Tag Archives: Federal Radio Commission

The Question Radio Itself Has Yet to Answer

86That was the subject of an email I received from a reader of my blog recently. The writer went on to eloquently state why he felt the way he did, even citing articles on the topic. He had my interest and I asked him if we could speak on the phone.

The BIG Question

This reader’s (who asked to be kept anonymous) big question was “What can radio do that other media can’t?”

And it’s a very good question.

In 2017 when many are using the internet for things that only radio could provide in the past, is radio’s future being the poor man’s smartphone, tablet or iPod when it could be more?

“NPR and SiriusXM, in addition to the new exploding podcast marketplace, have had no trouble creating personalities and programs,” but my reader writes “why does FM commercial radio continue to stick with playing the hits, past and present, at the expense of personalities, thinking it will make them money when the biggest radio companies have trouble paying off debts on the stations they seem to have paid too much for?”

Well it was a well-known fact all of my radio life that you make money in radio at the time you buy a radio station. Buying it right makes all the difference. And those big radio companies went on a buying spree using other people’s money (Wall Street) and it’s much like student loan debt, no one worries how much debt they’ve accumulated until they are asked to replay it.

Is Local Radio Local Anymore?

My reader quotes Westwood One’s Chief Insights Officer Pierre Bouvard from an AdExchanger interview as saying “A local radio station gives you traffic, sports, weather, great music, funny DJs and talks about your town,” he said. “Spotify has these robotic music playlists, which are awesome, but there’s no one telling you what happened at the Giants game last night.”

My reader says Pierre (who was my first Arbitron representative back in the 80s) makes a good point, but wonders if Pierre ever took the time to hear what passes for much of local radio these days. My reader feels that much of today’s FM radio stations do a combination of great music and robotic, Spotify-ish playlists, and relatively little in the way of “traffic, sports, weather…funny DJs and talk about your town” stuff.

Sadly, I’ve heard similar things said at radio meetings where the person starts off by saying “now don’t quote me on this, but…”

TELCOM Act of 1996

It was President Bill Clinton who signed the Telcom Act of 1996. That act was supposed to bring competition to the phone and cable television industries thereby lowering costs of each to the consumer. While that didn’t happen quickly (some might wonder if it ever did) it did cause the quick consolidation of the radio and TV industries. We went from a country where the largest radio operator could own 12AM-12FM-12TV stations to virtually whatever their pocketbook could afford. And with Wall Street Bankers waiting in the wings, what a company could afford was a lot.

Low Power FM & Translators

For the non-radio folks who read this blog, Low Power FM signals and Translator signals are virtually the same thing, with the exception being that Low Power FM stations originate programming and translators don’t. Both are received over the air on the FM radio dial. Both have increased the number of FM signals on-the-air in America today.

The latest FCC (Federal Communications Commission) report as of the end of December 2016 shows that there were 4,669 AM radio stations on the air in America. Over on the FM dial, 16,783 signals now beat the airwaves (FM, FM educational, translators and low power FM).

To put things in perspective, at a time in America’s radio history when the number of FM signals equaled the number of AM signals on the air, 75% of all radio listening was to FM. So you can only imagine what it’s like today.

93% of Americans 12+ are reached weekly by AM/FM radio says Nielsen.

So while the Telcom Act of 96 caused radio to consolidate under fewer owners who own more stations, adding to the signal overload was the advent of low power FM and translator signals. So much to program and no one home to do the work.

Enter computers, voice tracking, and syndication. This is same computer technology that is employed by Pandora, Spotify, Radio Tunes, SoundCloud and many others.

When TV Challenged Radio

In 1952 TV was born again. It was birthed just before World War II but the war years put broadcast radio/TV development on hold. After the war ended, things began to ramp up quickly for TV.

In 1953, Elmo Ellis was hired to fix 750AM – WSB in Atlanta. Ellis would write about “Removing the Rust from Radio Programming” for Broadcasting/Telecasting (now called Broadcasting and Cable magazine).

One of the points Mr. Ellis made was that a stack of records and a turntable do not a radio station make, though many broadcasters persisted in that very belief.

It was the very same philosophy I employed when I launched a “Music of YOUR Life” radio station. I felt that to be successful, you needed more than just Al Ham’s music list, you needed the personalities that complimented the music.

Both my reader and I are in complete agreement in that a radio station is more than just a song list.

Less Is More

The problem today is that with the “land rush” by broadcasters to own as many signals as they can, we have seen our country’s biggest broadcasters put themselves into a debt situation they cannot get out of and smaller broadcasters have signals and streams to manage but not the revenues to properly execute them.

