Tag Archives: FRC

October 10, 2021 · 3:00 am

Oh, The Insanity

The National Association of Broadcasters (NAB) submission to the Federal Communications Commission for the FCC’s 2018 Quadrennial Regulatory Review is eye-opening.  You can read it for yourself HERE. It left me shaking my head.

The NAB told the commission that “’local radio stations’ Over-The-Air (OTA) ad revenues fell 44.9% in nominal terms ($17.6 billion to $9.7 billion) from 2005-2020.” Local 2020 digital advertising revenues by stations only increased the radio industry’s total ad revenues by $0.9 billion bringing them to $10.6 billion.

The NAB’s solution to the problem is for the radio industry to become more consolidated.

The definition of insanity is doing the same thing over and over

and expecting different results.

-Albert Einstein

Say What?

Back in the mid 90s, the radio industry was telling anyone who would listen that the problem with the state of radio broadcasting in America was that the industry was made up of little “ma and pa” radio stations/groups which could not scale and if the ownership caps weren’t lifted the radio industry would perish.

Excuse me, but I’ve already seen this movie and how it ends. So, why would doing more of what didn’t work, result in a different outcome.

The Media World Has Changed

I don’t think anyone would contest that the media world we live in has changed dramatically since 2005. Facebook, the world’s largest social media company with over 1.84 billion daily active users, opened its doors on February of 2004. YouTube began in 2005 and Twitter in 2006.

Google, the dominate search engine on the internet, began in 1998 and internet retailing behemoth, Amazon, began in 1994.

The new internet kids on the block that dominate our day are WhatsApp (2009), Pinterest (2009), Instagram (2010), Messenger (2011), SnapChat (2011) and TikTok (2016).

The Top 10 internet companies at the end of 2020 raked in 78.1% of the digital ad revenue ($109.2 billion).

All Ad Dollars Are Green

While we like to break money spent on advertising into distinct categories like digital media, traditional media etc. the reality is the total number of advertising dollars is a finite number and in the end you can’t tell a dollar from digital from a dollar from analog advertising.

“You can’t handle the truth!”

–Colonel Jessup

(played by Jack Nicholson in the 1992 film “A Few Good Men”)

Since 2005, many young entrepreneurs have created a better mousetrap to capture those advertising dollars. No one ever made a regulation or a law that prevented the radio industry from doing what any of those internet companies did. The passenger railroad industry never thought of themselves as being in the transportation business but only the railroad business. That’s why it found itself challenged by other means of people transportation, namely the airlines.

The radio advertising industry was born by entrepreneurs that learned how to create a product that attracted a large listening audience, which in turn enabled them to sell audio advertising to companies wishing to expose their product or service to these consumers.

Unfortunately, we found ourselves challenged by new media competition. Initially, it was television, but transistor portable radios, along with car radios, allowed our business to reinvent its programming and flourish once again.

With the advent of the internet, radio was caught flat-footed.

If that were its only problem.

Radio Stations (2005-2020)

In 2005, America had 18,420 radio signals on the air.

  • 13,660 AM/FM/FM Educational radio stations on the air
  • 3,995 FM translators & boosters
  • 675 Low Power FM stations.

By 2020, those numbers increased to 26,001 radio signals.

  • 15,445 AM/FM/FM Educational radio stations
  • 8,420 FM translators & boosters
  • 2,136 Lower Power FM stations

18,330 vs. 26,001

That’s a 41.8% increase in the number of radio stations.

While radio folks were busy trying to steal radio advertising from the station across the street or consolidating with their former competition, the internet folks were focused on selling more advertising. From 2005 to 2020, the sale of digital advertising grew from $12.5 billion to $139.8 billion. That’s an increase of 118.4%.

But during that same time, radio grew its digital advertising footprint by $0.9 billion.

Quantity vs. Quality

When radio regulation began in America under the Federal Radio Commission (FRC) the decision was made by that regulatory body to focus on the quality of radio programming versus the quantity of radio stations they allowed to broadcast. Only people or companies with the economic capital to operate a radio station in the “public interest, convenience and/or necessity” would be allowed to obtain a radio broadcast license.

I believe you could say that the radio industry’s downfall began when we ceased worrying about quality and went with the more signals we license, the better for radio listeners mantra.

Sydney, Australia

Sydney is a major city in the country of Australia with a population of 5.312 million people. There are 74 radio stations on the air in Sydney.

By comparison, Los Angeles (America’s second largest city) has a population of 3.984 million people and 158 radio stations serving its metro.

In July 2021, radio revenues in Sydney were up 11.3% year-on-year according to Milton Data.

