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Radio

Intro

By the Project for Excellence in Journalism

In 2006 the transformation of radio into something broader — audio — accelerated.

The use of iPods, portable podcasting, satellite signals, digital HD radio, Internet streaming, and even phones as music-listening devices all grew. There were further signs that the new technologies were beginning to have an impact on traditional radio, from audience behavior and economics to transforming the ownership and strategy of the industry and altering the projections for the future.

For now, the size of traditional radio’s audience remains fairly stable. But the amount of time people spend with it is beginning to ebb.

In the meantime, other, larger signals of change were unmistakable. The biggest of the year was the decision by traditional radio’s behemoth, Clear Channel, to transform itself into a private company and sell off its TV holdings and well over 400 of its radio stations. Clear Channel’s executives hinted that they no longer thought they could manage their long-term survival if they had to focus on the short-term demands of Wall Street and public ownership. Is the move a harbinger of things to come, of a new era — a move away from large, public multimedia companies and toward private ownership?

While the older players in radio maneuvered, the growing array of alternative technologies was still sorting itself out. Satellite radio, the seeming golden gadget a year earlier, continued to grow, but not as much as expected in 2006. And in February 2007 the two satellite companies announced plans to merge, though anti-trust laws may pose a problem.

The use of podcasting also swelled. More news sites and music distributors began putting content on their Web sites to download on MP3 players, cell phones and PDAs (personal digital assistants, to give the hand-held gizmos their full name). The PDA option is growing most. But it still remains to be seen how much people will incorporate the idea of downloading programs for later listening into their lives.

And traditional radio’s best option to compete with all this, HD Radio, took on more momentum during the last year. But cost still remains a major roadblock.

The only notion that seems clear is that the first major new communication technology of the 20th century — radio — is changing rapidly and appears likely to survive the early years of the21 st. The form or forms the medium will take, however, are still shifting.

Audience

Despite the avalanche of new listening options, nearly all Americans still listen to the standard AM/FM radio — now eight decades old — at some point during the course of a week.

According to 2005 data found in the most recent “Radio Today” annual report (2006) —issued by the radio ratings company, Arbitron — 93.7% of people age 12 years and older still listen to traditional radio each week.¹

That represents a drop of 1.6 percentage points since 1998, a relatively small decline compared with other media facing expanded competition from new technology. The one caveat is that the drop appeared to accelerate slightly in 2005.

Radio Reach

Percent of the population 12 and older, 1998 - 2005

Design Your Own Chart

Source: Arbitron, “Radio Today: How Americans Listen to Radio, 2006 Edition,” February 14, 2006

The weekly listenership of traditional radio has also remained fairly stable. In an average week in 2005, according to the Arbitron data, people listened to the radio less than they did in 2002 by just under an hour. That takes the amount of average weekly listening down to 19½ hours, compared with 20¼ hours — a decline of 5% in three years.²

Radio News

If traditional radio’s audience is fairly stable, what about the listenership of news content in particular? The answer, given the complexities of measurement, is not a simple one.

For traditional radio, news remains a major draw. Arbitron each year measures what radio format listeners spend the most time with. Before 2005, the latest year for which there are data, the news/talk/information category was usually at the top of that list. It dropped in 2005 to the No. 2 spot, behind country music.³ The reason for news/talk/information’s fall, however, is a change in the way Arbitron does its counting, not a precipitous fall in audience. The news/talk/information format previously consolidated all news, all sports and talk personality programming. The latest Arbitron report, released in 2006, created separate categories for each of them. In the new measurement, 10.4% of listeners said they listened to the mixed format of news, talk and information radio (compared to 10.6% the previous year), while 2.1% listened to all sports, 1.5% to all news and 1.9% to talk personality.

When the excluded categories are added back in, the figure rises to 15.9%, which is unchanged from the previous year. And as in the past, the format moves to the top of the list of radio formats. Country music, the second most popular format, dropped slightly from the previous year’s data, down to 12.5%, from 13.2% in 2004.⁴

According to Arbitron data from the past six years, audience for news/talk/information radio has remained fairly consistent for most age groups. But the most recent data do illustrate a few changes, most notably a growing interest in news/talk/information among the elderly. Almost 20% more listeners between the ages of 55 and 64 tuned into news/talk/information programming in 2005 than in 2004. On the other hand, 25-to-34 and 35-to-44-year-olds listened less in 2005 than they had in the previous year, making noticeable departures from a once stable trajectory.⁵ Those changes could be a reflection, however, of changing national demographics, particularly with the large baby boomer generation entering retirement, and thus an era of increased leisure time that may be spent with radio news.

Listeners to News-Talk-Information Stations, by Age

1998-2005

Design Your Own Chart

Source: Arbitron, “Radio Today: How Americans Listen to Radio, 2006 Edition,” February 14, 2006

* 1998 data includes children’s formats.

Those who tune in to news/talk/information are also more educated than listeners to other radio formats, except sports radio. Over 43% of news/talk/info listeners are college graduates, compared with 48% of sports listeners, 15% of listeners to the popular country format and 27% of adult-contemporary listeners.⁶

The audience for news/talk/information radio also skews Republican. That finding is new to Arbitron’s annual “Radio Today” report. In its 2006 report, the company asked survey respondents to identify their political party affiliation. Of those who tuned into news/talk/information, 36% were Republicans, 27% Democrats and 26% Independents. The Arbitron report noted as general tendency that commercial talk radio appeals to a Republican audience.⁷ (See Talk Radio).

