Anyone who has been in the radio broadcast industry for more than a decade has witnessed substantial changes. If you have been working in radio for the past 20 years, you would not have ever guessed how the industry has changed.
The casino industry made changes as well when they began going public. Consolidation and changing the way they reported revenues and expenses by stronger accounting standards required by Wall Street caused other changes as well.
Radio went through a similar situation. Deregulation taking what had been approximately 10,000 AM and FM stations that were owned by some 6,000 or 7,000 owners now sit with a very small fraction of that operating America’s radio stations.
Casinos changed to having corporate accountants that had real power in how the operations would change. It was before this time when you could go to Las Vegas and have a buffet for $1.99 or see a big star in the showroom and the casino would sell it out but still lose thousands of dollars on it because it was a considered a lost leader. The accountants told the casino management, you no longer can loose any money in any department. It all has to pay for its self and make a profit.
In radio a very similar thing has happened. Technology has made it possible to have one person do a show on 10 12 or more stations at the same time. Cuts in every department have taken place from engineering, sales, marketing, research, and programming.
The consequences maybe better returns on investment for stock holders and it also maybe that the radio industry may loose to competing products because programming is more like a jute box than it ever was. If the people calling the shots are accountants and not broadcasters as it is with most of the publicly traded or very large companies, is there a Broadcaster voice somewhere speaking about the long term effects of this. Long term is just the next 5 to10 years from now and what the impact from competing media is going to be?
Stations were trading at 12 to 14 times cash flow with tine infusion of Wall Street money. Now stations have all the strings Wall Street attaches and are trading at the same levels, 6 to 8 times cash flow that they were before when it was privately owned and operated.
Our radio listening audience has gotten smaller, there is so much more competition. The real effects of that won’t be seen for a few more years but its coming and coming fast. The current 12 to 24 demographic is consumed by the competing products of radio and radio better figure out how to compete. I don’t think the accountants will.
Radio has shrunk its operating costs down to levels that have made it a great target for competing media to come in and take the audience and then the dollars away. Radio companies look across the street and see their radio competitors doing the same thing and figure they are still competitive because the guy next door has the same amount to work with.
There are too many vehicles to deliver music to our population today and there will be many more very soon. What is going to be the unique selling strategy for radio companies to keep their listeners coming back?
(source: Scott Seidenstricker, President ScottComm, LLC, Bob 93.7 FM, Reno, Nevada)