The Benefits of Pruning

Gardeners know that pruning is the act of trimming leaves, branches and other dead matter from plants. It’s by pruning a plant that you improve its overall health.

A beautiful garden is one where the plants have been trained to grow properly, to improve in their health/quality, and even in some cases to restrict their growth. Pruning is a great preventative gardening and lawn care process that protects the environment and increases curb-appeal.

The irony of gardening is, the more fruit and flowers a plant produces, the smaller the yield becomes. Pruning encourages the production of larger fruits and blooms.

Why do I share this with you?

I believe that everything in the world is interconnected. You can’t for a moment think that what makes for a bountiful garden would not also make for a robust radio industry.

Today’s radio industry is so overgrown with signals and other air pollution, that it has impacted its health.

Doing more of the same, and expecting a different result is insane.

It’s time to get out the pruning shears.

Less Is More

I believe that the way to improve the radio industry in America, to have more advertising revenues to support quality local services including news, sports and emergency journalism, along with entertainment by talented live performers, is by reducing the number of radio signals.

AM radio is the logical first place to start.

Elsewhere in the world we are seeing that not only the AM band being sunset but the analog FM band as well. The world has gone digital.

American radio has one final chance to get it right by correcting for past decisions, hurtful to radio broadcasting, in creating a new and robust digital broadcasting service.

17 Comments

Filed under Education, Mentor, Radio, Sales

Tagged as , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

November 11, 2018 · 4:00 am

Is Radio Biting Off More Than It Can Chew?

caravelle radio broadcast stationThere are lots of items in the news these days about what the radio industry should be doing. Streaming, podcasting, smart speaker accessible etc. The one thing I hear little talk about is, improving the core product and focusing on what the listener is seeking.

The Radio Ecosystem

If you think about it, the radio ecosystem, AM/FM radios, have not seen any real changes in decades. Oh, there was the introduction of HD Radio – introduced around the same time as Apple introduced the iPod (R.I.P. 2001-2014), but listeners never really understood the need for it. HD Radio was embraced by commercial broadcasters when they learned they could feed analog FM translators from HD Radio signals and have more FM radio stations in a single marketplace. This was hardly listener focused and actually chained the radio ecosystem to old analog technology.

What IS Radio?

In the beginning, radio was a way to wirelessly communicate with other people using Morse Code on spark gap transmissions. Guglielmo Marconi built a radio empire on this technology.

David Sarnoff, a skilled Morse Code operator and a Marconi employee envisioned a “radio music box” and wrote a memo about developing a commercially marketed radio receiver for use in the home. It wasn’t until after World War I, when Sarnoff proposed the concept again, this time in his new position as general manager of the Radio Corporation of America (RCA), that it would see the light of day.

Sarnoff would demonstrate the power of radio by broadcasting a boxing match between Jack Dempsey and Georges Carpentier. In just three years, RCA sold over $80 million worth of AM radios, and not soon after created the National Broadcasting Company (NBC).

Federal Radio Commission

America’s first attempt at regulating radio transmission was the Radio Act of 1912, that was enacted after the sinking of the Titanic. This law didn’t mention or envision radio broadcasting.

As radio broadcasting began to grow in the 1920s, then Secretary of Commerce Herbert Hoover would begin the process of trying to regulate the limited spectrum that everyone now wanted a piece of.

The Radio Act of 1927 was America’s first real attempt at regulating radio broadcasting. The Federal Radio Commission (FRC) was then formed by this act.

It should be noted that the FRC operated under the philosophy that fewer radio stations, that were well funded and provided live original programs, were better for America than a plethora of radio stations providing mediocre programming. It was an idea that the major radio receiver companies championed.

Federal Communications Commission

In 1934, the Congress took another attempt at regulating broadcasting (radio & TV) as well as all the other forms of communication that now existed. The Communications Act of 1934 created a new regulatory body called the Federal Communications Commission (FCC). By 1934, radio broadcasting had evolved into a highly profitable business. Broadcast educator, Fritz Messere, writes: “Many of the most powerful broadcasting stations, designated as ‘clear channels’ were licensed to the large broadcasting or radio manufacturing companies, and the Federal Radio Commission’s adoption of a rigid allotment scheme, under General Order 40, solidified the interests of the large Broadcasters.”

The biggest and most well-funded broadcasters have been favored since the very beginning. What kept things in check until 1996 was the limit on the number of AM, FM and TV stations a single company could own.

Telcom Act of 1996

Those limits would evaporate with President Clinton’s signing of the Telcom Act of 1996. Radio, as America had known it, would be over.