If we go back to the beginning of broadcasting in America, we see that the FRC (Federal Radio Commission) that predated the current FCC felt that quality over quantity of radio stations should be the rule of measure. By limiting the number of stations, the FRC was attempting to insure the content of those stations on the air would be of the highest quality and also by limiting the number of stations; the advertising revenue that is the life blood of free over-the-air radio could be sustained.

What Can Radio Do That Other Media Can’t?

This brings me back to the question my reader originally posed and asked me to answer.

But before I do, I’m going throw that question out to my other readers – to date over 80,000 from all over the world – to weigh in with their thoughts.

What do you feel radio can do that other media can’t?

Is any radio station you know of doing it right now?

Is this a sustainable future for over-the-air radio?

I’m looking forward to reading your thoughts.

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Radio’s Non-Compete Contracts

69Have you ever thought about how Silicon Valley became such a powerhouse in the world of technology?  Back in the 80s, my home state of Massachusetts was home to world class research with institutions such as MIT, Harvard and the Route 128 corridor. So how did Boston cede its leadership to California and Silicon Valley? Employee non-compete contracts that held employees bound to these vertically integrated firms.

Meanwhile, taking a different approach companies such as Hewlett Packard and Sun Microsystems were embracing their people to job hop. They encouraged open technologies and building alliances.

Cross-Pollination of Ideas

In her book Regional Advantage AnnaLee Saxenian writes that these same phenomena took place in all kinds of industries all over the world; that being that these companies in California allowed cross-pollination of ideas to occur by the movement of people between them.

Ironically, radio enjoyed this same kind of cross-pollination up until 1996.

The Telecommunications Act of 1996

President Clinton signed sweeping communications reform in America with the Telecommunications Act of 1996. The radio industry consolidated almost overnight with a handful of major companies owning virtually all of the best “beachfront” radio properties.

The radio business, is not about just having a license to broadcast, but is about transmitted power and – like the real estate business – location, location, location. Unfortunately, that’s not how the FCC looks at license assignments.

Federal Radio Commission

The first regulatory body for communications in the United States was the FRC (Federal Radio Commission) and it divided the country into five equal regions and assigned the same number of radio services to each region. Why was this a bad idea? Because most of the people all lived in one or two regions of the country at that point in time and so more radio service was needed in them than in regions where it was mainly wildlife.

History Rhymes Again

I fond of saying that history doesn’t repeat but usually rhymes and in the case of radio’s number of AM or FM licenses a single company can own in a metro area we are repeating the same mistakes made by the FRC.

It’s not about number of signals but the power of those signals and location.

Cross-pollination of People

Part and parcel with the Telcom Act of ’96 was the loss of cross-pollination of people. If a person was RIF’d (Reduction In Force) by his company, he was under a non-compete to walk across the street or maybe some place else in the country as the same companies were now competing against one another all across this great land.

Before the Telcom Act, a single radio company could only own 12AM-12FM-12TV stations in the entire USA.  After the act, pretty much as much as they could afford to buy (with certain limitations).

BEST PRACTICES

Worse, these huge new radio companies would introduce across their footprint the concept of “Best Practices.” This is a code word for putting a knife in the heart of innovation.

Innovation requires risk.

Wall Street investors are basically risk adverse.

Playing it safe becomes the rule of the day and anyone that can’t play by the new rules is quickly shown to the exit doors.

Innovation requires three things according to the author of The Rise of the Creative Class, Richard Florida. Those are talent, technology and tolerance.

Consolidation and the new goal of “increasing shareholder value” would chop the talent pool while replacing people with technology. And the tolerance for anything new was likewise reduced to nil. Welcome to “playing it safe” radio; sterile, predictable and boring.

The Day I Tore Up My Employee’s Non-Competes

Back when I was in Atlantic City, I had an employee walk across the street to a radio competitor of mine. I wanted to pursue this employee because I had them under a non-compete contract. My new owners said that if a person didn’t want to work for them, to just let them go. I said then if they didn’t intend to enforce my employee’s non-compete contracts why did they keep them in place when they bought my stations from the previous owner. The president’s response to me was, “darn if I know.” I said then I’m going to tear them all up and he said, “go ahead.”

Life Without Non-Competes

I have to tell you, as a young manager, the realization that everyone at my radio stations could walk across the street to competitors was scary.

However, something wonderful happened.

People who now worked for me knew they no longer were working under non-competes and they now worked for me because they wanted to. It also made me realize that I too needed to provide a style of management that made people want to stay with me more than going someplace else. That, I would learn, is the best way to run a business.

Even better, having this type of work environment saw lots of talented people waiting in line to come work at my stations.

Make Radio Great Again

Radio became the force in America it is by being open to risk, new ideas and innovation. It kept the things that worked and jettisoned the ones that didn’t.

