Broadcast, Cable, the Internet and Beyond Chapter 4

Quick Facts

Number of commercial AM stations in 2002: 4,825 Number of commercial FM stations in 2002: 2,140 Number of country radio stations: 2,134 Median salary of radio news anchor: $27,500 (2001) Average number of radio stations in most U.S. markets:

25 Number of listeners in New York City: 17.8 million Number of stations playing a polka format: 8

Broadcast, Cable, the Internet and Beyond Chapter 4

Radio’s three C’s indicate the nature of the business

Competition Consolidation Control

Broadcast, Cable, the Internet and Beyond Chapter 4

Competition

There are more radio stations than any other media 5 times more radio than newspapers 10 times more radio than television

There’s competition for advertising revenue within the radio market

Broadcast, Cable, the Internet and Beyond Chapter 4

Advertising Revenue by Medium (2001)

Newspaper21%

Magazines6%

Broadcast TV19%

Cable TV8%

Radio9%

Internet 3%

Other Media12%

Direct Mail22%

Newspaper

Magazines

Broadcast TV

Cable TV

Radio

Internet

Other Media

Direct Mail

Broadcast, Cable, the Internet and Beyond Chapter 4

The Radio Station Universe

Out of the 13,000 stations 37% are commercial AM stations 47% are commercial FM stations 16% are noncommercial FM stations

Radio is a locally based medium AMs in local markets rely on local advertising FMs frequently dominate in larger cities, combination of national

spot and local advertising

Broadcast, Cable, the Internet and Beyond Chapter 4

Share of the Audience

FM stations - 80% of all radio listeningThe most profitable of all stations

Big FM stations in major cities AM news/talk stations in major cities

Too early to talk about the effect of satellite radio

Broadcast, Cable, the Internet and Beyond Chapter 4

Consolidation

Increasingly competitive nature of radio reflects the companies now involved in the medium

1990s - NAB lobbied to deregulate radio Mom and Pop stations have largely disappeared Groups ownership restrictions were lifted Telecommunications Act of 1996 shifted the radio

landscape

Broadcast, Cable, the Internet and Beyond Chapter 4

The Telecommunications Act of 1996

Relaxed ownership standards No limit to total number of stations a group can own

Set as a maximum that group owners could own up to 8 stations in one marketplace

Supergroups of station owners formed

Broadcast, Cable, the Internet and Beyond Chapter 4

America’s 10 largest radio group owners Rank GroupOwner Stations 1 Clear Channel Communications 1240 2 Cumulus Broadcasting Inc. 257 3 Citadel Communications Corp 210 4 Infinity Broadcasting 185 5 Entercom 97 6 Cox Radio Inc. 86 7 Salem Communications Corp. 72 8 Entravision Communications Co. 68 9 ABC Radio Inc. 53 10 NextMedia Group 51

Sources:FCC Review 2001/ Broadcasting and Cable 9-2-02

Broadcast, Cable, the Internet and Beyond Chapter 4

TABLE 4.2 Largest Radio Group Owners by Revenue Rank Group Revenue ($000) % total revenue 1 Clear Channel $ 3,388,265 26.2% 2 Infinity Broadcasting 2,354,350 18.2% 3 Cox Radio Inc. 455,300 3.5% 4 ABC Radio Inc. 435,100 3.4%

5 Entercom 429,250 3.3% 6 Citadel. 350,100 2.7% Source: FCC Review 2001

Broadcast, Cable, the Internet and Beyond Chapter 4

Duopoly and LMAs (leased market agreements)

FCC studies show a trend in consolidation

Top 50 markets, Clear Channel controls about 36% of all revenue

The second largest firm in revenue controls 25% of all station revenue

Four largest groups control 85% of revenues in largest

markets

Broadcast, Cable, the Internet and Beyond Chapter 4

Ownership Consolidation - pros and cons

Advocates of consolidation maintain that group ownership allows for economies of scale (more efficient programming/ better news coverage).

Critics of consolidation point to sameness in formats from market to market, increasing use of voice-tracking by group owners

Broadcast, Cable, the Internet and Beyond Chapter 4

Control

Radio stations formats are very structuredFormats and music playlists tend to be very

tightly controlled by station managementRigorous consumer research is done by group

owners

Broadcast, Cable, the Internet and Beyond Chapter 4

Radio Programming Today

Most markets in the U.S. receive at least 25 radio signals

Most stations cater to ‘target audiences’ a specific demographic segment (as opposed to a

broad audience)

Citiy (geographical area) where stations are located are called ‘market’

Broadcast, Cable, the Internet and Beyond Chapter 4

Radio management targets audience by:

Age Gender Music preference Lifestyles

Broadcast, Cable, the Internet and Beyond Chapter 4

The program strategy is known as the radio station’s ‘format’

Successful format consistently delivers its target audience to specific advertisers

Target Audience attributes includeaggregate size lifestyle preferencegender income level habits

Broadcast, Cable, the Internet and Beyond Chapter 4

Top Formats AM FM TOTAL Country 643 1491 2134 News/Talk 1141 621 1762 Oldies 308 508 816 Religious 347 387 734 Adult Contemporary 116 592 708 Spanish 386 309 695 Contemporary Chris. 116 564 680 Top 40 8 496 504

Broadcast, Cable, the Internet and Beyond Chapter 4

Some Popular Formats

Country - about 1 in 6 stations play this format Contemporary - concentrates on current hits Traditional - emphasize country western standards

News Talk and Sports Most popular AM format Helped by nationally syndicated personalities such as Rush Limbaugh

Adult Contemporary and Oldies Many types of music fall into these categories Tend to attract the audience most in demand by advertisers

Broadcast, Cable, the Internet and Beyond Chapter 4

Some Popular Formats

Contemporary Hit Radio Emphasis is on most current hit music Music tends to be uptempo DJs tend to be assertive and loud

Popular Ethnic Formats Hispanic Radio Black / Urban Contemporary

Broadcast, Cable, the Internet and Beyond Chapter 4

Noncommercial Radio

About 2100 radio stations

Three types of noncommercial radio Community stations - licensed to civic groups College radio - sponsored by colleges and

communication departments Public radio - CPB qualified radio stations

Broadcast, Cable, the Internet and Beyond Chapter 4

Satellite Radio Today

Two national satellite radio broadcasters XM Satellite radio Sirius Satellite radio

Both offer 100 channels of programming Both are subscription services

Broadcast, Cable, the Internet and Beyond Chapter 4

Radio Station Organization

Radio Station Departments Operations - (a.k.a. traffic) - responsible for placing

advertising on the station schedule Program Department - overall responsibility for the

station’s sound Sales - responsible for sale of commercial time Engineering - keeps the station on-the-air

Broadcast, Cable, the Internet and Beyond Chapter 4