When I heard about the latest Cumulus bloodbath in San Francisco, I had to make this logo. About 20 staff were fired at KFOG and KGO. The financial press often ignores the real reason for these mass firings. The layoffs are part of the plan and not a freak result of a competitive market. Quite the contrary, consolidation occurs because competition is gone. It won’t matter to Cumulus if they fire their star talent because they also own the competition (who might have otherwise beaten them). Consolidators fire staff so that they may run a skeleton business and claim an increased profit through fewer expenses. It’s that simple.
Competition is actually what we need to end this radio nightmare. Businesses operate at the speed of competition, not at the speed of the consumer. When stations have to compete for the consumer, that’s when great programming occurs. However, corporate radio has pushed the government to create this alternate reality where competition is not allowed. Competition is bought out and consolidated. Rival consolidators now divide entire cities for monopoly control. In the past, many smaller broadcasters acted as disrupters and sent our culture into new, exciting places. Breaking up the consolidators would act as a stimulant to the economy through more local jobs and would also jump start the culture through more local programming. Music movements begin with faith and that is something that consolidators see as a negative on a balance sheet. It takes a human being who feels the music and knows one’s audience to make radio work. That is something that consolidation, by its very nature, destroys for quick gain.
Jim Ladd’s book Radio Waves, is part memoir, part historical narrative about the rise and fall of freeform FM radio. If you don’t know what freeform radio is, you will certainly recognize it in this book, as the very soul of radio. It’s the ability of a local DJ to pick music that they love, play it and speak as they like on the air for their entire show. Such freedom is now gone with tightly restricted corporate playlists and curtailed speaking times. Ladd shows with delicious detail how FM once garnered huge audiences through the simple force of sincerity and localism. The book may be a requiem for FM commercial radio, but is is also an unsettling reminder that good radio is just one decision away. But as long as corporate bosses and finance tycoons run radio, the “safe” choice of pushed programming will always win.
The final chapters of Ladd’s book read like a greek tragedy about the impending murder of the living LA rock station Radio KAOS. Out-of-town owners, motivated by ever-increasing appetites for cash, turn solely to accountants and research to determine programming. The result is a mishmash of mediocrity that tanks the station. The only person who learns a lesson from this is the reader, as the same catastrophe is played out over and over again as management moves up and DJs and listeners are moved out.
Radio Waves is an engaging read that is sprinkled with the author’s personable encounters with rock’s greatest legends. In the end, I was left wondering if all of us know that good radio requires localism and a talented staff; how long will it be till we reimpose the localism rules that were ditched by the government? The move is certainly ripe.
306 pages, St. Martin’s Press
High finance is secretly getting rich off of Radio while ordinary investors (and the tax payers) are stuck with the bill. Private-equity firms load tons of debt onto radio while hand-picking the management and skating with fees. It is no wonder that commercial radio is dying. Those in charge are not radio people. The film CORPORATE FM shows a way out of this.
Radio (like the United States) is the most relevant and vibrant when it is of the people, by the people and for the people. The out-of-town owners have no personal stake to make it live again. Lincoln might say…
Radio, the experts say “call it media”. Those experts are wrong and this is why it matters.
Many well-meaning radio consultants are afraid that emerging technology will destroy radio. These consultants even swayed the former head of NPR “National Public Media?”. Ask anyone on the street what it is; they call it Radio. Even at pledge-time the multitude of volunteers call it radio. These consultants believe that to save radio, it must become more like the internet. We already have an internet. If it were the 1950’s would we be telling radio to call itself TV? Radio survives because it is…radio first.
Changing from “Radio” to “Media” is wrong for 4 reasons.
1. It turns it’s back on 40 years of branding (for NPR). Who would tell Coke change its name from Coke? There are plenty of new popular energy drinks and esoteric teas are gaining market-share. It could make sense if you went only by the numbers. And that is exactly why the consultants get it wrong about radio repeatedly. Coke is Coke and Radio is Radio. [continue reading…]
The century old National Press Club is a couple blocks from the White House. It refers to itself as “The Place Where News Happens”. After a crazy subway ride in rush hour DC, Jill and I emerged in the “Edward R Murrow” room of the epicenter of establishment-journalism. We were in DC to show the film at the DC Independent Film Festival. The press club was asking about possible new rules for yet more consolidation. I had something to say to them. [continue reading…]
Walt Bodine knew his audience.
A good talk-show host will…
- Show that they are personally interested in what the listener has to say (or many will not call in).
- Make the guest feel comfortable.
- Love their listeners and community.
- Be comfortable with the conversation going in directions that they did not pre-plan.
Walt Bodine was one such individual. He passed away today. I had the pleasure of shooting his last live show for B‑roll for the film. This 18 second clip shows his personality. He was a giant among talk-show hosts who learned his craft on the night shift many years ago. See video below. [continue reading…]
What is Private Equity? How do they make their money? The answer to this mirrors the answer to “Why does commercial radio suck?”