Now, for the most part, a single owner could own as many radio stations as their pocketbook could afford. Lowry Mays and Red McCombs, founders of Clear Channel Communications, would grow their portfolio of radio stations to over 1200 from the 43 radio stations they owned before the act was signed.

In 2003, Mays testified before the United States Senate that the deregulation of the telecommunications industry had not hurt the public. However, in an interview that same year with Fortune Magazine, he remarked, “We’re not in the business of providing news and information. We’re not in the business of providing well-researched music. We’re simply in the business of selling our customers products.” (Mckibben, Bill (2007). Deep Economy. San Francisco: Ignatius Press. p. 132.)

Radio Zoning The FCC is now considering whether to further loosen up the ownership limits of radio and TV stations in America. FCC Attorney John Garziglia recently wrote:

“If radio stations could be erected like fast-food establishments and grocery stores, with no numerical limits imposed other than a businessperson’s risk tolerance, it would be difficult to argue for FCC-imposed ownership limits on radio. Indeed, a regulatory agency enacting numerical limitations on restaurants and grocery stores would likely not pass legal muster.

But there are widely-enacted municipal limitations on just about every type of local business. The limitations are called “zoning” – the permitting or prohibiting of certain uses in certain areas to protect the character of the community.

The FCC’s radio ownership rules can be thought of as a kind of radio zoning. In the same way as land-use zoning protects a community’s character, the FCC’s ownership rules permit or prohibit certain radio station combinations protecting the amorphous concept of the public interest.

With land-use zoning, communities maintain a distinct character, livability, aesthetic, and economic success by not bowing exclusively to the profit motive of land developers. Allowing several or fewer owners to own virtually all of the radio stations in the country would doom the specialness of our radio industry.”

 

I think John makes some excellent points and I would encourage you to read his complete article HERE.

Biting Off More…

Radio operators today can’t properly staff and program the stations they already own. What makes them think that will change if they own even more of them? Most radio stations are nothing more than a “radio music box” run off a computer hard drive, an OTA (over-the-air) Pandora or Spotify.

Former Clear Channel CEO, John Hogan, introduced the “Less Is More” concept when I worked for the company. While it actually introduced more on-air clutter, not less, the idea was neither new or wrong.

If owning more radio stations was the answer in 1996, then why in 2018 are we worse off than we were then?

Why was Jerry Lee able to own a single station in Philadelphia and dominate that radio market?

Why are many locally owned and operated radio stations some of the healthiest and most revered in America today?

Radio not only needs zoning on the number of radio stations a single owner can control in a market, but the total number of radio station on-the-air in a market. And it needs radio stations that are neglected to be condemned like property owners who let their land go to seed.

The FRC wasn’t perfect, but the concept of “less is more” served America well for many decades. Fewer radio stations that provided high quality, live programming, operating in the ‘public interest, convenience and necessity’ and by virtue of that diversity of ownership, provided diversity of voice and opinions, as well as healthy competition.

 

19 Comments

Filed under Education, Mentor, Radio, Sales

Tagged as , , , , , , , , , , , , , , , , , , , , , , ,

October 29, 2017 · 3:00 am

Live & Local ?

Stuck in a Time WarpI’ve been attending a lot of radio meetings these past years and one refrain I’ve heard over and over and over and over is that the power of radio is it’s “live & local.”

This week, the FCC voted along party lines 3 to 2 to eliminate the Main Studio Rule.

1934 Congress Establishes the FCC

The first regulatory body to oversee radio was the Federal Radio Commission (FRC) that was established by the Radio Act of 1927. The FRC was created to, among other things, insure that the public airwaves of America were used in the “public interest, convenience and/or necessity.” The FRC was given regulatory powers for licensing all radio stations and insuring the airwaves were assigned to broadcasters capable of providing quality broadcasts. The amateurs were assigned to another piece of the broadcast spectrum which today is known as Amateur Radio Service or Ham Operators.

Amateur Radio like AM/FM radio is regulated by the Federal Communications Commission which was established by Congress with the Communications Act of 1934.

Main Studio Rule

So, this week when the FCC voted to end the Main Studio Rule, what did that mean according to the FCC’s regulations that have been in place in 1934 (and per Gregg Skall) updated in 1988 to make them clearer? FCC attorney Skall wrote back in 1991 in his “Main Studio Rule and Staffing” memo:

The main studio rule as clarified in 1988 requires a station to maintain a main studio within its principal community contour “which has the capability adequately to meet its function…of serving the needs and interests of the residents of the station’s community of license.” That rule has now been further revised to allow a main studio to be located either within 25 miles from its community of license reference coordinates, or within the principal community contours of any station, of any service, licensed to its community of license. (See memo, Revised Main Studio and Public File Rules). Jones Eastern requires the station to maintain a “meaningful management and staff presence” at the main studio on a full-time basis during regular business hours.

