Connoisseur Media CEO Jeff Warshaw likes to speak his mind, and that’s exactly what he did Wednesday. During the Broadcast Finance panel, Warshaw continued his push to see more deregulation of the number of radio stations a company can own. He says without it, radio will be very challenged in 10 years. “We are fighting for survival. We absolutely need more deregulation.”
He also believes radio may be making too much of an effort to save the AM band, and that could come at the expense of the entire industry. “We should not sacrifice the future of this business for a declining band.” That is certainly not going to go over very well with the many AM broadcasters who are looking to the FCC to fix that band so they can survive. It’s an issue FCC Chairman Ajit Pai has championed and its doubtful he’s going to back off on that any time soon.
Warshaw, and many others, say the only way radio can compete for ad dollars with digital companies like Google and Facebook, who are unregulated by the government, the FCC must allow broadcasters to own more stations. “Getting relief on the number of stations we can own is the single most important thing that can happen in our industry.”
Of course, not everyone agrees with Warshaw. Many have also made the case that too much deregulation put the industry in a position where a few companies have so much debt that you often hear radio now has a “cloud hanging over its head.” You also consistently hear that companies with so many stations in a market will drop their rates on the lowest performing station or stations to get more share of the dollars being spent in that market. That last scenario, if done over many markets, for months and years is clearly one of the reasons radio has not grown its share of the overall revenue pie.
Warshaw also wants radio to step up the level that “we attack ourselves.” He says radio needs to have a serious discussion about why advertisers undervalue radio and all the things we are doing wrong.
No, the revenue situation ISN’T what it is. Or rather, it is what it is because radio stations have been dropping their drawers for 40 or 50 years. It didn’t have to be that way. Radio rates have not even come close to rising with inflation so your average million dollar revenue generating station in 1972 or 82 still has the same revenue while the value of those dollars is a tenth what it was then on a good day!
All of that sounds very good from a theoretical view. But when you put it into a practical application, a salesman will do whatever it takes to close a sale, even if it’s at lower than the market rate. Just as there were too many radio stations in 1988, there are too many media options that are all screaming for advertisers. That drives prices down. With the amount of competition that exists right now, there is no way to increase rates. Even if the FCC deregulates more, and allows more consolidation, it won’t shrink competition enough to get rates to rise in a major way. That’s why rates haven’t risen with inflation.
What people don’t remember is that a lot of heritage owners got out of radio long before deregulation. NBC sold their radio stations and network in 1988. A lot of insurance & electronics companies got out around the same time. The reason they got out was because Docket 80-90 added too many stations to each market, diluting the revenue marketplace. Now, we have digital diluting revenue. It’s also affecting TV. On-air isn’t going to be a growth area anymore, no matter what happens. That’s why CBS sold its radio stations. The revenue situation is what it is. It’s not going to improve, and people won’t give up their cell phones no matter what radio stations do. Forcing regulated on-air stations to compete against unregulated digital companies is unfair. How would you fix it?
Whatever this guy is smoking, it’s clearly working for him but his ideas are not in the best interest of the radio industry.
‘More deregulation?’ because it has worked out so well to this point?
Diverse viewpoints are important to finding solutions. Ridiculous views like this which are way out of left field, are best kept to yourself, avoiding the appearance of being totally out of touch and idiotic.
Forrest’ is right, once again …
Radio has never met a problem that it didn’t think deregulation was the answer to. And it has *never* worked as advertised. Ask iHeart & their $20 Billion debt, or an American public that increasingly finds us to be an irrelevant product that doesn’t meet their needs. Meanwhile, Emperor Nero Pai will continue to compromise FM stations by putting translators for AM stations on their frequencies.
But sure. Deregulate. It’s *always* our answer.