Small market radio is sizzling!


There was no gloom and doom Friday at the "Small market frenzy, boom or bust" panel at the NAB Radio Show. Small market operators are excited about growing revenues from lots of local accounts. "We have the ability to be able to control the business," said Ira Rosenblatt of Route 81 Radio, explaining the attraction of small market radio over big markets today. Rather than worrying about ratings, the focus is on showing local business owners that the local radio station can drive customers to them. Dean Goodman of GoodRadio.TV, who’d previously run some very large stations, noted that the number of active accounts at a small market station is dramatically higher than for a large market station. "That’s why they are able to grow revenues," he said. In his view, the spots from local merchants are not regarded as interruptions by listeners, but rather part of the content. "This is an unbelievable opportunity," Goodman said.

That opportunity is not going unnoticed. "Small market radio is the new thing," observed bond analyst Bishop Cheen from Wachovia. He is predicting the return of seller paper as a way to bridge the contraction of credit in getting small market deals done. But he also sees big money sniffing around the small markets – money that would be able to fund lots of small market purchases by a single company. That sort of consolidation is not an attractive prospect to Peter Ottmar of Dover Capital. "It is the worst thing for radio. What this industry needs to get back on its feet is de-consolidation," he exclaimed. He’s seen the effects of consolidation in larger markets. "When you dominate a market, you get lazy," Ottmar said. He got no argument from Mary Quass of NRG Media, although she could certainly qualify as a consolidator. "Over the past five years we’ve all become wimps. We won’t take risks," she complained. And don’t look for the big guys to have big ideas. Quass says the new ideas for radio are probably going to come from the small markets.

RBR observation: This was certainly a different atmosphere from when the big market group operators were talking last week. The kind of fun radio that attracted most of us to the business still exists in small markets. The one big complaint heard at the small market session was about people. It is just so hard to hire, train and motivate good sales people in small markets. Not that it is easy in big markets, either, but it seems to be even more challenging in markets where sales are made face-to-face with business owners, with no negotiation about CPMs or ratings-based pitches. No one had an easy solution. It just comes down to finding good managers who can identify potential and handle training – and take some chances.