One Radio Station Per Market

Every time I write about how better off the radio industry would have been without consolidation, I get a barrage of email telling me a) you’re living in the past; b) you’re out of your mind; c) how do you expect to compete with new media or d) you hate Clear Channel.

It has nothing to do with hating Clear Channel. As the old phrase goes, some of my best radio friends work for Clear Channel. But the people who run that company now have a proven record of not being ready for prime time.

How do you assemble over 1,000 radio stations and establish an initial value of over $90 a share and then drive the value all the way down to $26.92 (yesterday).

It’s more than that bad Internet, that bad economy, that bad iPod.

It’s about bad management at the top.

And it’s not just Clear Channel. They are the most vulnerable to criticism because they own the most stations. Most all of the consolidated radio companies are doing no better. In fact, some are doing worse.

Clear Channel is getting what it deserves no question about it – a monumental lawsuit that it and Lee and Bain have filed against the banks that are balking at the terms of their $29.5 billion buyout. Who can blame them? It’s not easy being an investment bank these days. That’s another group of financial geniuses, but don’t get me started.

It's awfully strange to me that Lee and Bain haven't tried to negotiate a better more realistic price for Clear Channel. My conspiracy theory is that Lee and Bain have a buyer waiting so they can flip some CC properties -- that buyer being Sam Zell.

And it is fitting that the Clear Channel that started its consolidated life in litigation is ending it by trying to sue the banks into marriage.

But Clear Channel employees deserve better.

These managers, program directors, sales managers, account execs, personalities and support personnel have been trying to run their company’s stations professionally and profitably during all the drama its owners and top management have supplied over the years.

That’s why I want to mention the virtues of owning one radio station per market.

I know. I know. It doesn’t work, right? You have to have critical mass to compete.

But the record shows that not one of the radio aggregators is running a successful, profitable, valuable or futuristic company. So much for conventional wisdom.

Radio is a dying business.

Don’t take it on my word.

Look at all the indicators. Listening continues to erode. The next generation shuns it. Radio advertising dollars continue to be diverted to the Internet. Shareholder value of public companies is pitiful. There is no workable plan to win the hearts and minds of the next generation on cell phones, mobile devices or the Internet and the consolidators have had the best part of ten years to think about it.

So work with me here.

I’m not saying that owners should be strictly prohibited from owning more than one station.

How about this: you can’t own a second station until you can prove you can operate one profitably, in the public interest, find an audience, return a profit (or at least break even) and have a plan to integrate your brand into new media.

I’m only half kidding.

There are success stories.

I often mention Jerry Lee who owns only WBEB-FM, Philadelphia and makes tons of money. He spends a fortune. Buys huge TV ads schedules (always has). Lee (my former boss a long time ago) once told me that he looks for ways to spend money on things that can help his station. How about that? Hear that one from a station owner lately?

But even Lee tried to expand once. He had the interest and money to buy the legendary WFIL-AM in Philadelphia long after its prime and he failed with it. But Lee was smart enough to get out and concentrate on his cash cow 101.1 FM.

Lee is not perfect. I can prove it. He advocates HD radio and that is the black hole of broadcasting.

But his station shows what happens when you do something well year after year. He defies the economy. Defies the wisdom of consolidation (“more is more”), makes ungodly profits for its owner. Has significant money to invest in staff, research and promotion.

I’m on this kick because Bonneville, another radio company I respect, just purchased KRBV (V-100) , Los Angeles from Radio One. That would make Bonneville a one station owner in the second largest market in the nation. It purchased the single property after having left LA as an owner years ago. Inside Radio quotes an unidentified longtime appraiser as saying the acquisition was at a 40% discount.

I’m sure a lot of naysayers think Bonneville’s Bruce Reese is nuts. I’m not one of them.

In fact, Emmis owns a great property in LA – Power 106. They also own a not so great property -- an FM station that used to be country and now is called “Movin’”. Wouldn’t it be better investing its time and effort into keeping its moneymaking brand number one?

Some may argue that what I’m in effect saying is that radio people can’t walk and chew gum at the same time.


Radio people have to get over a few things before they even have a chance to participate in the future of new media.

You don’t need critical mass to be a powerhouse. Ask Jerry Lee.

One radio brand is enough if …

If you own fifty or 100 lifestyle podcasts (all sponsored).

If you run some different Internet streams that are relevant and marketable to your terrestrial radio brand.

If you have a mobile strategy.

And if your brand has earned a place in the hearts and minds of your audience.

As long as the radio industry believes “less is more” on the air and “more is more” when adding up the number of radio stations it owns, it cannot compete in today’s media market.

No need to own all those stations when you can't operate all of them profitably and effectively.

Own one brand.

Then profit from hundreds of new age ways to create and market content for that brand.

The alternative is to continue to watch audience and advertising share shrink while another, better more economically manageable strategy eludes an industry hijacked by a handful of
Gordon Gekkos.

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