You can read the full memo here.

LIVE RADIO

Since the introduction of automation systems, syndication, satellite delivery and computer voice tracking, the LIVE aspect of radio has been on the wane. Even in the #1 radio market in America, New York City, stations may or may not have a live operator behind the microphone when you’re tuned in.

When I was starting out in radio, we used to have to announce whether a program was live or pre-recorded so the listeners wouldn’t be deceived about the broadcast. In the early days of radio, virtually all radio was live and so it was the exception for something to have been recorded.

Today, it’s more likely what you are listening to is not live but syndicated, voice-tracked and pre-recorded.

LOCAL RADIO

With the Main Studio Rule, the goal was at least there would be a live person at the station and the studio would be in the community the licensee was licensed to serve.

Lance Venta writing on RadioInsight wrote “But what will it (elimination of the Main Studio Rule) mean in the short term? Probably not a lot. In the long term, be prepared for a much leaner broadcast facility.” You can read Lance’s entire article “The Radio Station of the Future…Today!” here.

The National Association of Broadcasters has been lobbying for the elimination of the Main Studio Rule, and its executive VP of communications Dennis Wharton said “We’re confident that cost savings realized from ending the main studio rule will be reinvested by broadcasters in better programming and modernized equipment to better serve our local communities.”

Brick & Mortar Presence

FCC attorney Scott R. Flick said that the Main Studio Rule was really a government mandate for radio to have a brick-and-mortar presence in an internet age. “Its existence hindered stations from evolving and adapting to the rapidly changing business strategies of their many non-broadcast competitors.”

It’s ironic that the biggest online retailer, Amazon, is now in the process of acquiring a brick-and-mortar presence as the radio industry appears to be moving in the opposite direction.

Public Safety

When a broadcaster doesn’t have a studio in the local community it serves, it delivers its programming through the internet, satellites, microwaves or wired lines. Broadcasters have been quick to point out how these forms of communication are first to go down in natural disasters.

What seems to be missing in this conversation, is a Black Swan event. Will radio be ready for a Black Swan?

Today’s Big Regulatory Difference

The big difference I see today for radio versus its toddler years is how it is regulated. The Radio Act of 1927 provided the foundation for all broadcast regulation right up until today. While more Acts were passed and made law over the years, the basics remain much the same as when they were first made law.

Some of the key provisions in the original Act that we’ve deviated from today are:

  • Limiting the number of broadcasters to foster higher quality radio broadcasts versus having more stations of poor or mediocre qualities
  • Radio broadcasters would operate in the “public interest, convenience and necessity”
  • Radio would be a regulated medium to assure high quality and operating in the public interest
  • Radio would be commercial and privately owned (a condition that made radio broadcasting in the USA different from every other country in the world)

Those who complain that radio isn’t like it used to be only need look at how broadcast regulations have been changed over the past century; the biggest change being the Telcom Act of 1996.

Make Radio LiVE & LOCAL Again

On May 24, 2004, the Federal Communications Commission (FCC) held a “Broadcast Localism Hearing” in Rapid City, South Dakota.  The president, general manager and co-owner of KLQP-FM licensed to Madison, Minnesota (population 1,767) Maynard Meyer addressed the commission.  He told them (I’ve edited his comments. The full text can be found here. )

“Localism in radio is not dead, but it is in dire need of resuscitation in many areas.  I have been involved in the radio business in announcing, sales, engineering and management for about 36 years, all of my experience is in communities of 5,000 people or less.  We personally live in the communities we serve so we know the ‘issues,’ we work to address them in our programming and have been doing so for the past 21 years.“

“A few years ago, many stations operated this way, but much of that has changed for a variety of reasons.  I think the beginning of the end of local broadcast service started in the 1980s when the Federal Communications Commission approved Docket 80-90.”

Mr. Meyer went on to explain to the FCC how many communities that “on paper” had a local radio station actually found that the transmitter was being fed from another location tens of miles away.  Mr. Meyer went on to say:

“I don’t think this is the best way to promote local radio service.  From what I have seen through my personal experience, as soon as a hometown studio is closed and relocated, the local service is relocated as well.”

What do you think?

 

23 Comments

Filed under Education, Mentor, Radio, Sales

Tagged as , , , , , , , , , , , , , , ,

April 2, 2017 · 4:00 am

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.