In other words, before radio was encumbered with huge debt brought on by consolidators, it invested in its future.

Radio can only win the future by investing in it.

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Don’t Let Radio End Up Like Yahoo!

49I just finished listening to Jason Jennings’ podcast about how Yahoo went from being a company worth $120 Billion to its sale to Verizon for $4.8 Billion. I think the wisdom that Jason shared is very applicable to the radio industry’s journey through consolidation since the Telcom Act of 1996.

Jason says the selling of Yahoo is like a train wreck; you don’t want to look, but you just can’t help yourself. I know many who’ve said similar things as Wall Street invaded radio with its goal of “increasing shareholder value.”

So how can radio learn from Yahoo’s mistakes? What are the lessons Jason shared that apply to radio? Let me share with you the Top 5 Lessons of Yahoo:

#1) Know What You’re All About

Yahoo never really defined itself and the revolving door of CEOs contributed to this with each one bringing a different vision – or no vision – to Yahoo. Or as Jason puts it, the company didn’t have a purpose; they never knew what they were all about.

As radio was deregulated and its original mission of serving the public interest, convenience and necessity was abandoned, nothing replaced radio’s reason for existing except for “increasing shareholder value.” Not surprising as radio people were replaced by Wall Street investors.

#2) Have a Set of Guiding Principles

Radio’s guiding principles were first established by the FRC (Federal Radio Commission) and then by the FCC (Federal Communications Commission). Under President Ronald Reagan – and his government is best that governs least approach – radio’s deregulation began. President Bill Clinton would open the flood gates of consolidation with his signing of the Telcom Act of 1996.

With no guiding principles, investors were free to move in all directions; and they did, buying up not just radio stations but many of its manufacturers and service providers for radio.

It’s like the old saying, if you don’t know where you want to go, any road will take you there.

#3) Using a Business like a Personal Piggy Bank

Radio investors and many top radio executives began using radio as a personal piggy bank, only taking care of themselves and focusing on the immediate quarter with no long term vision, strategy or investment. Too many just lined their pockets and left.

#4) Trying to Be All Things to All People

Jason says “great companies stick to their knitting. You can’t be all things to all people.”

Radio was originally about serving their community of license via over-the-air broadcasting. It delivered local news, local sports, local community events, local bands and more by local radio personalities who lived in the communities they served. It was focused like a laser beam on local, local, local.

#5) Don’t Copy the Competition

Radio today is trying to copy Pandora, Spotify, Apple Music and others. Radio today is trying to also copy YouTube, Facebook, Pinterest, Twitter and SnapChat. Radio is trying to copy just about every other business advertising model and without any guiding principles has been economically treading water.

Yahoo’s SVP Brad Garlinghouse wrote his infamous “Peanut Butter Memo” in October of 2006 that pleaded with the company to narrow its focus and clarify its vision.

Brad felt that Yahoo was spreading its resources too thinly. Business Insider recently wrote “This internal memo from 10-years ago shows Yahoo still hasn’t solved its biggest problem.”

If Yahoo had a culture problem, radio by way of mass consolidation had an even bigger one. First, as Wall Street money flowed in and radio stations were bought up, each of those stations represented its own culture that would need to merge into a larger culture. Then these new larger radio groups would try to change the culture from a local scope to a national scope. National radio personalities like Ryan Seacrest, Rush Limbaugh and many others would replace local personalities. National radio contests would replace local ones. Live and local for the most part would soon only appear in the history books on radio.

Culture is created at the top. Over the last twenty-years, radio’s consolidation has seen a revolving door of top leadership. The culture of radio has been a moving target for both industry professionals and listeners alike. Culture is built over time. There is no “quick fix” for building culture.

Absent a company culture, what fills the vacuum is one of everyone for themselves.

Now twenty-years later, there are signs of new growth as people who believe in live and local, and operating in the public interest, convenience and necessity are entering the business.

In many small markets, this way of operating never got sucked into the vortex of consolidation.

Even some of our country’s biggest radio companies are focused on getting back to the core principles radio was built upon.

Radio, the first broadcast transmission system to reach a mass audience, almost 100-years later is still the leading way to reach a mass audience.

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Dream Along With Me…………………. (My Plan to Save AM Radio)

26I’ve been reading all the opinions about the FCC’s proposal to change the rules regarding America’s 77 Class A (formerly known as clear channel) licensed radio stations. Supposedly, all being done to “revitalize” the AM broadcast band. Like giving AM radio stations an FM translator does nothing to revitalize AM radio listening, neither – in my honest opinion – does this bright idea either.

The FCC’s plan is to allow AM radio stations to retain their daytime power at night, politically correct though it may be the laws of physics play by no such rules. And we don’t have to wonder about the consequences, because to some extent this type of thing has already been initiated with 1,000/250 licensed stations maintaining a full 1,000 watts day and night, and it didn’t work.

