Is Deregulation Really The Answer To Radio’s Woes?

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(By Radio Ink Publisher Deborah Parenti) Last week, Radio Ink ran a series of interviews with radio group owners focusing on deregulation; specifically, what they would like to see the FCC consider when it reviews the ownership caps later this year.

As we found out in that series, many of Radio Ink‘s rank-and-file readers believe lifting current ownership caps will simply give more stations to the bigger groups and nothing will really change. There is skepticism from some corners as to whether owning more radio stations than the law currently allows will result in: 1) more revenue for the industry overall, or, 2) better service to the community.

All of this reminded me of something I wrote over 10 years ago which also raised some questions, ones that still seem to remain topical.

Someone once commented that “God must love radio more than any other media — because He made more radio than any other media.”

That’s “a good thing” because someone needs to love it. Good intentions aside, radio’s stewards seem to have lost that basic instinct since the Telecom Act of 1996. While many were busy perfecting the art of making the deal in the early, heady days of mergers and acquisitions, far fewer expended similar energy in executing the results of those deals. More than 20 years of attention deficit disorder have placed the industry behind the proverbial eight ball. Today’s bottom lines point to eroding loyalty, uninspired product, and a growing stewpot of confusion among advertisers, thanks to mixed signals and incomplete passes at fixing what got broke. Radio needs to address those issues and close the sale again with its audience and its advertisers — and it needs to do it now.

Before problems can be tackled, however, they must first be identified.

The biggest challenge facing radio today is eroding audience interest. Nothing else is as imperative as maintaining, engaging, and growing the listener base. After all, listeners are the product radio delivers to advertisers. Without listeners, radio pricing collapses. It’s that simple.

Understanding why audiences aren’t listening longer, however, is not quickly fixed and requires thinking beyond the obvious. Certainly, radio did itself no favor by increasing commercial loads on the heels of consolidation. In trying to enhance revenues, no spot was “too many,” driving listeners to distractions — distractions frequently found in other, newer media. Luring them back for the long term, however, takes more than simply reducing loads. If “product is king,” then product must be compelling. Think about what you tell a client whose advertising brings customers to the door but can’t get the customer to buy? The greatest advertising can’t make a bad product good!

Speaking of advertising, where is it? Cutting promos as part of cutting spot loads has helped result in cutting the medium’s throat over time. While radio has, for generations, been a primary medium, today’s younger demos have found little to encourage interest or inspire loyalty. The previous assumption was that they would tune in and turn on to radio like their predecessors. No intense efforts were made to market to this group. The result? There are just too many other imaginative choices and radio hasn’t competitively delivered with the product or the marketing.

The issue of spot loads continues to take center stage, as does the clamor to “clean up” the radio environment. That’s great in theory but no problem is that simple and too much emphasis on any one element at the expense of the others can be a mistake.

Such a preoccupation also assumes two things: that listeners are satisfied with what else airs between those breaks — enough not to be lured by other media — and that spot length trumps unit count perceptually among listeners. The jury is certainly out on the former. As for the latter, however, consider the terms in which complaints about commercials are typically expressed. It’s not how long (minutes) the break went — but how many commercials (units) were heard. If perception is reality, two cleverly scripted 60-second commercials may be more favorably perceived than four 30-second, although equally well written, ones.

Catastrophic events such as last year’s devastating hurricanes, demonstrate that radio has the heart to respond and adapt to circumstances beyond any mortal control — to take the media lead and carry the day with the masses. Whether it possesses the soul necessary to extend that energy to the more mundane challenge of the everyday is the real character, and creative, test. It’s like cable news. It’s not difficult to know what airs when a huge story breaks. It’s when nothing happens that holding on to the audience gets tough. Radio needs to rediscover its roots, and its programming genius along with it.

As simplistic as that sounds, it may be that simple. Before radio can reinvigorate itself and its business, it needs to diagnose the problems. And that means calling in the experts, the product experts, namely, programmers. More input from the creative side could go a long way toward remedying what’s wrong. When the heart is in trouble you call in the cardiologist, not the orthopedic or neurosurgeon. Too many from sales and finance, not to mention a host of outside analysts, are making the calls and calling the shots in an area where they have little practical expertise. And in more than 20 years, we’ve seen how well that works.

That there are many stations, especially those in smaller markets, which struggle to make ends meet, is a fact. And it’s one which needs to be addressed if diversity of programming options and choices is to be maintained. Every day, stations are faced with competition not only from other stations, but from a multiplicity of media choices and advertising options. But if Google and Facebook, Spotify and Pandora, are, as some have opined, the biggest competitive threat, then perhaps before, or in tandem with, thoughts of unfettered ownership caps are considered, the industry needs to take into account the product it is providing and its strategy for enticing listening to its airwaves and sites.

