Radio in the U.S.Radio in the U.S.

Jon HerbertJon Herbert

U.S. Radio TodayU.S. Radio Today

How Many Radios?How Many Radios?ListeningListeningProvidersProvidersRadio: A Mass MediumRadio: A Mass Mediumwww.arbitron.comwww.arbitron.com

Core CharacteristicsCore CharacteristicsA Private Sector IndustryA Private Sector IndustryFunded by AdvertisingFunded by AdvertisingNetworksNetworksProgramming AnnoyingProgramming AnnoyingFederal RegulationFederal Regulation

A Short History: 1A Short History: 1 Invention and Invention and

GrowthGrowth Hertz, Marconi…Hertz, Marconi… Frank Conrad & Frank Conrad &

KDKA, 1920KDKA, 1920

A Short History: 2A Short History: 2 The Rise of AdvertisingThe Rise of Advertising

– A.T. & T, & the Queensboro Realty A.T. & T, & the Queensboro Realty CompanyCompany

NetworksNetworks

–NBC, CBS, ABCNBC, CBS, ABC

– 97% Affiliation by 194797% Affiliation by 1947 Federal RegulationFederal Regulation

Federal RegulationFederal Regulation1912 Radio Act1912 Radio Act1927: Radio Act1927: Radio Act

–Federal Radio Commission Federal Radio Commission 1934: Communications Act1934: Communications Act

–Federal Communications Federal Communications CommissionCommission

Federal RegulationFederal RegulationA. Protecting Localism: RegulationA. Protecting Localism: Regulation   1. Must Survey Listeners on Needs of 1. Must Survey Listeners on Needs of

CommunityCommunity 2. Must Design Programmes to Respond to 2. Must Design Programmes to Respond to

NeedsNeeds   3. Owners not allowed to sell within three years3. Owners not allowed to sell within three years 4. Caps on Station Ownership by Companies 4. Caps on Station Ownership by Companies Stations licensed to serve the public interest of Stations licensed to serve the public interest of

those who can hear their signals.those who can hear their signals. A Culture of LocalismA Culture of Localism

A Short History: 3A Short History: 3 Boom TimesBoom Times ProgrammingProgramming A First Status QuoA First Status Quo

The 1st Crisis of U.S. RadioThe 1st Crisis of U.S. Radio

World War IIWorld War II The Rise of TVThe Rise of TV Why does TV trump Radio?Why does TV trump Radio? The Radio Networks in TroubleThe Radio Networks in Trouble Where next for American Radio?Where next for American Radio?

The New ModelThe New Model Cut CostsCut Costs Local IdentityLocal Identity Niche BroadcastingNiche Broadcasting The Specialized FormatThe Specialized Format Specialized AdvertisersSpecialized Advertisers Top 40 (C.H.R.)Top 40 (C.H.R.) A New Status QuoA New Status Quo

A Couple of WrinklesA Couple of Wrinkles The Rise of FM BroadcastingThe Rise of FM Broadcasting Non-Commercial Radio, and N.P.R.Non-Commercial Radio, and N.P.R.

De-regulationDe-regulation Telecommunications Act, 1996: Telecommunications Act, 1996:

DeregulationDeregulation 1. Survey Requirements: Reduced1. Survey Requirements: Reduced 2. Three Year Ownership Rule: 2. Three Year Ownership Rule:

DroppedDropped 3. Ownership Caps: Reduced3. Ownership Caps: Reduced

ConsolidationConsolidation A Trading Frenzy…A Trading Frenzy…

– Normal Year: About $2bill spent on Normal Year: About $2bill spent on acquisitions and mergersacquisitions and mergers

