Exporting Radio Stations to Other Markets

CBS Radio has announced that it will be offering its very successful WFAN sports radio station in New York and KROQ’s rock format serving Los Angeles to other markets.

Great idea?

Here’s the bad news.

CBS is locating this “out of market experience” on HD side channels. Channels virtually no one can hear because HD radio only exists in the minds of iBiquity and a handful of radio executives deep in denial.

This would be like Apple inventing the iPod and shipping them on the next rocket to the moon where no one lives.

Great idea.

Bad execution.

And this is indicative of what consolidated radio is doing these days on the innovation front – networking, voice tracking and repurposing. CBS is one of the better consolidators according to this ongoing poll, but exporting successful radio stations to a place where few, if anyone, can hear them is beyond comprehension.

The precedent is there.

CBS previously sent WFAN to Tampa, West Palm Beach and Orlando. The argument could be convincingly made that a lot of transplanted New Yorkers (wintering, vacationing or retiring) inhabit Florida so they could really appreciate their hometown radio station.

But this is worse than program syndication.

At least when a show or format is syndicated elsewhere it presumably goes on another equal radio facility with the chance to attract listeners.

Radio groups have done virtually nothing in the innovation space.

No new formats.

No investments in new talent.

No promotion.

No key programmers.

So much for creating local radio.

Radio is in the distribution business and it doesn’t seem to care if what it distributes ever really gets an audience. Otherwise, they would see that HD side channels are the Siberia of broadcast radio.

You may remember before the recession what actually constituted Clear Channel’s digital efforts amounted to a format lab.

These formats were developed for minor league purposes just in case they happened to show enough mojo that they could make it to the big time radio spectrum. I like the idea of a minor league, but even in the world of sports, minor leaguers have a place to aspire to and their actions can be seen by minor league fans.

The bigger issue is that as long as radio is playing under the rules of bankers and public markets, they will not be able to innovate. That’s what happens in the general marketplace as well. Why do you think big companies are always spending billions to acquire that which they could never have developed themselves in the first place?

Public companies are bottom line driven. They live (and die) from quarter to quarter. That’s why you’ll never hear Cumulus CEO Lew Dickey go to his shareholders and say, “we’re going to invest $100 million of your money in developing a digital platform for the future”.

Public markets are not patient.

Back to the out of market experience that CBS is expanding.

If you take that – their HD initiative and add on all their Internet operations, you still don’t have a growth business that gets investors excited.

Jerry Lee owns 100% of WBEB in Philadelphia, the top station in the market. Almost a year ago Lee pulled the plug on the terrestrial stream of his popular station. He did it in protest against Sound Exchange’s policy of choking webcasters with royalty fees while the stations are actually doing more to help the artists by playing their music.

Hardly anyone complained about this number one station ending its webcasting. Lee never sold separate streaming ads online – not that this makes anyone significant money. All these months later, Lee is still number one. Still rich. And still right.

Where he is wrong is that Lee thinks that listeners will turn their iPhones and cellular devices into FM stations and listen to B101. Study human behavior and you’ll see a cell phone is not a radio in the hands of today's consumers.

Already since the much ballyhooed debut of the iPod Nano with FM, absolutely nothing has happened to improve radio’s availability to mobile phone users.

Now, the industry has it in their heads that if they can only get Apple CEO Steve Jobs to unlock the FM capability of the iPhone, happy days will be here again.

Apple made the Nano an FM radio.

Nothing happened.

If the iPhone gets FM capability nothing will happen – again.

Exporting radio stations to HD Siberia, developing new formats without a chance that they one day make the major leagues and hanging their last hope on getting phone users to become radio listeners is thinking that severely handicaps what radio can do extremely well.

Create content.

Yes, content for cell phones that are not streaming stations.

New social networking sites, using webcasting for purposes other than carrying already existing terrestrial programming and new WiFi-related products that will be auto ready when the next generation of WiFi winds up in cars (GM is adding it as an option next year).

You don’t come up with all this innovation by laying people off, doing repeater radio and fantasizing about what you want iPhone users to do on their mobile devices.

The answer is – innovate.

Radio is great at innovating -- or was.

It’s not accidental that innovation slowed down and stopped as duopoly was allowed and eventually consolidation. That is, the more stations owners were allowed to have, the fewer innovative risks they took.

Accordingly, it is not accidental that as long as local radio remains securely under the control of public companies and heavy-handed investment bankers, the only place you’ll find innovation is at a start-up company.

That's where futures are not defined as a standardized, transferable, exchange-traded contract that requires delivery of a commodity, bond, currency, or stock index, at a specified price, on a specified future date, but rather, growth businesses actively in development by radio people who know what they are doing.

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