First, I don’t have a dog in this fight. So what I’m about to say is not to benefit one side or another. These are my own opinions.

My first GM job was running a daytime 1,000 watt radio station with no pre-sunrise or post-sunset authorization. We signed on with local sunrise (7:15am in the winter) and signed off at local sunset (4:15pm in the winter). I was at my desk before my radio station went on the air about half the year and I remember writing commercial copy for an advertiser I’d sold that day as my radio station was playing the Star Bangle Banner to sign-off for the day.

When that carrier was turned off, WBT from Charlotte, NC would come booming in.

I know the pain of being a small radio operator.

Today, such a radio station has probably obtained a 250-watt FM translator and has its programming appearing on local FM radios in addition to their AM signal. Ever listen to any of these radio stations? I have, when I take road trips. I’m listening to their AM signal but they only identify themselves by their FM dial position.

The History of Clear Channel Signal Radio Stations

The clear channel signal designation goes back to the Radio Act of 1927 and the creation of the Federal Radio Commission (FRC). The FRC immediately went about creating a number of national “clear channel” AM radio stations that would be superior in quality broadcast content and with enough power to be heard over an entire region. Their signal would be on a frequency that would have no competition. Lower power AM radio stations would be relegated to a complex system of frequency sharing.

The FRC was later replaced by the Communications Act of 1934 and the establishment of the Federal Communications Commission (FCC). The FCC was put in place to be the “cops” of the people’s airwaves and protect those airwaves from being misused or interfered with in any way.

Less Is More

The FRC operated under the belief that it would be better for America to have fewer radio stations of higher quality than lots of radio stations that were mediocre.

The FCC, mainly through deregulation, has lost that mission. For broadcasters it meant less oversight – which they didn’t mind – but it also meant that the FCC wasn’t looking out for their interests when it came to policing things that might interfere with the AM broadcast band. You see the FCC regulates (or not) those things that now are the bane of AM radio. Things that, like Mother Nature’s lightning, interfere with AM radio signals – light bulbs, power lines, computers etc.

I Grew Up On AM Radio

By the way, it was lightning’s interference with AM radio that was the impetus for Edwin Howard Armstrong to invent frequency modulation or FM radio. FM is how the audio gets to your TV set.

It was AM radio that I grew up on. It was AM radio that attracted me to a radio career that spanned over forty years. And I believe that AM radio should be preserved, because it is low tech and is the signal most likely to be around after some event that takes out everything digital – which today is just about everything.

However, I also ran a news/talk AM radio station once that people depended on in emergencies and that was the problem. They didn’t think about it any other time. So I’m very aware that to be viable, a radio station needs to program something that people want/need even when there’s no emergency affecting their lives.

How To Save AM Radio

So here’s my “bright idea” to save AM radio. Eliminate Class B, C and D AM radio stations, sign these signals off and let them make their current FM translators their whole radio station. First, they will be able to liquidate the land their AM antenna farm sits on and at the same time reduce their operational costs. They already are identifying by their FM translator’s dial position and local residents have most likely made the switch.

For America’s Class A (formerly known as clear channel class stations), I proposed a HUGE power increase, like to 250,000, 500,000, 750,000 or a million watts for these current 77 stations. I would also propose a study be done of AM radio stations, not currently licensed as Class A being reviewed for such a designation, but with a power of say only 50,000 or 100,000 watts to deal with specific geographies and locations of America.

I’m Not a Radio Engineer (But I’ve Stayed at a Holiday Inn)

There’s simply no way to put the “noise genie” back in the bottle that causes AM radio such grief. My hope would be (and you radio engineers feel free to weigh in here and set me straight) is that by removing a lot of the AM radio clutter caused by other AM radio stations and increasing the power of the few remaining stations, we might cause these stations to be really listenable in more (most?) situations.

I would also regulate these new high power radio stations in the same way that the FRC proposed when they established them. These would be stations that would create original programming. They would be operated by entities that would operate in the public interest, convenience and necessity. They would be a low tech backup in a high tech world. They would have the scarcity of competition that should make them economically viable because of their attractiveness to advertisers. They would tie the country together in the event of a disaster. If a local dominant AM radio station was taken out by a disaster, the other high power stations, not similarly affected would be able to be heard and assist the affected area.

This situation happened years ago in Kentucky when floods put Louisville under water and Nashville’s 650AM-WSM stepped in to provide residents with the information they needed.

AM radio that provides solid information and yes, even entertainment, would get listeners. But even more importantly, it would provide America with a life-line in times of emergencies that digital communications has been shown to fail.

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