New Audio News

If news continues to be such a big part of traditional commercial radio’s appeal, does it hold the same sway in the new audio formats?

That is harder to answer. For now, the data on newer audio formats — satellite radio, Internet radio and podcasts — do not specify the type of content people tune in to. The total number of people and the time they spend listening to news is expected to become measurable with Arbitron’s Portable People Meter starting in 2007.

But a survey released by the Pew Center for the People and the Press does provide some insight into how many people are using the new audio devices to access news content, and how frequently.

The data suggest that the devices are not being widely used for consumption of news, not yet anyway. Only 12%⁸ of the Internet population has ever downloaded any kind of podcast on an MP3 player, and only 2%⁹ has done it for a news podcast, according to Pew data.

News on Mobile Devices

Source: Pew Research Center for the People and the Press’ biennial consumption survey, “Online Papers Modestly Boost Newspaper Readership,” July 30, 2006

But of MP3/iPod owners (25.5% of the population), 8% say they download news podcasts to their MP3 players.¹⁰ Though that is a small percentage, Pew survey data show that about a quarter of the news podcast downloaders report doing so daily.

Watching or listening to news on a cell phone is about as popular as podcasts. Some 6% of adult cell phone owners (who make up 74% of the population) say they receive news headlines or news reports on their cell phones.¹¹ And a little over a third of them say that they do so daily.

BlackBerry and Palm Pilot users, however, are much more avid consumers of news on their portable devices. Of the 12% of the population who own such a PDA device, nearly one in five (18.5%) say that they receive news headlines or reports on it.¹² Just over half of them report doing so daily. It should be remembered, however, that those people represent only 2.3% of the overall adult population. What’s more, the Future of News study conducted by Robert Papper for the Radio and Television News Directors Foundation showed that fewer than 5% of the U.S. population had ever consumed news on a small-screen device (mobile phone, PDA iPod or the like) and that only about 10% said they had any interest in doing so.¹³

Those numbers represent a small percentage of the total population of portable news consumers, but it’s also true that millions of Americans are receiving news in this manner. Pew data also show that those on-the-go news consumers tend to be wealthier and more highly educated than average, which could soon make them a prime target for marketers.

How big is the overall audience for those new audio technologies? It is worth examining them one technology at a time.

 Satellite Radio

One of the first major rivals to traditional radio — satellite — began to show some signs of difficulty in 2006, ultimately leading to an announcement in February 2007 to merge.

After several years of explosive audience growth but heavy financial losses, the industry began the year with high expectations. It projected not only to continue expanding its subscriber base, but also to begin turning a profit.

The high hopes weren’t realized.

While subscriber bases for the two satellite radio systems — XM and Sirius — did grow, year-end figures fell far below early estimates. 16 Throughout 2006, XM’s forecast of its year-end subscription base declined. In March, the company predicted a base of 9 million subscribers, but by the end of July, that estimate had fallen to between 7.7 million and 8.2 million.¹⁴

At the end of the year, XM reported its subscription base as 7.6 million. Always the leader in audience totals and audience recognition, it remained so; Sirius reported its subscriber base at 6 million.

But in the last two years, Sirius had been closing the gap. XM grew 29% from the end of 2005 to the end of 2006, adding 1.7 million subscribers. Sirius grew even more, 82%, adding 2.7 million subscribers.¹⁵

The two companies’ subscription totals added up to 13.6 million satellite subscribers. That is more than a third higher than the 9 million reported at the end of 2005. Total audience reach for the satellite media, moreover, is estimated to be higher still, since subscriptions represent entire households, but an exact figure is hard to pin down.¹⁶

For the moment, until the people meter system becomes more widespread, analysts must rely on the figures reported by each company for the size of satellite radio’s audience. Still, the platform is growing, while the traditional radio audience is shrinking, though slowly.

Another measure of satellite radio’s audience can be derived from survey data. According to the biennial media consumption survey by the Pew Center for the People and the Press in the spring of 2006, 10.5% of adult Americans said they had listened, at some time, to satellite radio.¹⁷

There are also signs in the data, however, that satellite radio’s growth may be approaching a ceiling. According to an Arbitron survey, only 4% of non-subscribers to satellite radio said they were “very likely” to subscribe in the next 12 months. An additional 14% of non-subscribers said they would be “somewhat likely” to subscribe.¹⁸

One possible explanation for the slowdown in satellite radio growth is competing technologies, including MP3 players (such as iPods), Internet and HD radio, which all offer consumers breadth and diversity in their listening options. And the big advantage that satellite radio has offered and seemed to cultivate most effectively — high-profile talk personality talent — may have proven to be too expensive for successful competition with the portable and customizable choices offered by other digital audio technologies. These will be key arguments that the companies will use before the Federal Communications Commission and the anti-trust courts as they make their bid to merge.

Internet Radio

One new technology that had been slow to gain momentum, Internet-based audio, began to emerge in 2006 as a meaningful competitor.

Internet radio, as the name implies, is audio content offered online, usually in the form of live streaming. One of the appeals of Internet radio is its potential for even greater breadth and depth of listening options. iTunes was an early leader in providing such online listening. Among its many options, iTunes software offers users a wide selection of radio stations to stream live through their computers.

Now, both news and music outlets have jumped on the audio Internet bandwagon. Broadcast radio stations are increasingly putting their content online as audio clips and podcasts. And Web sites like Pandora and Yahoo Music uniquely allow listeners to craft individual music stations that home in on the specific kind of music they enjoy, while discovering new artists in the process. The customizability and choice of such Web sites distinguish them from traditional radio and the other forms of new audio.

