SIX IN '06: RADIO'S MEGA-TRENDS Tony Sanders, Bram Teitelman, Phyllis Stark, Paul Heine and Ken Tucker – Billboard This year could be a breakout one for terrestrial radio, when innovative thinking yields new and surprising plans for holding onto listeners and advertisers. To that end, Billboard Radio Monitor offers this food for thought.
FM Talk, News/Talk Proliferate
The migration of news and talk to FM is the trend to watch in 2006. CBS Radio's launch of "Free FM" is one variation on the theme. The other is the switchover of all-news, news/talk and sports talk to the younger-skewing FM band.
Two other aspects to this trend are the rise of sports talk on FM and the move to bring more talk programming into some of the key dayparts of music-intensive radio.
Ultimately, these changes are terrestrial radio's direct challenge to the increased competition from wireless entertainment alternatives.
All of this is designed to give listeners something they cannot get anywhere else; something local, perhaps, or, if not local, at least something unique.
Another variation on FM talk is what Billboard Radio Monitor has dubbed "modern talk."
In Seattle, Entercom developed KQBZ (the Buzz), which has the tag line "radio for guys." The Buzz is one of several modern talk stations without Howard Stern, powered by a mix of local fare and such syndicated hosts as Tom Leykis and John & Jeff.
Entercom VP of news, talk and sports programming Ken Beck sees modern talk as "a format unto itself."
"Traditional talk, hot talk, sports talk—whatever type, basically the format is migrating to where the audience is," Beck says. FM talk continues to grow because "we're kind of running out of flavors" for music-intensive radio.
Rock Flavors Blend
As this story was written, New York's last full-time current rock station was in its death throes. Infinity's WXRK will be "Free FM" by the time you read this, and such bands as System of a Down, the White Stripes and Korn will not be heard regularly in the Big Apple for the foreseeable future. As rock and modern rock stations alike disappear, the line between active and modern has become increasingly blurred.
With fewer rock stations overall, many of these are trending mass appeal and mainstream. Regent simulcast WQBK/WQBJ Albany, N.Y., just flipped from active rock to mainstream following Howard Stern's departure. Saga's active rock mainstay WLZR Milwaukee flipped to a classic-based library as WHQG (the Hog) in 2005 as well. "I think we're going to see more 'middle of the rock' stations, just because few markets are going to support an entire rock wall now," Edison Media Research VP of music and programming Sean Ross says.
Being mainstream is not necessarily a bad thing. Ross calls Clear Channel modern rock WWDC (DC101) Washington, D.C., a good example of a station that can play Gorillaz, Breaking Benjamin and AC/DC. "I also think there are opportunities in some markets for modern rock to double as the pop CHR/hot AC, which DC101 does, and some markets where the pop CHR is going to end up being the one that plays Weezer," he adds.
Station Trading
Media Venture Partners is one of several brokerage firms with longstanding ties to radio. One trend that MVP co-founder and managing director Elliot Evers sees is "the general rotation of the industry from a growth play to a value play. We're seeing slower top-line revenue growth for all the reasons that are discussed every day, but radio is still a good business with a fair amount of free cash flow."
In other words, even if advertising revenue growth slows to 2% per year, the percentage of that revenue translated into operating profits is still significantly high, especially when compared with other industries. It is that sustained, higher profit margin that continues to bring new investors to radio.
New investors and lenders means more competition, effectively pushing some of the traditional lenders off to the side.
Ultimately, this stepped-up competition means there is more money available to fund acquisitions. More money means more deals. One area where this has already proved true is with Hispanic radio groups. Aside from major companies like Entravision, Univision and Spanish Broadcasting System, smaller groups are arriving on the scene.
Peter Davidson's Davidson Media is one example. The group formed in 2005 and started its portfolio with six stations. As of late 2005, Davidson owned and operated 22 stations in 18 markets.
Frank Kalil, founder of media brokerage Kalil & Co., says that he expects to see "some of the public companies go private," suggesting that the low cost and the inherent value of the underlying assets will take those companies off the public stock exchanges. Kalil also expects to see "big, non-broadcast companies getting into radio and TV ownership."
The Push To Podcast
Rush Limbaugh is doing it. Al Franken is doing it. NPR is doing it, and so is Citadel country KIIM Tucson, Ariz. Sirius Satellite Radio has a show dedicated to it, and CBS Radio has a whole station—KYCY San Francisco (KYOU Radio)—devoted to it. What is it? Podcasting.
This new content delivery platform debuted in 2004, but the word podcasting moved quickly into the vernacular last year.
The truth is that podcasting is a double-edged sword. While it allows listeners to hear a show or a segment they might have missed on your station, it also offers an alternative to listening to your station. The trick will be to use podcasting to brand your station, build loyalty and make a buck, while retaining listenership.
Among advertisers, the talk about podcasting is getting louder, even though it is not a line item in media plans. And many agencies see media companies as the key beneficiaries.
In the end, the ability for stations and their parent companies to develop new revenue streams using the medium will determine whether it will be seen as friend or foe.
Holland Cooke, news talk specialist for consultancy McVay Media, says the way in which Limbaugh approaches his podcasts might make radio stations think twice about where his loyalties lie. Cooke believes Limbaugh is exhorting listeners to purchase his podcasts, which contain all three hours of his daily show, and to bypass local radio. In addition, his "Morning Update," a daily 90-second feature, is now available to subscribers as a video podcast the night before it is available to affiliates.
Here Comes HD2
Close to 300 new digital radio stations will sign on during the first quarter as the most important radio development since the Telecommunications Act of 1996 takes flight. Roughly 70 HD2 channels are now up and running, and an average of eight to 12 more per market are expected in 28 markets this quarter, including most of the top 25.
"The whole idea of the HD2 selection process is to end up with an additional array of formats that are unique, diverse and non-duplicative, based on what is or isn't available in the market today," says Peter Ferrara, president/CEO of the High Definition Radio Alliance, which formed in 2005. Look for brand extensions and formats that have nothing to do with the mothership station.
While coalition channels will be "locally driven and managed," Ferrara says "companies will look to their internal resources to help amortize some of their costs." That means Infinity could use Westwood One for talent and services, should it launch an HD2 format in multiple markets. Some networks, such as Premiere or Jones, will emerge as "content providers," Ferrara adds. "But the majority of operators will be programming [HD2] themselves, just like they do their own radio stations."
Stations selected to launch HD2 first will be the ones with the best signals and the highest ratings. This blowtorches-first strategy is predicated on stations with the widest coverage areas and largest audiences being best-equipped to market and promote the new service.
Accountability
Blame it on Eliot Spitzer, but the new watchword for 2006 is "accountability."
The New York state attorney general's probe into payola, and the settlements he struck last year with Sony BMG and Warner Music Group, are affecting all of the music business. Programmers and label reps alike say that among the key differences in the way they do business is more paperwork, as businesses endeavor to leave a paper trail proving all of their dealings are aboveboard.
One PD says the result of the Spitzer probe is "a lot of cover-your-ass paperwork."
A country consultant agrees, saying the result has been "more red tape," which makes it "harder for honest people to do business."
Another PD says that while the "process of getting a promotion done has become more tedious, on the positive side it has taught us more accountability." Yet another says he has noticed "more structure" in the label/radio promotion process, but he calls that a good thing.
Many broadcasters agree. In Billboard Radio Monitor's 2005 year-end programmers poll, 44% of those surveyed said they thought the Spitzer probe has been good for the radio industry, and 54% said it has been good for the record business. |