50 Comments

Filed under Education, Mentor, Radio, Sales

Tagged as , , , , , , , , , , , , , , , , , , ,

January 22, 2017 · 4:00 am

You Can’t Have Too Much Fun

77There are some things in life you can’t have too much of.

You can’t have too much fun.

You can’t have too much wisdom.

You can’t have too much love.

Too Many College Bowl Games

My university invested a ton of money to upgrade to Conference USA. We won our bowl game in Florida this year too. Did you watch our team win? Probably not. Turns out attendance at the plethora of Florida college bowl games is down.

“When the Outback Bowl in Tampa announced an attendance of 51,119 on Monday who watched Florida dismantle Iowa 30-3, it became the sixth college bowl game among eight in Florida to have a decline in attendance from the previous year,” reports the Florida Times-Union.

NFL TV Viewership Decline

Rolling Stone magazine wrote that one of the big stories of 2016 was the decline in viewership of the NFL. How big was the decline? Down 8%.

Prime Time games were down the most with an audience erosion of 10 to 12%.

Commuter Traffic

The Federal Highway Administration says that by 2025 passenger miles traveled will have increased 72%. Why? Because that same agency says our population will have increased by 26% by that same year.

Tell me the road you commute to and from work isn’t already over congested.

Why is Country Music not the Top Radio Format in Nashville?

Nielsen Audio did a research study in 2014 and said the top radio format in America was country music. Ironically, the top radio station in Music City aka Nashville was NOT a country station. And it’s still not.

The latest ratings for Nashville show the highest rated country music station is ranked #7. The following radio formats are all ahead of that country station: Adult Contemporary, CHR, Sports, Urban AC, Talk and Variety Hits.

However, if you combine all of the audience of the many country format radio stations in Nashville, you will have a higher share of audience than the number one radio station commands.

Less Is More

So while you cannot have too much fun, wisdom, or love, you can have too many choices of products and services. Great for consumers’ maybe, but not for business owner/operators. Ask those who are dealing with the increase in college bowl games, NFL games, traffic congestion or playing country music in Nashville.

Radio is experiencing its own issues with supply versus demand.

The FCC will open up two windows for new translators this year. That’s after 750 new FM translators were signed on in 2016. Currently there are 19,778 FM signals beating the airwaves throughout America. Compare that to 4,669 AM radio stations currently on the air.

At the point in America’s history when the same number of AM radio stations equaled the number of FM radio stations on the air in America (end of 1992), 75% of all radio listening was to FM radio.

The Psychological Aspects of Overpopulation

This brings me back to my own undergraduate college days and psychology class. I remember learning about an experiment about putting too many rats into a confined space.

“As the number of rats rose above a certain level, the effects became rather dramatic,” wrote Albert J. M. Wessendorp, Psychologist-Psychotherapist. The rats displays behavioral disturbances, death rates rose, male rats began to show deviant sexual behavior and more. You can read more here.

Whales are known to commit collective suicide in order to control overpopulation.

What about you and me? How are we impacted by overpopulation (or over choice)?

The research says even human population growth is subject to limits. If we fail in controlling things ourselves, mother nature will begin to do it for us. (Think: Climate Change)

Radio Station Overpopulation

I love the radio business.

I share these thoughts because I’m concerned that the current overpopulation of the FM band is not taking into consideration the laws of physics or the impact of anything that gets overpopulated.

The FRC when it was formed (Federal agency that pre-dates our current FCC) it made it its mission to see America have quality radio stations or a large quantity of mediocre ones. We now look back on this period of time as “The Golden Age of Radio.”

Wessendorp writes that Maslow taught us that “People are only stirred into action when they feel their basic needs to be threatened.”

Have you looked at the revenue forecasts for radio for 2017? Are you feeling threatened yet?

What You Can Do

Next week I will continue with this topic and offer up what I believe is a solution to radio’s problem in an overpopulated entertainment world.

13 Comments

Filed under Education, Mentor, Radio, Sales, Uncategorized

Tagged as , , , , , , , , , , , , ,

December 4, 2016 · 4:00 am

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.

8 Comments

Filed under Education, Mentor, Radio, Sales, Uncategorized

Tagged as , , , , , , , , ,

August 7, 2016 · 4:00 am

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.

37 Comments

Filed under Education, Mentor, Radio, Sales, Uncategorized

Tagged as , , , , , , , , , , , , , , , , , , , , , , , , ,

March 13, 2016 · 4:00 am

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.

35 Comments

Filed under Education, Mentor, Radio, Sales, Uncategorized

Tagged as , , , , , , , , , , , , , ,