Those new Internet options seem to have helped fuel interest. After being somewhat stagnant in recent years, according to Arbitron and Edison Media Research, weekly Internet radio audiences jumped 50% from January 2005 to January 2006.¹⁹ That translates into 12% (up from 8% in 2005) of the American population over the age of 12 — or 30 million people — who reported listening to Internet radio in an average week, according to Arbitron. What’s more, Arbitron reports that the number rises to 21%, or 52 million people, when asked if they had listened to Internet radio in the past month — a 40% increase over the previous year.²⁰

Much of that growth can probably be explained by the big jump in broadband use, which allows for a much faster connection and higher quality sound. According to the Pew Internet Project, broadband penetration in the home jumped 40% from March 2005 to March 2006, rising to 84 million homes, up from 60 million a year earlier. That growth rate is twice that of the year before, and puts the total portion of adult Americans with broadband in the home at 42%.²¹ FCC numbers from a year earlier suggest that the number is lower.²² But both agree that broadband penetration is growing.

In addition to broadband connections, other factors can also explain the increased popularity of Internet radio. Like its video counterpart — particularly YouTube — Internet audio offers consumers flexibility and a shot at innovation of their own. People do not need expensive equipment or broadcast licenses to put their content in the public domain. And traditional radio stations are increasingly offering their content online for listeners to hear at times that are convenient to their schedules.

Another factor is that more radio stations are now streaming their broadcasts online. After big pushes by CBS and Clear Channel, Tom Taylor, editor of Inside Radio, estimates that about 33% of over-the-air radio stations are now streaming. “Radio was slow to get off the mark, but it’s doing some catching up,” he said. Most likely, in turn, some proportion of that Internet radio listening involves people listening to traditional radio broadcasting over their computers.

Podcasting

Along with the Internet, podcasts also saw a good deal of growth in 2006. The rise of MP3 players fueled much of that. MP3 players are pocket-sized devices that enable people to download content from their computers and take it anywhere they go. Music files transferred to computers from CD’s have historically been popular for MP3 downloading. But now that Internet podcasts have gone from being a B-list player to an A-list player, the content of MP3 downloading has diversified.²³

Podcasts originally were popular for giving people the ability to be their own DJ’s and distribute their unique content, similar to the way the Internet granted bloggers a public voice. While still a common practice, the pool of available podcasts is increasingly being filled with content distributed from mainstream media outlets, in the form of news segments and now, even television shows.

The particular strength of podcasts is portability — listening wherever you are. But podcasts also embrace many of the characteristics of other new audio — flexibility, breadth of selection and digital-quality sound. Like Internet radio, the array of listening choices is seemingly infinite.

The selection runs the gamut: homegrown music, citizen DJ’s, iTunes playlists, pajama pontificators and daily news coverage. From the Web sites of NPR and the New York Times, to Yahoo News, local and national television news sites and user-generated content sites like digg.com, podcasts are an important component of news Web sites. A good indicator of the universe of available podcasts is Podcast Alley, an online directory of podcasts. As of December 2006, it catalogued over 27,000 different podcasts, up from the 1,000 it listed two years previously.²⁴

Podcasts also may have a bigger upside in terms of growth than some other new audio. In November of 2006, the Pew Internet Project reported that 12% of adult Internet users (those 18 and over) — or approximately 17 million people — said they had at some time downloaded a podcast to listen to or view at a later time.²⁵ That was up from 7% just six months earlier — an increase of over 70%.²⁶

But in a survey that included people aged 12 through 17, Arbitron, the radio audience rating service, found that teenagers make up a large percentage of those who download podcasts. Of Americans who said they had listened to an audio podcast, one in five was between the ages of 12 and 17. That age cohort contributes largely to the April 2006 Arbitron finding that 11% of the entire population (including non-Internet users) 12 and older — or 27 million Americans — reported having listened to podcasts.²⁷

The rapid growth of podcasting and the high use among teenagers certainly suggest that the podcasting universe is likely to continue growing. The Diffusion Group, a research and consulting firm specializing in new media, predicted that by 2010, the number of American podcast users would swell to 66 million, more than doubling in four years.²⁸

Another factor helping the growth of podcasting is the continued spread of MP3 players necessary to download the material. Arbitron’s 2006 report on digital radio revealed that approximately 25% of Americans over the age of 12 owned such a portable digital music player, up 56% from January 2005 to January 2006.²⁹ Of those digital devices, 11% were iPods (up 83% from the previous year).

And the industry expects MP3 sales to keep increasing as the technology of the devices improves. Microsoft recently introduced its version of a souped-up MP3 player to compete with Apple’s popular iPod, and the battle for the ultimate portable audio/video device doesn’t look like slowing anytime soon. As the devices attempt to invent themselves as the new Walkman, it is reasonable to expect that podcasts will also hit the mainstream.

But if growth in the number of people who podcast seems likely, a bigger question may be how often they will do it. According to Pew Internet data, only 1% of respondents claimed to download a podcast everyday.³⁰

(For more on podcasting, see also “What is Podcasting?” a PEJ commentary).

HD Radio

Many radio professionals believe that HD radio is traditional radio’s strongest chance to compete with satellite and Internet radio. HD radio is a digital version of the traditional AM/FM dial.

