Independents Should Rethink Using Syndicated Shows

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(By Ron Stone) How did local independent radio become repeaters for national syndication? The large broadcasters started pulling local programming almost immediately after consolidation in the mid-1990s, replacing it with national programming they created. The reason for this was clear. They paid horrendous multiples for radio stations and they needed to cut cost and fast. The mass elimination of local jobs (which continues  to this day) by the mega broadcast groups bought them time. They eventually still paid a price via  bankrupt companies. Local independent operators followed their lead and gladly took national syndicated  programming to save money on local talent, not realizing what they were trading the savings for.

What no one realized at the time, was what was really in play. By giving up so much local inventory to  syndication, independent radio was also giving the networks a tool that could and has been seriously used  against independently owned radio stations. Large syndication now has access to inventory on almost  every radio in America. This enables them to sell extremely cheap spots to large national clients, literally  pennies of what stations once were paid by these same clients. Remember the day when clients like  Home Depot, State Farm, GEICO and many others came to your stations air as national spot revenue?  There is nothing more frustrating than seeing reports that these large companies are radio’s “number  one” clients for spots aired and yet most independents never see a dime from any of them anymore. This  in large part explains where radio’s revenue is gone, down from $16 billion in 1996, to perhaps as low as  $10 billion in 2020. One does not have to look much further than cheap network spots for an answer.

Now, as hundreds of millions of dollars are coming down the pike to provide a “public service” to  Americans about COVID, we discover that that independent radio is being left out again. We will of course  be asked by the Ad Council to air free spots, but none of the cash raised by them for these spots is used  to purchase ads on independents. To make it worse, as written in the trades yesterday, and originally reported by The New York Times, radio has been planned for the Department of Health & Human Services’  public education campaign specific to the COVID vaccines and their effectiveness and safety.

However, only one major company was chosen as a media partner, as was one for broadcast and one for digital. That major player appears to be deeply entrenched and you can bet that the inventory controlled by its network on your stations will be used to “get the message out” while the cash remains within its company coffers. This does not seem fair, because it is not fair, to the 15,000 radio stations owned by others. But we must accept the blame for this ourselves. We gave them access to our inventory years ago, and now we see the real price to be paid.

Adams Radio Group decided long ago that we would not accept advertising from any disrupter service  than is seeking to disrupt local radio. We do not take ads from mega companies trying to harm our local  businesses. We do not air ads for podcast created by other operators. We do not air network ads for  large national clients that no longer buy spot radio. Now we must add to the list any message from a  network that has removed our chances to compete for dollars being spent on COVID. To allow the

networks to continue moving money from spot to network, is equal to digging our own graves. At Adams,  we review the logs for network spots closely and request replacements for those that do not meet our  standards.

Every broadcaster must make their own decisions as to how they treat situations that are not in their own  best interest, or not fair. In my opinion, it is clear, more than ever, that the best way to survive and thrive,  is to reduce our dependency on syndication and take back our inventory. The fewer organizations that  have access to the 12,000 stations not controlled by the mega companies the less risk of losing spot money  to cheap network spots. Being more local may cost more to operate initially, but it will ultimately generate  more revenue opportunities.

Radio revenue has declined every year since consolidation and the coming of age of major networks. We  gave the power to the networks by accepting their syndication and products. We did the damage  ourselves. We need to recognize this as an industry, and we need to reverse course soon if we ever want  to see a fair system again. A system where large agencies and large advertisers work through all the  national rep firms and give every radio station a fair chance to participate in national advertising being  placed. This is critically important when the dollars placed are coming from American taxpayers.

Ron Stone is the CEO of Adams Radio Group and launched the Independent Broadcasters Association and can be reached at [email protected]

 

6 COMMENTS

  1. This is certainly a good thought starter, Ron.

    Here’s a slightly different take on how things have evolved over the years, the current opportunity, and more importantly, a global suggestion on actual solutions.

    The growth in syndication actually began about 10 years before consolidation occurred.

    Of course, the history of how this evolved is important to understand, and at the same time, lamenting about something that happened in a different world, more than 25 years ago, let alone 35 years ago, won’t avail the opportunities and the needed solutions now.

    That, said the defining example of this shift actually occurred when Rush Limbaugh arrived on the national scene in the 1980s.

    Certainly, there were network and syndicated talk shows prior to this, but they were generally weekend programs, some evening and overnight shows such as Larry King.

    The biggest driver for this shift was indeed Limbaugh.

    Despite politics as the exhausting overarching issue in every discussion anyone has today, Limbaugh’s program reinvigorated AM radio at that time.

