Local radio broadcasters differentiate from big groups


Susan Patrick of Legend Communications and Rick Peters of Bluewater Broadcasting defended themselves and most of their radio peers as being local businesses committed to serving their communities. They are undergoing financial distress because of the recession, not over-leveraging. And they firmly stated that they will not be able to operate with new restrictions based on reining in the largest consolidators.

Legend has stations mainly in Wyoming and other locations. Bluewater operates a station cluster in Montgomery AL – an AM, three FMs, and FM translator and an LMA’d station.

Peters said his operation is completely local, and that it’s the only radio operation with news employees. He said his competitors who lacked a local news presence were Clear Channel and Cumulus.

He said it was critical that broadcasters operate in the public interest, and noted that he seldom hears words public interest, convenience and necessity – usually companies are tossing around financial jargon.

While openly critical of big national companies, he praised Clear Channel’s performance in New Orleans at the height of the Katrina crisis.

What he doesn’t need, he said, is other industries picking his pocket, namely the recording industry getting performance royalties, and he doesn’t need the FCC telling him to how to be local. Specifically, he wants no part of a citizens advisory board or a separate studio for each station rule, two proposals floated in the FCC’s plans to encourage localism.

Patrick noted that small markets owners were not as hurt by acquisition leveraging as their large market brethren, but the recession is getting them anyway, causing many to bump into loan covenants despite a conservative debt history.

Brian McNeill of financial backer Alta Communications said radio needed to be protected from royalty payments, and suggested revamping attribution rules, and said the FCC could provide a major shot in the arm by trying to help get an FM chip built into cell phones.

Peters came back again and again to the theme of serving the local community, taking pride in it. He said that the concept is lost when you drive every possible penny to the bottom line. Patrick agreed that smart and committed broadcasters serve their first customer – their audience – and advertisers follow.

Both Peters and Patrick agreed that they need to be able to decide locally how best to serve the audience. It cannot be done by the feds in Washington, nor by a distant consolidator who fails to grant autonomy to a local staff. (Bonneville was offered as an example of a large radio group that gets localism right.)

McNeill noted that free cash could go to a number of places; it could go to audience in the form of improved service or programming, or it could go to shareholders. He said most companies try to strike a balance on that count, and noted that at the present time, almost nothing is going to shareholders or the audience – it’s all going to debt service.