HD radio made a big push in 2006. According to the “HD Digital Radio” Web site, 1,001³¹ stations were broadcasting on a digital signal as of December 2006 — about 7% of the total number of stations in the country.³²

The reason that HD radio is thought of as an answer to new digital competition is not only that it offers better signal quality, but also that it allows stations to multicast, or take advantage of HD’s split signal to broadcast multiple stations. The number of stations broadcasting on what is known as the HD2 multicast channel was around 700 at the end of 2006 according to the “HD Digital Radio” Web site, www.hdradio.com.³³

Though HD radio’s penetration rate is low, experts think its future looks promising. Those numbers are already moving faster than the long buildup and slow deployment of its digital television counterpart, HDTV.

There is also evidence that audiences are receptive. Arbitron’s survey on digital radio platforms found that more than a third of survey respondents were interested in the technology. That number rose to 4 out of 10 when satellite radio subscribers were asked of satellite subscribers. Whether satellite subscribers would switch away from satellite or simply augment their listening platforms is yet to be determined.³⁴

In addition the Internet and podcasts, HD technology offers one more way that traditional radio stations can compete in the era of consumer control. (See Economics).

Mobile Radio

Finally, if one can put radio content on an iPod, one can also download it onto other digital devices, including cell phones and PDA’s like BlackBerries and Palm Pilots.

In September of 2006, Clear Channel announced its plan to stream radio content to cell phones with service provided by Cingular Wireless. The mobile radio program began streaming content out of New York’s station WHTZ-FM Z100, and includes live radio and news features, as well as on-demand podcasts. The service is called Z100 Mobile, and requires a subscription fee of $2.99 a month. Subscribers to the service can also request songs and locate the titles and artists of recently played songs via text messages on their cell phones. Clear Channel reported in its September press release that it expected to expand the service to 100 stations by the end of 2007.

Demographics of ‘New Radio’

For now, the new digital forms of audio are not only expanding the potential for listening beyond that of traditional radio, they are also attracting a different audience. Some of these differences are to be expected, but others are more surprising and subtle.

To begin with, contrary to popular conception, teenagers are not necessarily the most avid consumers of new technology, at least not with new audio devices.

Young adults, for instance, those between age 18 and 34, are the most likely to listen to Internet radio. Nearly 1 in 5 does so at least once a week, compared with closer to 1 in 10 of 12-to-17-year-olds.³⁵

Teenagers, though, are more likely to listen to podcasts — 21% of people under 18 report doing so — but listening to podcasts is equally as popular with 35-to-44-year-olds, followed closely by people 25 to 34, at 20%, and 45 to 54, at 17%.³⁶

The listening device that reigns supreme with youth is the MP3 player. A majority of U.S. teenagers (51%) now report that they own an iPod or some other brand of portable digital music player, according to Arbitron.³⁷

Of the new audio formats, satellite radio attracts the “oldest” crowd, though it isn’t really old at all: those between 35 and 44 are most likely to listen to satellite radio. Of those surveyed in that age group, 24% said they listened to satellite radio, followed by 20% in the 25-to-34 age range and only 6% of those 18 to 24.³⁸

Weekly Use of Digital Audio, by Age

2005

Design Your Own Chart

Source: Arbitron, “The Infinite Dial: Radio’s Digital Platform”, April 13, 2006

The new digital technologies also tend, at the moment, to skew toward the more affluent. Americans who make less than $25,000 a year — though they make up one-fifth of the population — constitute less than one-tenth of the audience for any of the new audio formats.³⁹

Those who make more than $100,000 a year — 14% of the population over all — make up over a quarter of those who report listening to satellite radio.⁴⁰

Podcasting also skews toward the affluent, but not as heavily. Though 22% of people who listen to podcasts earn more than $100,000, more than half of podcast downloaders (55%) earn between $25,000 and $75,000.⁴¹

Weekly Use of Digital Audio, by Income

2005

Design Your Own Chart

Source: Arbitron, “The Infinite Dial: Radio’s Digital Platform”, April 13, 2006

As in years past, males are also more likely to consume the new digital audio options, making up 58% of the population who listen to radio online. Other new audio formats are more balanced between the sexes, though still tilt toward the male side: satellite radio attracts an audience that is 53% male and 47% female, and podcasting splits 52% male and 48% female.⁴²

The Pew Center for the People and the Press offers a view of the demographics of digital listeners that is different from Arbitron’s.⁴³

Demographics of Satellite Radio and MP3 Owners
2005

Source: Pew Research Center for the People and the Press’ biennial consumption survey, “Online Papers Modestly Boost Newspaper Readership,” July 30, 2006

Pew finds that nearly 11% of the population has listened to satellite radio and 25.5% owns an iPod or other MP3 player. Also, both audiences skew male, young, and affluent, as seen in the Arbitron data. While satellite listeners also skew white, MP3 owners skew non-white.

Public Radio

Whatever is happening in new audio, one traditional platform from the old technology continues to thrive in delivering news. Public, or non-commercial, radio has been one of the success stories of the audio platforms — and news is at the crux of that success.⁴⁴

While most news organizations in the country have seen audience declines, public radio, particularly National Public Radio, has seen dramatic growth. With the sudden expansion of new digital audio technology, is that growth continuing?

For NPR, the answer is that the audience may have reached a plateau for the moment. The largest of the four main public radio providers nationally, NPR found its weekly audience level steady at 26 million in 2005, the latest year for which there are data, according to its annual report.⁴⁵ The network distributes programming to over 800 public radio stations nationwide, and to Sirius satellite radio.

After a decade of remarkable growth, what does that number mean? Is growth for public radio slowing, perhaps because of competition from satellite radio and other new rivals? That is worth monitoring in the next year or two.

