Ron Stone is the CEO of Adams Radio Group. On Friday we interviewed Stone as part of our CEO series on deregulation and whether there should be more deregulation for radio. He’s opposed. Our interview with Ron resulted in a lot of reader feedback. In case you missed it Friday here’s that interview again.
Adams Radio Group has stations in Tallahassee, Fort Wayne, Northwest Indiana, Salisbury-Ocean City, and Las Cruces. Ron Stone may seem like a man on an island after our deregulation interviews to this point. He does not believe more deregulation is the answer to radio’s woes and here is why…
Radio Ink: Why are you opposed to deregulation?
Ron Stone: I simply fail to see how further deregulation is going to make our business more competitive or more profitable. Most operators do not make a profit now with all the stations they own in a single market. The ones that are profitable derive the profit from one or two stations in a market. How will owning more change that? Most stations do far less now to serve the local market interest than they did before the first round of deregulation – how will owning more change that? Think about this. We own more stations in a single market now, have fewer employees operating them than we did when we had fewer stations. We can barely service what we currently own. How can we possibly service more…better?
Radio Ink: Have you been reading our series and if so what do you think of what other owners are saying?
Ron Stone: What I read into most of this is the same thing I saw in the first round in the 90s: own more, control the market. But that is not at all what happened. When we finally owned more, we did not get better at supply and demand pricing. We bowed to the agencies and allowed them to continue setting our prices…and even went further by using smaller-rated stations as tools to get on buys. Now we see individual stations literally given away in buys. Some of the CPP today are 50% of what they were 10–15 years ago. It is almost criminal what has happened to our business.
Radio Ink: Why do you believe so many broadcasters are in favor?
Ron Stone: In every industry there is always some that believe you can buy your way out of trouble. It never works, not in any industry, but it does not change some from thinking that way. In other words, we don’t learn from our own history of the mistakes already made.
Radio Ink: What do you believe the first round of deregulation did to radio?
Ron Stone: 1) Eliminated many good broadcasters from our industry; 2) Eliminated thousands of jobs from the industry; 3) reduced our ability to sell on results giving buyers more control and allowing them to set our rates for us; 4) put amazing pressure on everyone to survive the ridiculous leverage and the results thereof; and, 5) 20 years later put the two largest companies into bankruptcy.
Radio Ink: What would another round do?
Ron Stone: Some want all caps to be lifted. Let me put it this way. In 1996, radio had $12 billion of revenue. Today, radio has $16 billion. Sixteen billion dollars today, in 1996 money is $10 billion. So as far as I can tell, deregulation has taken us backwards by $2 billion over the past 20 years. If we had just kept even with inflation — not actually benefited from deregulation in any real way, just kept even — radio would have a $19 billion year this year. Owning more stations has not helped. This is clearly a case of less competition equals less money in fewer pockets. I can also argue that 20 years later, the largest benefactors of deregulation are now in bankruptcy.
Radio Ink: Do you buy the argument that more dereg will help radio compete with FB, Google, and other digital companies?
Ron Stone: No. How? Owning more stations does make us a digital operation similar to these companies. We will never out-Google Google, or out-Facebook Facebook. That is not our business. Thinking that way is no different than thinking we can be a television station or newspaper or steel mill for that matter. It’s silly. People listen to our stations for three reasons: 1) to hear live and local information about their communities; 2) because they have a relationship with the jocks; and, 3) to hear music. If we are live and local and we limit commercials, we can keep our listeners. If we don’t offer the local content listeners want, and we continue to play 20-25 commercials an hour like many stations do these days, then yes, we will lose the listeners to digital operators. We are our own worst enemy. Google’s revenue is $110 billion, Apple’s revenue is $220 billion, and Facebooks revenue is $40 billion annually. Radio’s combined $16 billion revenue is not their target. We are using them as an excuse for our bad decisions and poor operations.
Radio Ink: Do you buy the argument that fewer owners in a given market will lead to stronger local programming?
Ron Stone: Well, that certainly has not been the case since 1996. I would make just the opposite argument. I believe if more true radio broadcasters got back into the business, we would see amazing local programming.
Radio Ink: Right now, in a lot of markets, owners that have multiple stations throw in the weak ones at no charge, killing the average unit rate and devaluing the product. How would being able to own more stations make that better and not worse?
Ron Stone: Exactly. It will not make it better, and it will indeed make it worse. We turn down business every single day that major companies accept because it is priced lower than we will accept. We say no, they say yes. Just recently a major home improvement store (not Home Depot) wanted to buy one of our markets for an $8 CPP. Male demo. We dominate this demo. We priced at $25 and said that’s the bottom. Our competitor, a national company, does very well in the female demo, still priced at the $8 CPP, and accepted the buy. Not the right stations for the client; not the right decision for the market for helping the CPP. But that’s how it goes. We control what we can and try not to worry about what we cannot.
Radio Ink: Look into your crystal ball. What do you think is going to happen?
Ron Stone: I wish I could tell you. Follow the money, I guess. For the life of me I don’t understand why we continue to do things that are obviously ruining our industry. The big boys are okay with dropping in thousands of translators and get that done but they push back on the C-4 allocation. There is definitely a difference in opinion based on different circumstances. I love this business. I hate to see it destroyed by these bad decisions.
Ron Stone can be reached at [email protected]
Read part 1 of our series HERE with Galaxy CEO Ed Levine.
Read part 2 of our series HERE with JVC CEO John Caracciolo.
Read part 3 of our series with Neuhoff CEO Beth Neuhoff HERE.
Read part 4 of our series with Cromwell CEO Bud Walter HERE.