An American Radio Trilogy, 1975 to 2004

Welcome to Volume One of AN AMERICAN RADIO TRIOLOGY. My goal with this series of books is to provide a complete and comprehensive history of the commercial terrestrial radio industry from the mid 1970’s to 2004. Now I realize that this is an ambitious undertaking but it is, I feel, important that it be accomplished.

Volume One and Volume Two will provide the statistical groundwork for the theses, conclusions, and predictions which will be offered in Volume Three. Volume One serves to the reader millions of statistics about commercial radio in over 150 individual radio markets. The data is structured and ordered in a manner, which allows the user to compare and contrast the historical events in each market covering a thirty-year period. Volume Two will provide data on a national basis. I will take data from all these markets and use it to illustrate national trends in radio listening and usage, formats, ratings, and revenues.

I believe that the period being covered by these books will one day be considered by scholars to be the most interesting part of the medium’s history. There were so many trends and cross currents during these thirty years. The shift in audience from AM to FM. The rise of the Wall Street supported entrepreneur and the corresponding decline in the family radio company. Radio’s development from a secondary advertising medium into a huge twenty billion dollar per year industry. The deregulation of radio which has forever changed the industry. Finally, the events of the early 2000’s, which may possibly have, marked the beginning of terrestrial commercial radio’s decline.

I believe that it is within the realm of possibility that traditional radio saw a long-term peak in the year 2000. This “Trilogy” will investigate that possibility. If traditional radio is beginning a decline this event is the result of a long series of historical complexities. It is not the result of one event, or one decision, or one company. It is always the easiest way to tag a few generalities with the responsibility for major changes of historical proportions. History is caused by thousands or millions of small events, which combine to cause and create important changes.

Only rarely does history predict the future. Conversely, only rarely does history not provide important clues about the future. The goal of these volumes is to find some of these clues from amongst millions of bits of data.

As I write these words I think it is fair to describe the traditional radio industry as being embattled. This has happened to the industry before in the 1950’s, the late 1970’s, the early 1990’s and at other times. Radio has always not only survived but also prospered. This time, however, feels much different. There are a lot of negatives that traditional radio must deal with. Yes, the traditional radio industry will certainly survive and, indeed, may do quite well. However, there are huge challenges ahead and the industry needs to adapt and evolve if it is to meet those challenges.

I want to share with you some positions I have as I complete Volume One and begin work on the rest of the “Trilogy.” These are theses, which my subsequent work will either prove or disprove. I suppose it is possible that I will neither prove nor disprove some of these points but I hope that does not occur.

1. Our listeners are going away.
2. The current models (financial and programming) are broken and in need of immediate repair. These models have not been destroyed but if the needed repairs are not quickly and thoroughly made then traditional radio will become a lesser media form.
3. Periods of great radio revenue growth always have causes, have catalysts. Each period of such growth in the last thirty years is explainable. Such periods were the late 1970’s, the mid 1980’s and the mid and late 1990’s. I see the chance of a similar growth spurt in the short to medium term (until 2014) as unlikely.
4. Radio has maltreated its listeners and advertisers. Too much clutter, too many station promos, too little leadership, and too much research. We follow our listeners instead of leading them. We pander to them.
5. The most recent revenue growth spurt—the mid and late 1990’s —was only in part explained by a strong economy. Most of the gains were caused by expanded inventories of radio spots. The healthy economy used up the excess inventory but only at compressed prices. Revenue growth came as a result of increased spot loads at the then current pricing. Very little revenue growth came from increased overall rates.
6. BCF and EBITDA are dying concepts for the financial analysis of radio companies. Net profits and earning per share (EPS) and real returns to shareholders are not.
7. Traditional radio companies can no longer be considered “growth” companies. They are now mature companies with limited growth potential and nowhere to go (within the medium) to seek new growth or new revenue streams. Most radio companies are saddled with high debt loads, which prevent them from aggressively returning capital to shareholders through dividends and stock repurchase programs. Radio companies should accept the reality of the situation and get themselves in a position to return money to shareholders.
8. Consolidation has helped the quality of the radio product, the actual “on air” presentation. It has not helped to expand the range of programming choices available to our audiences. This has been a huge disappointment.
9. Consolidation has done harm to one of our most basic and important tenets of commercial radio: the ideal of localism.
10. As much as I have come to regret some of the results of consolidation I still firmly believe that there was no moral, ethical or legal reason that the FCC and Congress should not have allowed it to happen. The radio industry got what it wished for and now must deal with a whole host of unintended consequences.
11. The key to dealing with many of the problems is held by one entity: Clear Channel. Clear Channel has amassed such a huge portfolio and such massive power that I feel its actions (or inactions) will strongly influence or even shape the future of traditional radio.

So these are my positions going into the publication of the Trilogy. It will be interesting to see where I stand when I complete this series in late 2005.

I do consider this Trilogy to be the capstone of my career in the radio industry. More importantly these books will provide students of the industry with a historical record; a record I think would have otherwise, at least in part, disappeared.

J.H.D.
November 2004