Originally published January 20, 1997
While most of the big talk in media these days centers around the World Wide Web, real money is quietly being made in radio.
“Suddenly,” says Tom Taylor, 47, editor of the daily fax tipsheet, Inside Radio, “radio is starting to look like other businesses.”
What he means is that for the first time, it’s possible for one person or company to own as many radio stations as they can afford. Until 1992, federal regulations limited station ownership to just a handful per owner. But in ’92, under the so-called duopoly rules, the same company could own two AM and two FM stations in the same market. And then in February of last year, the Telecommunications Act of 1996 turned the industry inside-out, permitting virtually unlimited numbers of stations to be held by a single company.
“It’s only been 11 months, but it feels like 11 years since the Act took effect,” Taylor says. “An avalanche was unleashed, as dramatic a change as we’ve ever seen in the business.”
Instead of controlling seven or 14 stations, radio groups with anywhere from 75 to 300 stations have emerged. That may not seem like much in a country with nearly 10,000 commercial outlets. But in cities from New York to Tampa and from Dallas to Los Angeles, one company may now own separate stations featuring Top 40, country, news and rock formats.
“If you look at the CBS/Infinity group, that company is the leading revenue company in eight of the nation’s top 10 markets,” Taylor says.
The recently completed $4-billion merger between CBS Radio and Infinity Broadcasting created a broadcast company with 83 stations and an estimated $1-billion in advertising sales this year. On the programing side, it brought together strait-laced CBS talent such as Dan Rather and Charles Osgood with raucous Infinity personalities such as Howard Stern, Don Imus, Tom Leykis and Don & Mike.
“This growth spurt has made a lot of people notice radio for the first time, particularly on Wall Street,” Taylor says. “The next wave of combinations will be very large groups. The joke going around is that the next wave of owners will be the Baby Bells and Microsoft.”
On a regional basis, Taylor says that Bud Paxson, a co-founder of the Home Shopping Channel, created a mighty tempting company in Florida by buying up multiple stations — 38 in all — in every one of the state’s major markets.
“If he wants to sell, he can say, ‘Look, here’s Florida,’ ” Taylor says. “Because of the changes in the law, these local groups are much more attractive to investors.”
Prices for stations have skyrocketed in recent years. Taylor says that former singing cowboy Gene Autry recently sold his last station, KSCA in Los Angeles, for $112-million. It is changing formats to Spanish language broadcasts.
“Go back 10 years and that station would have been less than $10-million!” Taylor exclaims. “But radio is a great cash-flow business. That’s one of the things that attracted Wall Street.”
The impact of all this on programing is still uncertain, although Taylor thinks the number of duplicative formats will shrink. In Seattle, for example, Taylor says multiple ownership reduced the number of country music stations from three to two.
“If you own four shoe stores in a mall,” Taylor says, “you wouldn’t sell the same shoes in all four. You’d aim one at women, one at men and one at kids. You’d segment to give each their own identity.”
Still, it’s safe to assume a company such as CBS will move quickly to put newly acquired talent/money machines such as Stern and Imus on more of its stations.
Could this be the beginning of a return to 1940s-style network radio, in which listeners from coast-to-coast could simultaneously hear the same programs?
“Imus has 75 stations. Stern is on 35. Rush Limbaugh is on more than 600 and Dr. Laura (Schlesinger) is a hot newcomer on hundreds of radio stations,” Taylor says. “I think the 1990s have brought more willingness to use syndicated programs. The technology is here — stick a satellite dish on the roof and you get the world.”
Radio has even invaded cable TV; Taylor says MSNBC’s simulcast of “Imus in the Morning” is its highest rated program and E!’s edited version of Stern is likewise that network’s top draw.
Drawbacks? With fewer stations carrying locally originated programing, breaking into the business will be tougher for the next Stern, Leykis or Tom Taylor, who spent the bulk of his career spinning plastic waffles at WPST-FM in Princeton.
“I literally went for coffee and sandwiches to get my foot in the door at my first station, then dubbed tapes,” Taylor says. “That’s how a lot of people get in the business — those opportunities may no longer exist.”