The way a firm makes profit can say much about how it behaves. For instance, Private Equity makes money off of fees taken from investors and from maintenance fees from the companies that they own. They can make substantial commissions if they can sell the companies they own for a profit. This means that short-term profits that make the company appear attractive to a buyer are more important than costly long-term business infrastructure improvements that might not pay off for 10 years. This lack of long-term motivation has hurt Clearchannel as they have stopped investing in their employees (and you the listener) in favor of short-term profits by cutting as much staff as possible. Private Equity also makes money by shifting debt onto others. The debt is shifted onto the station. This maneuver is called an LBO or “Leveraged Buyout”. See video below. [continue reading…]
In 1955, the government convicted the Kansas City Star (newspaper company) with monopoly charges. The Star had abused their power with the ownership of two newspapers, a TV station (WDAF TV) and a radio station (WDAF radio). They forced advertisers to buy ads for all 4 properties, and also punished advertisers for utilizing other media by placing their ads in unfavorable places and times. The Star was guilty of restraint of trade. Because the abuse of monopoly power was so tempting, the FCC ruled “cross-ownership” of several media forms within the same city illegal.
Since that time, high finance has entered the ring. The “Mergers and Acquisitions” lobbyists are constantly urging the FCC to allow for more mergers and more short-term profits via staff layoffs. [continue reading…]
The podcast “Sound Track of the Week” (SOTW) has announced that they are starting “Radio Diversity Day” to take place on December 5th 2012. They say they were inspired by the movie Corporate FM. The idea was born during an hour long interview that they did with Jill and me late one evening.
The Sound-Track of the Week crew and us.
On Radio Diversity Day, listeners are encouraged to call up their local radio stations and elected officials and demand more diversity in programming. Urge them to play more local music and hire more live local talent to interact with and deliver to the community authentic radio programming. SOTW has created a web page for the event here.
We are providing these additional references to help listeners. [continue reading…]
They lump debt on the station but do not share in the risk.
I find myself explaining Private Equity this way. Many ask “How is this even legal?” The consequences are hidden from the financial reporters (who often report the mergers as a good thing) because the firings happen over time as the debt matures and refinancing and/or reselling become immanent. The more debt there is from the corporate buyout, the more employees that will have to be fired so their former salaries can go toward paying off that debt. For more information watch a short video expert here.
Prometheus radio project has made this possible.
A possible new radio station called “Fayetteville Community Radio” held a screening of Corporate FM to motivate supporters behind the venture. The station is possible because new low power FM frequencies (LPFM) were legalized by bill in congress in 2010. “It fired them up” said organizer Joe Newman about the film. “It was a very good presentation for what we are fighting for. It inspired people to take that extra step”. That evening several audience members, who had left commercial radio, volunteered to help community radio become a reality in Fayetteville Arkansas. [continue reading…]
Consolidation has displaced so many DJs from serving their communities. When SHORTY AND THE BOYZ worked at the Cumulus owned VIBE they were prohibited from playing local music or using speech that sounded too “urban” (a code word for black). Now gone from Cumulus, they have begun their own venture. Their internet show does not get broadcast over the entire city, but we can stream it to see that the light of talent burns bright outside the halls of corporate radio. See the video they produced.…
Radio Suicide or Radio Murder?
Radio used to make money through advertising. Radio stations had a motive to engage the public in order to sell their ratings to the advertisers. “We sold the advertiser [an] audience,” says veteran broadcaster Dick Fatherley. Here capitalism works because the station makes money by being relevant to the audience.
Nowadays radio, like many other industries, makes its money through high finance gamesmanship. Money is made by buying and selling the company rather than what the company produces. In this model it makes sense to cheapen the product for short term financial gains. In other words a station can fire an entire staff and then post the reduced overhead as if it were a profit. This works for a short while till the listener gets sick of automated radio. It works perpetually when they can do it to the entire spectrum because the consolidator does not have to face their biggest fear: competition. The loser is the listener, the community and the radio station employees.
Private Equity firms are not afraid to [continue reading…]
No. This is why it is important not to just hate commercial radio and hope for the best. I got an email from a listener who was happy that Corporate radio was dying. He thought that we should “starve the beast”, implying that if it went bankrupt, the rats would jump off a sinking ship and someone who cared about their community would buy the station back. I wish that were the case. The way high finance manages radio stations, allows them to keep them in a zombie state rather than killing them. Even if the station does go bankrupt, the same firm that sucked all the life out of the company can manage to keep the company after bankruptcy. This is called a “pre-packaged bankruptcy”. In such an arrangement, they convince a judge that they are the best ones to manage it, because they obviously know whats wrong now and they promise to pay a percentage back to debtors. The creditors may get 90% of the new company. Who’s complaining? The listener would if they knew about it.
art by paulorocker
Imagine you were a DJ at Citadel (a radio consolidator) where you watched all your friends get fired and the quality of the programming drop thus driving listeners away. The company is huge, thanks to debt financing and mergers spurred by a private equity firm (Forstman Little and Company). In 2009 when the company is heading for chapter 11 you may think, at long last the CEO Farid Suleman is going to get his comeuppance. Banks keep radio for themselves to trade