Radio enjoys many platforms today to extend its reach and opportunity. Making sure the product itself is as viable and exciting as technology is crucial to its viability and growth. And so, it begs the question: Will more deregulation really answer radio’s revenue woes? And if not, what happens then?

Deborah Parenti is Publisher of Radio Ink. She can be reached at parenti@aol.com

8 COMMENTS

  1. the digital world has nothing to do with the analog world of radio. not even close. in the internet radio platforms like shoutcast, you have 20,000 radio streams serving 5 to 10 listeners each. meanwhile, on the other hand, on analog radio, you have 10 radio signals broadcasting to 20,000 listeners each. this even aplies to pandora and spotify. so, you can never spect the fcc to reregulate based on the internet example. those two completly different worlds. the radio industry needs to connect with their audiencie using their biggest features a top priority: localism, great programming, wonderfull promotions, high impact audio production, carismatic local djs, and a saled force based on a marketing formula where the client will always make a profit on their advertisement investement. if the radio station yields tons of revenue to its advertisers, the radio industry will be there for years in the future.

    but, if they keep trying to do the opposite: fewer owner and bigger networks, with those toxic ideologies, the radio idustry will be doomed in a few decades from now.

    • “the digital world has nothing to do with the analog world of radio.”

      Tell that to the general public. To them, radio is radio. And we’re judged on the playing field of all forms of audio. That’s just the reality of it. Regardless of what you think.

  2. If you want to know how more deregulation will work, why not do the obvious? LOOK AT HISTORY. When ownership was limited to just a dozen AM and FM stations around the country, I was in the record business and everyone told me something that I’ve never forgotten, that “Owning a radio station is like having a license to print money.”

    Nowadays, it seems like owning a huge number of stations is like having a license to print IOUs, and not being able to pay them back. It’s like having a license to fire 75% of everyone in the industry, giving the remaining people multiple jobs for less pay. And now you don’t even need a studio! Just a satellite receiver at your transmitter, a sales office and a website with a form for “advertise with us” on it.

    More deregulation? Why not? We’ve already killed the goose that laid golden eggs, let’s kick the corpse around some…

    • Deregulation didn’t kill the golden goose. Do a search for Docket 80-90. After that, a lot of the heritage companies like NBC and GE sold their radio stations and quit the business. Deregulation was supposed to fix the problems caused by Docket 80-90.

      • Docket 80-90? That dealt with NON commercial FM stations. The legislation was piece-meal, ugly and political and politics make for poor engineering, but what does this have to do with the sorry state of AM today?

        No, there are two problems, and this article touches on one: content is king. NOBODY is going to listen to / buy ads on a station that is broadcasting crud.

        The other is that the FCC ‘punted’ their ability to regulate noise-makers. AM suffered most and immediately because of the new ‘type accepted’ noise-makers, but FM is not far behind, and digital is fragile enough that it will be hit FIRST before analog FM!

        Nope, deregulation created the cruddy content — well it ENCOURAGED it — so I think Scott has a good point. Now if we can just get station owners to stop being ‘defensive’ and admit they have a problem!

        • “Docket 80-90? That dealt with NON commercial FM stations”

          No that’s not correct.

          “Nope, deregulation created the cruddy content”

          Show me where.

  3. I’ve been a “content is king” radio guy for 20 years and I think the writer here makes a compelling case about the hypocrisy of big owners. How do we consult clients that the greatest advertising can’t make a bad product good if we don’t believe it based on our own practice? Consolidation has never made radio better for listeners, but rather guaranteed a sameness from coast to coast and stronger bottom lines for owners. As a listener, the lack of creativity and localization in music rotation puts me in a coma. We can do better.

  4. “Will more deregulation really answer radio’s revenue woes?”

    Not sure that deregulation is meant to solve revenue woes. Regulations cost the licensees money. Not just in the things the regulations require, but in the legal and engineering costs involved in it all. So fewer regulations will bring down operating costs. I don’t know that any of the CEOs in this series thought deregulation could improve revenue. I don’t see the connection. The lack of regulation in the internet hasn’t affected revenues there either. Even when you consider the regulations in LPFM and other non-com radio, it’s all very costly. It’s partly why so many colleges are getting out of the radio ownership business and switching their students to internet radio. And I also don’t think any owners want or expect complete deregulation. I think all anyone is saying is stop forcing radio owners to do things that aren’t required of anyone else.

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