    Limbaugh generally began to appear on AM full-service stations, many of which previously played music, and had a “personality” who would exchange benign pleasantries and read the weather at :20 & :50.

    Many of these stations were powerhouses – and while they continued to rule in AM drive, middays on many of these stations were anemic and had already lost the battle to FM music stations as the “at work” choice. The age of being “a companion to the housewife” was long-gone by that time.

    Many local AM stations rose to dominance during the midday hours with syndicated programming. It also played a big part in evolving full service-stations into news and talk outlets.

    Local stars were developed during this period as well, and the format continued to evolve.

    At that time, you could get great ratings in a daypart by giving up just four minutes of local inventory and putting on a syndicated show.

    As the ratings grew, stations then had to give up five minutes of inventory and often also had to pay well into six figures in cash for the “privilege” of running one of these nationally-syndicated programs.

    The eventual byproduct of this was the easy “solution,” for what actually was, and is, a local business. It was okay the time.

    Some stations were actually paying more cash for syndication than they would’ve paid a local host. Plus they gave up that inventory. More inventory was then taken in morning drive with “daily features” as the next way to pay for midday programming.

    More syndicated shows followed – and localism was becoming more and more a thing of the past.

    However, at that time the revenue was still there. This was at a time of fewer listening choices, no Internet, no smartphones, no satellite, fewer technologies, a different ratings system, a different selling philosophy – and because of historical buying patterns.

    After much of this was already happening, consolidation was next wave.

    Highly-leveraged consolidators overpaid for radio assets.

    From there, these companies employed nationally-based “solutions” on formerly locally-owned properties. These properties were no longer as revenue-focused, but simply were viewed more often as only “cost centers,” which could be easily and deeply cut to show immediate earnings growth.

    Much of this was actually driven by operationally-focused people, who understood how to use technology to do this – versus those with sales expertise. Consolidation and efficiency was the big solution. Revenue growth wasn’t – and history clearly shows that fact.

    Of course, as the costs were taken out, the revenue declines predictably followed based on what these local institutions no longer represented.

    The consolidators, after having pulled out expenses, then moved on to implode total market revenue.

    They cratered ad rates even on their lead stations and packaged for share by using their secondary and tertiary signals.

    It was now just a game of share of a swiftly declining pie actually driven by those with most of the signals. That’s what doing a good job became.

    Earnings declines followed.

    This is all very basic, but that’s exactly what happened.

    Despite all the window-dressing at the time, and the revisionist history today from people who actually led that change, the strategy was sold to formerly locally-owned stations by the mantra “Now that WE OWN YOU, you can now have a more ‘professional sound’ at your (our) station.”

    That professional sound was nothing more than a nicer sounding, but detached “voice” reading news copy from 200 miles away, with little clue of the community, mispronouncing names and places and stumbling through “local” newscasts. Traffic reporting done by a disembodied voice, only stating that an “exit ramp is closed” within three seconds, followed by five seconds of sponsorship copy, which always stretched to 20 seconds. Trust and credibility were lost.

    With today’s technology, why would anyone depend on a radio station to deliver traffic information like that?

    That professional sound was also the “big station” in a city running a show about cosmetic dentistry while a tornado was ripping through the town. I heard that first-hand before, during and after the hotel in which I was staying was hit. Of course, this same station finally began to report on it, 24 hours after it happened.

    Seriously.

    Why would one depend on radio in that market for the safety of one’s family?

    Meanwhile, on the music side, stations sounded “more professional” by running generic, low-impact music formats delivered by non-remarkable, non-local talent reading USA Today factoids and inane generic material from a pile of magazines. Of course, they all had “good pipes” – they just had nothing to say of any relevance, let alone anything meaningful to a local market.

    That “solution” was shoved down to these consolidated stations, versus their continuing to provide a local experience, having communities connecting with stations, stations creating events, driving advertising revenue and being major forces in a community. That all ended and took the revenue with it.

    Either way, these solutions became “heroin” to big national operators who had a little clue that radio is fundamentally a LOCAL business.

    So when it comes to the commoditization of radio, none of this is new. None of this is surprising.

    I’m not sure anyone should be surprised that radio, overall, wasn’t the go-to for COVID-19 information. Honestly, why would it be? The good examples of unique local service are fewer.

    During the past 18 months, I’ve poured over financials and dug into operations big and small. There certainly aren’t inventory issues based on the amount of unsold inventory I’ve seen (including pre-pandemic). Rates are at an all-time low. What’s very telling is to analyze LURs during this last political period.

    I’ve seen many organizations who’ve simply commoditized radio and are simply ill-equipped to create local solutions for advertisers. They just don’t know any other way to do it.

    The advertising model now dominating radio is one that’s more commoditized than solutions-based.

