities and sheer ignorant greed that is killing commercial radio.

I splurged and took a taxi to JFK airport in New York City today, and waddayaknow, my driver was a dedicated Sirius XM fan. We listened to the Love Channel for a while (I would not have taken him for a Lionel Richie type of guy). I asked him how much he likes Sirius XM. A lot, he replied, and took me on an extended tour of all the channels in his package.

This made me feel a little optimistic for the company. Checking the web I found some basis for this. Turns out that Sirius XM is issuing over 250 million in senior secured notes to pay back that humongous loan it borrowed from Liberty Media. Its second quarter financial numbers aren’t all that bad either. The company reports a one percent increase in revenue from the same time last year, which isn’t a lot, but beats Clear Channel and Westwood One, both of which appear to be in free fall, revenue-wise.

On the other hand, the satellite company says it is slightly down in subscribers—a one percent drop; at this point Sirius XM has 18,413,435 customers, my taxi driver among them. But given the state of the economy, that might be another sign of the services’ strength.

The company still has some loose ends it has to tie up with the Federal Communications Commission. Sirius XM still hasn’t figured out how to distribute those minority channels it agreed to share when it got merger approval from the FCC and Department of Justice (The FCC just gave Sirius yet another extention on this problem). And it still has to resolve a nasty dispute with the Wireless Communications Service over tower and translator positioning.

But things look better for satellite radio than they have in a while. The Love Channel sounded good, too.

Cautious optimism abounds for the economic outlook, with the Federal Reserve predicting that the Great Recession is “leveling out.” Financial markets are improving, the Fed says. Household spending is “stabilizing.” Businesses are realigning inventory with sales. Thus “market forces will contribute to a gradual resumption of sustainable economic growth in a context of price stability.” Hooray!

But the prospects for  big radio continue to look pretty darned grim. Clear Channels’ second quarter report for this year is particularly gnarly. The company says that its revenue has dropped nearly a full twenty five percent from the same time last year. $692.1 million in the second quarter of 2009; 914.8 million in the second quarter of 2008.

The report also discloses that Clear Channel, recently acquired by Bain Capital, has slashed the operating expenses of its advertising company, Clear Channel Outdoor, by twenty percent.

Meanwhile Westwood One posted a revenue drop of 16.7% for the last quarter, which rather neatly translates into an actual loss of $16.7 million. “The decrease in revenue is primarily attributable to the current economic downturn and the continued decline in advertising spending,” the company notes. Network radio revenue fell by $7 million, aka 14.9%. “The decline was principally due to the decline in advertising spending in news, talk and sports programming, particularly from automotive advertisers.”

The press release continues:

The difficult economic environment continues to negatively impact revenue across the advertising industry in general including radio advertising. In early July 2009, Magna, the research and marketplace intelligence arm of Interpublic Group’s Mediabrands, released projections that concluded that the first half of 2009 will likely turn out to be the worst period of the recession for the advertising industry, with an 18% drop in overall advertising revenue versus the first half of 2008. In June, BIA Advisory Services, a subsidiary of BIA Financial Network, Inc., released 2009 radio projections, noting that “[t]he economy has affected the radio industry more this year than originally projected”, and predicting significant revenue declines in 2009 compared to 2008.

The question, of course, is whether this stark free fall is simply a result of the recession, or the decline of terrestrial radio in general. If it is both, does big over-the-air radio have any strategy for reclaiming its share of the media pie after the economic comeback?

It was definitely a feel good moment last week when Clear Channel announced that it plans to donate four radio stations to the Minority Media Telecommunications Council. The MMTC says it will work with the National Association of Broadcaster’s Leadership Training Program to “use the stations for training and to incubate new minority and women broadcast owners.”

If Clear Channel were giving these stations to me, I’d be, like, “THANK YOU CLEAR CHANNEL. DUDE. WOW. THANKS.” David Honig, President and Executive Director of MMTC, did the formalities with a lot more class. “Clear Channel Radio’s generosity and support creates an enormous opportunity not only for our own training programs, but for minority and women broadcasters who would not otherwise have the means to operate their own stations,” he said. Very well put.

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