The Industry Dot Biz: Struggling to stay on the dial
Radio industry — with revenues faltering and staffs cut to the bone — plots survival strategy

In the studio at WCKX (107.5 FM): from left, the Power Morning Crew of Konata, Misty Jordan and Paul Strong, and general manager Jeff Wilson.
Jeff Wilson doesn’t work in the radio business anymore. He is general manager of WCKX (107.5 FM), WXMG (98.9 FM) and WJYD (106.3 FM), but the word radio “is nowhere in our local creed,” he said recently. Better to call it “brand management,” he said.

It’s a new way of looking at the radio business, and it may be a key to the industry’s future, which, like that of other advertising-dependent media, is looking pretty grim. Revenue in the Columbus radio market, the nation’s 36th largest, fell by 21.2 percent to $34.1 million for the first six months of 2009, down from $43.4 million for the same period last year. The drop isn’t just from the absence of political ads, which crested as last year’s presidential election neared, managers say, or because fewer people are buying ads. The problem is that people are paying less per ad.

“A large part is not a consequence of fewer ads but a consequence of rates,” said Alan Goodman, general manager of Saga Communications’ stations in Columbus, which include WSNY (94.7 FM) and WJZA (103.5 FM). “There are roughly the same number of accounts utilizing radio. It’s the rate structure that has somewhat imploded.”

The ripple effect of that dearth of revenue is becoming evident. The debt rating of Clear Channel — which operates six stations in Columbus, including market leaders WNCI (97.9 FM), WCOL (92.3 FM) and WTVN (610 AM) — recently was lowered two notches into junk status by Stand ard & Poor’s, reflecting concern that the company might default. Financial pressures have led Clear Channel to lay off more than 2,400 employees this year, more than 10 percent of its work force.

Radio One, which operates three stations in Columbus, reported a loss of $59.4 million for the first quarter of 2009, compared with a loss of $18.9 million a year earlier. Things are not likely to improve in the second quarter, Alfred C. Liggins III, Radio One’s president and CEO, said in a statement.

It’s a similar story at Saga Communications, which operates four stations in Columbus. It reported a loss of $362 million for the first quarter of 2009, compared with a profit of $910 million a year earlier. Radio stations have been cutting back but, given wholesale changes enabled by a decade-old law, little fat is left. The Telecommunications Act of 1996 permitted a single company to own multiple stations in a single market, allowing them to share or cut the staff and use money-saving technologies and syndicated features. Further reduction of staffing could threaten stations’ personality and ability to act quickly in the event of a breaking story or weather alert. In the long run, such a strategy could prove self-defeating, several broadcasters said. “It’s critically important to have live disc Radio DJeys around all the time,” said Saga Communications’ Goodman. “When Michael Jackson died, none of the Clear Channel stations had it until the following morning, nor did WLVQ. Radio One, us and CD101 were the only stations that had people — real people — on the air taking comments, going live.”

Even so, radio would seem to be better-positioned than other older media to ride out the recession by integrating itself into the world of the Internet, iPhone and iPod. “The partnership between radio and the Internet, the potential for it, is humongous,” Goodman said. “We can reach everybody now at the office, through iPhones, cell phones. So we’re available to multiple users. The only thing that changes is the delivery systems.” For now, online potential is still more promise than fact. In Columbus, digital ad sales have risen 36.6 percent for the first six months of 2009, to $1.2 million, from $896,000 for the same period in 2008. But online ads represent only 3.5 percent of total revenue. Still, not all the news is bad. Audience levels for radio haven’t changed much during the past decade. Nationally, radio reaches 92 percent of people age 12 or older each week, despite the popularity of MP3 players and the growth of Internet-only stations, Arbitron, a media and marketing research firm, reported last month. Even 89 percent of the young radio audience, youths ages 12 to 17, continue to tune in each week. And though some stations have cut their staff significantly, opportunity is on the horizon, programmers say.

WBNS (97.1 FM) dropped 16 people in programming, sales and promotions in January when it dumped its music format and began simulcasting the all-sports format on its AM sibling, WBNS (1460 AM). The move, while painful, was made with an eye toward the future, said Dave Van Stone, who oversees both stations as president and general manager of RadiOhio, a sister company of The Dispatch Printing Company, which also owns The Dispatch. “I’m really, really optimistic about the future,” he said. “This year has stunk for everyone, of course. But, for us, sports is a huge opportunity and the listeners have supported our move to FM. We’ve gotten great response from advertisers, too, so I think it will play out as we hoped.”

Can radio survive?

“I still believe in the future of radio,” Goodman said. “It will be redefined by the medium of its delivery. That will be different. But hopefully we can continue to contribute the same things to the community that we’ve always done. It’s not only about the profits.”

Information from the Philadelphia Inquirer via the Associated Press was included in this story.

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Revenue in the Columbus radio market, the nation’s 36th largest, fell by 21.2 percent in the first half of 2009. [source]