to attend the 2008 Marketing to African-Americans with Excellence (MAAX)
Summit? Order the workbook which contains hard copies of the presentations
made by some of the nation's top experts on the Black consumer marketing,
R. L. Polk
Starcom MediaVest Group
U.S. Census Bureau
2009 by Target Market News Inc. All rights reserved
228 S. Wabash Ave.
Chicago, IL 60604
Philadelphia radio stations weather hard times with cutbacks, double
shifts By Jonathan Storm
(July 12, 2009) Elroy Smith has been in radio since 1981, and it's not
what it used to be.
"Jocks are working double shifts," says Smith, Philadelphia operations
manager for urban-oriented Radio One. "I'm doing three stations here,
and one in Charlotte."
"We have to survive. . . . This is no joke."
Nobody's laughing. Stock prices have plummeted, and red ink is rising
around Radio One and the entire industry, struggling with a mountain of
debt and a disastrous drop in advertising revenue, although listenership
has shown only a modest decline.
Stations are streamlining operations and trying to adapt to the digital
age, but radio people, traditionally the most creative local media
moneymakers, are way behind newspapers, magazines, and television in
extracting cash from the Internet.
Revenue in the Philadelphia radio market, the nation's eighth-largest,
fell from $326.9 million in 2004 to $265.1 million in 2008, a slide of
19 percent, reports BIA Advisory Services, a leading financial analyst
for the industry.
BIA sees the trend continuing for at least two more years, and getting
worse before it gets better. Last month, it increased its gloomy
forecast for 2009, saying national radio revenue would decline not 11
percent ($1.7 billion) from 2008, as first expected, but 15 percent
The deepening economic distress has frayed nerves. "Our lives are very
stressful and unpredictable. There's more insecurity than ever before,"
says Smith, who manages WPHI (100.3), WPPZ (103.9), and WRNB (107.9) and
began managing the Charlotte station in April.
Two words apply to radio in 2009, says BIA research vice president Kip
Cassino, who has spent 30 years as a media consultant: "Nothing good."
Examples of radio's woes abound:
Clear Channel Communications Inc., which operates six stations in
Philadelphia, including WRFF (104.5) and WDAS (105.3), saw Standard &
Poor's chop its debt rating two notches last month to CCC, reflecting
concern that the company may default. In 1999, the Wall Street Journal
ranked Clear Channel the fifth-best-performing stock of the decade.
Nationwide this year, Clear Channel has laid off more than 2,400
employees, more than 10 percent of its workforce.
CBS Corp., with five Philadelphia stations -- WIP (610), KYW (1060),
WPHT (1210), WYSP (94.1), and WOGL (98.1) -- also took a hit last month
when S&P knocked its debt down a peg to just above "junk" status.
Radio One reported a net 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, according to a statement by
Alfred C. Liggins III, Radio One's president and chief executive
There are breaks in the clouds roiling over radio, but whether they are
opening or closing is uncertain.
At first glance, radio -- flexible and entrepreneurial, with a
relatively stable audience -- seems better positioned than the other
older media to ride out the recession and, perhaps, integrate itself
into an Internet, iPhone, iPod world.
But it's still struggling, BIA's Cassino says.
"They should be making megabucks off the Internet, but they don't seem
to really care much about it," he says. "You would think radio would
have a leg up when it comes to the Web, just because WXYZ.com can start
up providing exactly the same service as WXYZ-FM."
Not only can radio stream its regular programming and get ratings
counted, but also users of computers and smart phones can view
associated entertainment and advertising content while listening to the
"We've found that 27 percent of Americans have listened online to
radio," says John Fullam, vice president and market manager for Greater
Media Philadelphia, which operates WMMR (93.3), WBEN (95.7), WNUW
(97.5), WMGK (102.9), and 950ESPN, an AM sports outlet. "We're trying to
transform this into a model where digital and traditional methods are
Elvis Duran's New York morning show, which is syndicated to 18 other
markets, including Philadelphia, where it airs on WIOQ (102.1),
demonstrates how well the old and new can work together creatively.
"We're not purely just a radio show anymore," says Duran. "The Internet
is a sidekick to our show. People can look at pictures, read more about
things on our Web site. We're very, very active."
But activity doesn't boost the bottom line.
"Streaming, Web sites, and so forth, people know that it's there. They
know it has value," says Ellen Drury, president of local broadcast for
GroupM Matrix, a major media buyer. "How do you get traditional shops,
which have separate online departments, to put it in their buying plans?
It certainly hasn't become the revenue stream they hoped it would be."