The other public radio networks are significantly smaller than NPR. American Public Media, with headquarters in St. Paul, Minn., reports a weekly audience of 14.7 million listeners. According to Arbitron, it distributed programming to 744 affiliates as of the spring of 2006. Public Radio International, through a partnership with the British Broadcasting Corporation, reports program distribution to over 750 public radio stations across the U. S. And the Pacifica Radio Network owns five stations, in San Francisco, New York, Los Angeles, Houston and Washington, D.C. It also distributes to 103 local affiliates across the nation.⁴⁶ Audience numbers for these public radio networks are difficult to track. The numbers are calculated internally and not all networks release them.

Where and When Radio Happens

For the majority of Americans (excluding teenagers and those over 65) most listening to traditional radio occurs outside of the home, usually in the car or at work. In the morning, Americans are almost evenly split between listening to the radio at home (39%) and in the car (37%), while only 23% tune in at work.⁴⁷ Though the audience is smaller in midday, from 10 a.m. to 3 p.m., the majority of those that tune in do it from work (41%). Audience spikes again in the late afternoon, from 3 p.m. to 7 p.m., when most people listen to the AM/FM dial from their cars (44%), again during their commutes. These numbers, for 2005, are similar to those of past years.

But it is interesting to note where people tune in to the different radio formats. Adult Contemporary is the most popular format people listen to from work. Contemporary Christian, Sports and Alternative are the most popular formats in the car. And News/Talk is the most popular format at home, followed by Mexican Regional.

Where People Listen

2005

Design Your Own Chart

Source: Arbitron, “Radio Today: How Americans Listen to Radio, 2006 Edition,” February 14, 2006

Audience Demographics for News/Talk: Public vs. Commercial Radio

There are some distinct differences between public and commercial radio audiences. In a comprehensive look at public radio statistics, Arbitron’s “Public Radio Today: How America Listens to Public Radio Stations” records that nearly 26 million listeners tune in to public radio in an average week.⁴⁸ Of the eight format types that Arbitron looked at, the News/Talk format dominates listenership, commanding about 50% of public radio’s audience, with an average weekly audience of 13 million listeners.

Audience characteristics for public radio differ quite a bit from commercial audiences:

• Public radio listeners skew to the economically elite and more highly educated. Commercial news/talk listeners are more blue-collar and more male.⁴⁹
• The public radio audience for news/talk is fairly evenly split by gender (52.5% male and 47.5% female), while the commercial news, talk and information audience tilts more heavily male (56.1% and 43.9% female). That gender gap in commercial news/talk narrowed 10% over the previous year (2004), from a 22% disparity.⁵⁰
• Nearly equal to the previous year, more than 71% of public radio news, talk and information listeners were college graduates. That number for commercial listeners was 43.1%. High school-only graduates made up almost 20% of the commercial news, talk and information audience but less than 7% of the public radio audience. Both figures were unchanged from the previous year.⁵¹
• Public radio audiences also tend to occupy a higher economic stratum. Some 50% earn an annual income of $75,000 or more, up 3% over the previous year. By contrast, 36.8% of commercial news, talk and information listeners earn that much.⁵²
• Public radio listeners, according to Scarborough data, are 14% more likely than all consumers to vote in presidential elections and 24% more likely to vote in statewide elections.⁵³

Also, unlike commercial radio audiences, the audience for public radio tilts somewhat more Democratic, a trend that has become more pronounced recently. According to a survey conducted by the Pew Research Center for the People and the Press, there is a ten-point difference between National Public Radio listeners who define themselves as Democrats and those who identify as Republicans. Of those who tune in at least occasionally, 40% identify as Democrats, 30% as Republicans and 39% as Independents.⁵⁴

The total audience for news/talk/information, on commercial and public radio combined, tilts Republican, according to Arbitron: 36% identify as Republicans, 27% as Democrats and 26% as Independents.⁵⁵

One other difference between public radio audiences and commercial news/talk audiences is the time they spend listening. According to the Arbitron data, people listen to commercial news, talk and information longer. Commercial audience members aged 35 to 64 spend nine hours listening a week. News, talk and information public radio listeners of the same age spend an hour and a half hours less, 7.5 hours. That gap has narrowed slightly since last year.⁵⁶ One reason people spend less time with public radio news may be that most of news/talk time on commercial stations tends to be talk, while most NPR stations include considerably more news programs each day, and that news includes a certain amount of repeat programming. NPR’s Morning Edition, for instance, is two hours long each day before repeats. Rush Limbaugh alone, by contrast, airs for three hours.

Time Spent Listening to News/Talk/ Commercial Radio Vs. Public Radio

2005

Design Your Own Chart

Source: Arbitron, “Public Radio Today: How America Listens to Public Radio Stations,” July 27, 2006 and “Radio Today: How Americans Listen to Radio, 2006 Edition,” February 14, 2006.

The Portable People Meter

In the days when there was only one form of radio, measuring audience was simpler.

Today, in the age of podcasts and Internet streaming, things have become a good deal more complicated. Advertisers and industry insiders increasingly are calling for some way of measuring audience across a variety of audio platforms.

The Portable People Meters have been a long time coming. Arbitron, the dominant company measuring radio ratings, began developing the audience measurement system in 1992. But the complexities inherent in the new system and the need for repeated market testing made for a drawn-out debut process.