    Inventory is less the issue.

    Frankly, in many a cluster, National represents less than 10% of the revenue pie anyway.

    When you own the biggest rep firm and you own the largest radio group, you don’t have to worry about being “fair” to competitors. It’s not your problem. It’s a free market.

    Of course that’s all academic.

    Here’s the good news:

    It doesn’t have to be that way!

    The issue for independent broadcasters and others is the opportunity is to create local experiences, rekindle relationships with fans, create solutions beyond just spot schedules, and not worry about Geico and Home Depot. Those horses left the barn ages ago.

    Control the controllables.

    There will be two more clearly defined models. They’ve actually been evolving for quite some time. It’s just happening REALLY fast now.

    One is the nationally-based model, as you describe. It will continue to be run more efficiently from an operational standpoint, but connect less personally and emotionally in every local situation. Tower ownership, local real-estate and local infrastructure are no longer core to the model. They don’t need to be. The model IS different and it ultimately may have challenges competing with local multi-platform experiences (not just on-air), delivered through several means, by “real local humans.” It’s not lost on consolidators that the real value is in the audiences they have. As they allow (or arguably) push their own local radio products into oblivion, they are working very hard to move their audience over to their digital platforms. It’s certainly a strategy.

    On the other hand, enlightened broadcasters will embrace the fact that radio is fundamentally LOCAL business and stop chasing after “relay stations,” white-labeled national content aired on local “signals,” ridiculously competing with music streaming services with a “playlist” they believe is the panacea – and commoditized selling.

    There are two business models.
    Pick a side – and express your competitive edge.

    Great local radio-based experiences still do happen in places.

    What are they doing well? In what ways might we repeat that success on our stations? How can we help businesses who don’t care about CPM‘s, but do care about moving 50 cars off of their lot this weekend? Our job is to create solutions.

    The choice is clear.

    Be a victim of the changes that inevitably happen in our world, or reinvent local, multi-platform local media experiences, which drive customers to local advertisers.

    Then sell that value proposition as it can and should be sold.

    The past is what it is…

    At the same time, great local brands still have great value, and are still loved and important, despite so many self-inflicted wounds.

    Honestly, the best examples of great success are in the “small markets” and they do come from terrific independent broadcasters.

    It’s a great time to lead change and move what is a fundamentally a local business, forward!

    We CAN do this…

  2. This is one of those things where you’re chopping off your nose to spite your face. So drop popular, well known syndicated shows because you don’t want to clear their inventory. Then you replace them with your own people because then you control the inventory. That cheapens the sound of your station, but gives you a bigger share of the pie. Except if you don’t improve the quality of the air product, the declining AQH and PUR means a bigger share of a smaller pie. That’s the battle radio is fighting. Unless you can come up with programming that’s better than what you have, it won’t matter how big a share of the pie you have.

  3. Way to walk the path Ron! We have successfully kept our communities engaged not by abdicating but by embracing our role with local hosts but use the syndication for music. This hybrid model strikes a balance between cost savings and keeping things real. XM spotty cry and spamdora can hyper focus on its minuscule playlist repeated to death and say they are winning but not here!! Happy New Year!

  4. The article is spot on. We have lost any chance of landing Regional & National buys. We have handed those buys over to the syndication market (which is owned by the largest groups). They have cut us out. We are not needed. We are giving it away for FREE and they hold you accountable to run FREE spots. Before you say “we never get any buys” the next phase will be cutting your local co-op. With new delivery systems, a local dealer or franchise can be inserted in a National spot via new delivery methods.

    The exclusion of stations that don’t subscribe to a certain service is the final nail in the coffin to control National and Regional buys.

    Think about this when you listen to that syndicated show on your station. The syndicators thank you.

    …and don’t moan when you lose your job. Your are not needed. That National show can fill your spot with no probelm. It is about clearing inventory.

  5. Chase, spoken like a true anti radio ad buyer. Your generalization of all independents as being insignificant just shows your lack of knowledge on the whole subject. Many independents around the country do have growing audiences and strong community ties. This article hits the problem square in the face and is on point. As long as we keep people like you away from our business we all will be just fine. You keep listening to your “pay to play” music list, believing that digital is the end all be all. Nothing touches the power of local radio, local talent and local business. I’ve seen it first hand for over 20 years.

  6. Seriously? Yes blame your small market, small performance on giving up inventory. Let’s just overlook the fact that national ad campaigns don’t have the time, resources or desire to place buys on every insignificant little station with a dwindling audience and tired old programming. At least you got the part right about drastically reduced ad dollars. Newsflash: It ain’t coming back, with or without available inventory.

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