Radio can claim a more faithful audience than other traditional media,
although a new ratings-measurement device has created confusion in the
Weekday newspaper circulation nationwide declined more than 11 percent
in the year that ended March 31. Prime-time network TV ratings are down
6 percent since 2006-07, and dropped 16 percent last season in the
18-to-49 age demographic that is the major currency in TV advertising.
In contrast, the radio audience in the Philadelphia area decreased only
3.4 percent over the last two years by a commonly used measurement, the
"cume," that calculates the number of individuals who listen to at least
15 minutes of radio per week.
In April 2007, according to Arbitron Inc., the primary provider of radio
ratings, 4.45 million different people 6 or older listened weekdays
between 6 a.m. and 7 p.m., radio's prime time. In April 2009, 4.3
million tuned in.
The number of people listening in an average quarter-hour decreased from
582,800 to 572,000.
New measuring techniques found a larger cume than anyone suspected, but
also revealed that listeners spend less time than previously thought
with their favorite stations.
Still, that should not affect ad rates, says Drury, of GroupM Matrix.
"The strong stations are still the strong stations," she says. "Losing a
share point here or there, that's not going to kill you."
Flexibility is one of radio's advantages. With more than 100 formats and
sub-formats, radio is much more finely tuned demographically than TV or
"An advertiser trying to reach the African American community would
probably go to Radio One," with stations broadcasting hip-hop, gospel
music, and contemporary rhythm and blues, says Mike Gillespie Sr.,
president and founder of the Gillespie Group, a Philadelphia advertising
and marketing company. "If you have a car repair on lower Germantown
Avenue, you don't need Cherry Hill."
But such flexibility is no match for an economic crisis of historic
proportion, as Radio One's troubles show.
"These are unprecedented times," says Fullam, of Greater Media
It's tough for anyone who sells advertising. Radio has to navigate the
same turbulent economic waters that other media do, explains Jeff Haley,
president of the Radio Bureau of Advertising, and the depth of those
waters, as measured in advertising revenue, diminished 12 percent in the
first quarter of 2009, according to the Nielsen Co.
Not only are fewer people buying advertising, but they also generally
are paying less per unit because of the decreased demand. Rates may stay
the same, but stations will throw in some free spots to sweeten a deal.
Radio has a much bigger problem than declining revenue; Haley calls it
the "financial structure overhang."
Much of radio is leveraged up to the little red lights on the tippy-tops
of its tall antennas.
The "market perception of radio is abysmal," says Mark Fratrik,
financial vice president of BIA. "The people who own the debt don't want
to acquire these stations because there's nobody out there to buy it."
In some cases, you can't even give a radio station away.
An investment firm donated a station playing inspirational music to a
Georgia religious organization. A few weeks ago, the Augusta Radio
Fellowship Institute, citing "the economy and other factors," gave it
The "market for broadcast stations has been almost nonexistent for more
than a year," says the Radio Business Report, a trade journal whose RBR
Radio Index, a measurement of stock values in the industry, lost about
80 percent of its value between March 31, 2007, and March 31, 2009.
"We used to not list penny stocks," says Jack Messmer, who maintains the
radio index, "but we've had to leave them in because otherwise there
wouldn't be enough companies in the index."
Changes in the way people listen to music have had only a small effect
on traditional radio.
Sirius XM satellite radio, which has leveled off at about 20 million
subscribers and narrowly avoided bankruptcy this year after accumulating
more than $6 billion in losses; Web-based radio, such as Pandora; and
digitally recorded music all siphon some listeners from traditional
radio. But many of the new services and devices attract additional,
rather than alternative, listening.
"Different ultimate delivery systems have increased the total number of
listeners," Drury says.
Target Market News
Congratulates the Recipients
of the 2009
of the Year
of the Year
LOUIS CARR President. Broadcast
of the Year
CRYSTAL WORTHEM Multicultural Marketing Manager
Ford Motor Co.
of the Year
ESTHER FRANKLIN Executive Vice Pres.,
Director of Cultural Identities
Starcom Mediavest Group
of the Year
President / CEO
"UNDER THE INFLUENCE"
Tracing the Hip-Hop Generation's Impact on Brands, Sports, & Pop Culture
By Erin O. Patten
Hip-Hop culture has had a profound impact on marketing in the past two
decades and it provided an intersection for brands, sports, and popular
culture. Erin O. Patton documents this impact in his new book, Under the
Influence--Tracing the Hip-Hop Generation's Impact on Brands, Sports, & Pop
Adam Graves, senior vice president of Deutsch Advertising says of Under
the Influence and Patton: "If there are any marketers out there that still
think they can ignore the urban market they'd better think again...This
isn't just a book for so-called urban marketers; this should be
mandatory reading for every marketer in the country."
Click here to order