But in January of 2007, Arbitron finally began rolling out the new Portable People Meters. The first city to officially launch the electronic measuring devices was Philadelphia, with a panel of 2,040 participating radio consumers. That makes the fall 2006 the last period for diary-reported audience measurements for the Philadelphia market. Houston will begin using the new system in the spring of 2007, and the top-ranked New York market will follow in the fall.⁵⁷

Most people think the new system will represent a major advance. The people meters will replace a personal diary system that relied on individual recollection and pencil-and-paper recording of radio listening. For years, media organizations and marketers have questioned the reliability and effectiveness of personal diaries for measuring audience. They worried in particular about the problems people had in accurately recalling or even identifying what they had listened to. They also argued that the diaries relied too heavily on the perception that radio listening is largely confined to the car.

The Portable People Meter, on the other hand, is a small electronic device, similar in size to a cell phone, that measures exposure to a wide range of media, including traditional, satellite and online radio; broadcast, cable and satellite television; cinema advertising and other electronic media. Randomly selected survey participants are asked to carry the device with them in order to track the media forms they are exposed to, and when and where. Some of the benefits of the people meters over diaries include: measuring audiences ages 6 and over (rather than 12 and older with diaries); evaluating larger sample sizes; providing more frequent listening statistics (reports will be released monthly, along with smaller weekly reports); and reducing human error by electronically measuring a participant’s exposure to listening devices rather than depending on their memory recall.

Accuracy was a key force in the quest for an electronic method of measurement for radio audience. A study by researchers from Ball State University, the Middletown Media Studies, found in 2003 that phone surveys and diaries often underestimated actual media use.⁵⁸ The tendency is more pervasive with computer use, the Internet and television, but it could become a more pervasive trend as all media use embraces its digital component. The study compared phone surveys and diary reporting with observational studies, and found that observational studies revealed more media use because people often didn’t report simultaneous use of multiple media. The Portable People Meter is expected to help correct for that.

But not all radio organizations are keen on the new measurement devices. Clear Channel Communications, the largest radio station owner, has led the movement of dissenters. It did not participate in the rollout of the Portable People Meters in Philadelphia and said it is keeping its options open with “Requests for Proposals” for alternative ways to measure radio audience. Clear Channel’s hesitations are not entirely clear, but press accounts have suggested the company is concerned about the repeated delays in getting the technology rolled out or that it may be holding out to negotiate a lower price with Arbitron.

The people meter technology also could be applied to TV audience measurement, and that raised the prospect of collaboration between Arbitron and Nielsen Media Research, the leader in the TV-audience field. In 2000, Arbitron invited Nielsen to enter a joint venture to deploy a pilot program for the people meters as both a radio and television ratings service. Nielsen, looking to improve audience measurement in a digital age, worked with Arbitron on adopting the people meter as a potential measurement system for television. But in 2006, after investing heavily for five years, Nielsen abandoned the partnership. (See Local TV Audience). The two ratings services continue to collaborate on a marketing research service called Project Apollo, which measures advertising efficiency by employing the people meters to measure media exposure and ACNielsens’s Homescan to track product purchasing.

Despite the complexities of Arbitron’s people meter, and Nielsen’s role in its development, the emergence of new media has forced media measuring services to dramatically rethink their methods. And perhaps more revolutionary are the partnerships formed among media platforms as the boundaries between media both shrink and blur.

Footnotes

1. Arbitron, “Radio Today: How Americans Listen to Radio, 2006 Edition,” February 14, 2006.
Note: Radio audience was measured in the spring quarter of 2005. “Weekly cume rating” indicates the number of “undifferentiated individuals” who tune in weekly and is the standard unit of measurement by which Arbitron calculates total radio audience. (“Undifferentiated individuals” are different people who tune in.)

2. Ibid.

3. Ibid.

4. Yet the future is not necessarily so promising for country music. According to Veronis Suhler Stevenson, in 2005, some stations began dropping the country format. The number went from 2,021 stations in 2004 to 2,008 in 2005. And since 2000, the number has declined 8.3%. Some say the drop is from the second- and third-ranked format in a given market, not the leading stations. Demographics might also explain the drop, since data show that country listeners tend to be more male and less affluent than listeners to other formats. But the data suggest that this is changing, with country music attracting more female listeners. Meanwhile, stations are adding more news and talk formats, probably because they attract a younger and more affluent demographic. From 2004 to 2005, the news/talk/sports format (note: Veronis includes sports), increased from 1,686 stations to 1,750. [Source: Veronis Suhler Stevenson, “Communications Industry Forecast, 2006-2010.”]

5. Arbitron, “Radio Today: How Americans Listen to Radio, 2006 Edition,” February 14, 2006 .

6. Ibid.

7. Ibid.

8. Mary Madden , Pew Internet & American Life Project, “Podcast Downloading,” November 2006, http://www.pewinternet.org/pdfs/PIP_Podcasting.pdf

9. Pew Research Center for the People and the Press’ biennial news consumption survey, “Online Papers Modestly Boost Newspaper Readership,” July 30, 2006.

10. Ibid.

11. Ibid.

12. Ibid.

13. Bob Papper, RTNDF/Ball State University, “Future of News Survey,” October 2006.

14. Erik Sass, Media Daily News, “Subs Surge for Satellite Radio, Losses Too,” October 5, 2006.

15. Sirius and XM, end-of-year news releases: “Sirius Exceeds 6 Million Subscribers and Achieves First Cash Flow Positive Quarter,” http://investor.sirius.com/ReleaseDetail.cfm?ReleaseID=224031&cat=&newsroom=
“XM Adds Nearly 1.7 Million New Subscribers in 2006 for Total of More Than 7.6 Million Subscribers, Achieves Positive Cash Flow From Operations During Fourth Quarter 2006,” http://xmradio.mediaroom.com/index.php?s=press_releases&item=1409 .