– 1996, $14.4 billion1996, $14.4 billion– 1997, $15.3 billion1997, $15.3 billion

Big Players ArriveBig Players Arrive– 1992, Biggest Owner is Infinity, 22 stations1992, Biggest Owner is Infinity, 22 stations– 2007, Now it’s Clear Channel, 1,100+ 2007, Now it’s Clear Channel, 1,100+

stationsstations

Ownership & Consolidation Ownership & Consolidation at its peak…at its peak…

1 Clear Channel 1 Clear Channel 11841184 2 Cumulus Broadcasting 2 Cumulus Broadcasting 300300 3 Citadel Broadcasting 3 Citadel Broadcasting 223223 4 CBS Radio 4 CBS Radio 179179 5 Educational Media Foundation 161 5 Educational Media Foundation 161 http://www.stateofthenewsmedia.org/2007http://www.stateofthenewsmedia.org/2007 ……but 2007-08: shifting patterns.but 2007-08: shifting patterns.

The Marketplace Decides…The Marketplace Decides… Keep Costs DownKeep Costs Down

– Centralize OperationsCentralize Operations– Computerized ProductionComputerized Production– Voice TrackingVoice Tracking

Keep Revenues UpKeep Revenues Up– Chase your marketChase your market– Consultant/Poll RadioConsultant/Poll Radio– Loss of Community ConnectionLoss of Community Connection– Rise of AdvertisingRise of Advertising

…….on “Corporate Radio”.on “Corporate Radio” Every City, Same Range of StationsEvery City, Same Range of Stations Each Sound The SameEach Sound The Same ““Format Homogenization”Format Homogenization” Dull, Dull, Dull. Dull, Dull, Dull. But… (Hurrah!) …But… (Hurrah!) …

The 2The 2ndnd Crisis of U.S. Radio Crisis of U.S. RadioThe Rise of “New Audio”The Rise of “New Audio”

The War of the TechnologiesThe War of the Technologies Terrestrial Radio Under AttackTerrestrial Radio Under Attack

– SatelliteSatellite– InternetInternet– HD Radio (Digital)HD Radio (Digital)– MP3s, iPods and PodcastingMP3s, iPods and Podcasting– Mobile PhonesMobile Phones

SatelliteSatellite Fee PayingFee Paying Car PartnershipsCar Partnerships National & Broad National & Broad

ProgrammingProgramming 14m subscribers14m subscribers The Merger: July The Merger: July

2008.2008.

InternetInternet The Arrival of BroadbandThe Arrival of Broadband The Ultimate NarrowcastingThe Ultimate Narrowcasting

–minority interestsminority interests

– last.fm, Pandora, Live365last.fm, Pandora, Live365 Future Mobility?Future Mobility? The Royalties Issue (Internet Radio The Royalties Issue (Internet Radio

Equality Bill)Equality Bill)

–

HD (Digital) RadioHD (Digital) Radio Digital Terrestrial RadioDigital Terrestrial Radio Britain Ahead, Shock!Britain Ahead, Shock! ……but why?but why? Summer 2006: 600 broadcasting in Summer 2006: 600 broadcasting in

digital formatdigital format Fall 2007: 1,300 (NYT) ??Fall 2007: 1,300 (NYT) ?? But…But…

Digital/HD RadioDigital/HD Radio

Mobile Phone RadioMobile Phone Radio

Clear Channel’s ResponseClear Channel’s Response ParanoiaParanoia Address the Advertising ProblemAddress the Advertising Problem

– limit times, micro-commercials, sell the limit times, micro-commercials, sell the programmingprogramming

Experiment with New Formats: “Jack”Experiment with New Formats: “Jack” Deal with the CompetitionDeal with the Competition Lobby Like FuryLobby Like Fury DivestDivest

Where Next?Where Next? Clear Channel In TroubleClear Channel In Trouble The Censorship Issue?The Censorship Issue? How does the technological battle How does the technological battle

play out?play out?

Radio ExerciseRadio ExerciseQ: Who are you going to Q: Who are you going to

target?target?Q: What format will win them Q: What format will win them

over?over?Q: Who’s Going to Buy Q: Who’s Going to Buy

Advertising?Advertising?

Format WheelFormat Wheel

Format WheelFormat Wheel