16. Public awareness of satellite radio is also growing, probably due in large part to chance exposure, like listening in other people’s cars or rental cars, as well as high-profile talk talent on the stations. According to the most recent survey data from Arbitron, more people in 2005 had heard about both stations. But Sirius saw the greatest leap in public awareness, putting it on par with XM. As of January 2006, 61% of those surveyed had heard about both XM and Sirius. Compared to 2004, that was a 33 percentage-point increase for Sirius and a 20 percentage-point increase for XM. Also, the rivals have spent quite a lot of money on advertising, notably on promotions during sports events. Source: Arbitron, “The Infinite Dial: Radio’s Digital Platform,” April 13, 2006.

17. Pew Research Center for the People and the Press’ biennial news consumption survey, “Online Papers Modestly Boost Newspaper Readership,” July 30, 2006.

18. Ibid.

19. Arbitron, “The Infinite Dial: Radio’s Digital Platform”, April 13, 2006.

20. Ibid.

21. John Horrigan, Pew Internet & American Life Project, “Home Broadband Adoption 2006,” May 28, 2006, http://www.pewinternet.org/pdfs/PIP_Broadband_trends2006.pdf. Survey question: “Does the computer you use at home connect to the Internet through a dial-up telephone line, or do you have some other type of connection, such as a DSL-enabled phone line, a cable TV modem, a wireless connection, or a T-1 or fiber optic connection?

22. According to the Federal Communications Commission (“ FCC Releases Data on High-Speed Services for Internet Access Report”, http://www.cybertelecom.org/data/broadband.htm), there were 50.2 million high-speed Internet subscribers by the end of 2005, about 20% fewer than Pew Internet’s total. The FCC bases its data on industry reporting of broadband infrastructure deployment.

23. A podcast is probably best known as an audio or video file that is distributed online, usually for the purpose of downloading it to a portable MP3 player (though it can also be listened to/viewed straight from a computer). The term “podcast” was first coined by the journalist the Ben Hammersley in an article published in The Guardian in February 2004. Just one year later, the New Oxford American Dictionary designated it the word of the year because of its rapid evolution from a techie underworld activity to a mainstream medium.

24. The Web site podcastalley.com does for podcasts what technorati.com does for blogs, which is to say, it tallies, aggregates and discusses the universe of podcasts. As of early December 2006 the total number of podcasts that they tracked was 27,000.

25. Pew Internet & American Life Project reports that 70% of the adult American population (over 18) use the Internet, which represented 141 million people as of December 2006. The total number of podcasters is an estimate based on this figure.

26. Mary Madden , Pew Internet & American Life Project, “Podcast Downloading,” November 2006.

27. Arbitron, “The Infinite Dial: Radio’s Digital Platform”, 2006.

28. The Diffusion Group, http://www.tdgresearch.com/

29. Arbitron, “The Infinite Dial: Radio’s Digital Platform”, April 13, 2006.

30. Mary Madden , Pew Internet & American Life Project, “Podcast Downloading,” November 2006, http://www.pewinternet.org/pdfs/PIP_Podcasting.pdf

31. http://hdradio.com/stations_on_the_air.php

32. BIA Financial Networks tracks some 14,000 commercial and non-commercial radio stations in their database.

33. For a format list of both HD1 and HD2 channels by market, see http://hdradio.com/hd_digital_radio_format_list.php

34. Arbitron, “The Infinite Dial: Radio’s Digital Platform”, April 13, 2006.

35. Ibid.

36. Ibid.

37.Ibid.

38. Ibid.

39. Ibid.

40. Ibid.

41. Ibid.

42. Ibid.

43. Pew Research Center for the People and the Press’ biennial consumption survey, “Online Papers Modestly Boost Newspaper Readership,” July 30, 2006.

44. Though public radio stations operate locally, much of their content comes from four national program service providers: National Public Radio, Pacifica Radio, American Public Media and Public Radio International. These radio groups operate a lot like a TV network, supplying programming to public-radio member stations for a fee. The local member station then typically combines nationally broadcast material with locally created content

45. NPR Annual Report, 2005.

46. The total reach of public radio is extensive. The Media Audit, a media market survey group, estimated that public radio, as a format of its own (including news, music and other programming), was the fourth- most-listened-to radio format in the country. In line with Arbitron’s findings, the media researchers found that the commercial news/talk format took the lead with 19.4 million weekly listeners, followed by country music with 18.5 million weekly listeners, and the Christian format with 17 million. In a category all of its own, public radio ranked fourth, commanding 14.7 million listeners each week. Furthermore, the survey found that public radio was reported as the No. 2 format for respondents was asked for their “most listened to” format.

47. Arbitron, “Radio Today: How Americans Listen to Radio, 2006 Edition,” February 14, 2006.

48. Arbitron, “Public Radio Today: How America Listens to Public Radio Stations,” July 27, 2006.

49. Arbitron, “Public Radio Today: How America Listens to Public Radio Stations,” July 27, 2006 and “Radio Today: How Americans Listen to Radio, 2006 Edition,” February 14, 2006.

50. Ibid.

51. Ibid.

52. Ibid.

53. Arbitron, “Public Radio Today: How America Listens to Public Radio Stations,” July 27, 2006, with data from Scarborough Research.

54. The Pew data indicating a Democratic tilt in public radio lines up with trends that Scarborough Research has also identified. Scarborough uses an index to arrive at its findings. According to its data, public radio listeners are 12% more likely to be Democrats, and if Independent, they are 41% more likely to lean Democratic.

55. Arbitron, “Radio Today: How Americans Listen to Radio, 2006 Edition,” February 14, 200

56. Arbitron, “Public Radio Today: How America Listens to Public Radio Stations,” July 27, 2006 and “Radio Today: How Americans Listen to Radio, 2006 Edition,” February 14, 2006.

57. See Arbitron’s Portable People Meter rollout schedule for the top 50 markets at:
http://www.arbitron.com/portable_people_meters/ppm_rollout.ht

58. Middletown Media Studies, Ball State University, Spring 2004.

Economics

The economics of radio are in transition. Revenues for most companies are fairly flat. Advertising, moreover, has become a double-edged sword. If there is too much of it, that can drive listeners away in a medium with so much competition. Some companies have reduced the number of commercials they carry and raised their ad rates.

At the same time, the finances of the new technologies are still evolving and remain uncertain. The picture, generally, is of a medium in which changes are occurring rapidly.

Revenue of Traditional Radio

As the notion of radio listening expands to include new digital options, traditional over-the-air radio stations and owners are faced with tough financial decisions.

In the short run, the conventional metrics suggest the industry is managing to get by. But the signs that something bigger needs to change seem unmistakable.

By one basic measure of financial health, company revenues from radio, the industry is treading water. In the year for which the latest full data are available, 2005, things were generally flat. Most of the top radio broadcasting companies increased their year-over-year radio-based revenues only marginally from 2004 to 2005. And one, Cumulus Broadcasting, was down.

Total Revenues for Top Ten Companies, 2005

Design Your Own Chart

Source: BIAfn Media Access Pro

The signs for the 2006 results do not look all that much more promising.

Advertising

Another measure of financial health is overall radio advertising revenue, and in 2006 the industry was flat.

According to the Radio Advertising Bureau, total ad revenue was up just 1 percent in 2006 over the year before.¹

Much of the gain for the year came from national advertising, the smaller of radio’s two main revenue sources. National grew 5% to $3.55 billion, while radio’s biggest income generator, local advertising, fell 1 percent to $15.48 billion.²

The numbers for the year might have been even worse had it not been for a boost from the fourth quarter, when total advertising revenues rose 3%. And much of that came in October (up 6%) and November (3%), suggesting that at least part of it came from election-year advertising.

News Format Stations

Where does news fit into this economic equation?

Revenues of Top Companies: Total vs. News Revenue

2005

Design Your Own Chart

Source: BIAfn Media Access Pro

For the larger companies, newsrooms generated only a small portion of total company revenue in the latest year for which there are data, 2005. Of the top five total revenue-generating companies (Clear Channel, CBS Radio, Entercom, Cox Radio, and Citadel), CBS was the only one that earned more than 15% of its revenue from its news operations (21.3%).³ Clear Channel, the top overall revenue-earner, generated 10.4% from news. Entercom brought in 13% and Cox, 12%. Bonneville, which ranked 11 th on the list of top revenue-earning companies, however, brought in about 35% of its total revenue from its news operations.

Other research paints an even more dismal picture of the economic viability of radio news. One major source of information is an annual survey of news directors conducted for the Radio and Television News Directors Association by Bob Papper of Ball State University. Since 2003, the survey has shown a steady decline in the number of newsrooms turning a profit for their stations, at least according to news directors who said they knew whether or not their stations were turning a profit. The number of stations actually losing money has moved up and down. In the 2006 report, the number of newsrooms showing losses rose.⁴

Radio News Profitability

Survey of news directors, 1996-2005

Design Your Own Chart

Source: RTNDA/Ball State University Newsroom Surveys Note: Based on survey responses of news directors

Looking at newsrooms by market size, it appears that those in major markets and large markets are doing better than their counterparts in medium and small markets. More news directors in the larger markets reported profit gains than reported losses. Few directors in medium-sized markets reported losses; most reported that they broke even. Losses were reported by a greater percentage of small-market directors, but on the whole, they broke even.⁵

Radio News Profitability by Market Size

2005

Design Your Own Chart

Source: RTNDA/Ball State University Surveys Note: Based on survey responses of news directors. * Major markets are those with 1 million or more potential listeners. Large markets are 25,000 to 1 million; medium markets are 50,000 to 250,000; and small markets are fewer than 50,000 listeners.

Satellite Radio

If traditional radio, including news, was facing trouble, could the new audio formats be more successful?

Satellite radio, one of the first of the newer technologies, showed early promise, but as with its audience picture, it seemed to lose its economic momentum in 2006. The two companies – Sirius and XM – announced in February 2007 their intent to merge. Though rumors of a merger percolated in the media at the end of 2006, both companies initially denied such intentions. (See Ownership). So what were the economic factors that determined the merger?

For both XM and Sirius, the average cost of increasing new subscriptions has been high, as both have aimed to attract big-name and big-cost talk personalities like Howard Stern and Oprah Winfrey. In the end-of-year Securities and Exchange Commission filings for 2005, Sirius posted an $863 million net loss, XM $667 million.⁶

At the onset of 2006, both satellite stations predicted they would reach the magical break-even point by year’s end. That didn’t look likely as 2006 came to an end. Based on preliminary financial data, both companies said they achieved positive cash flow — bringing in more than they spent — in the fourth quarter of 2006. While that is a positive indicator, it isn’t by itself a guarantee of longer-term economic viability, since cash flow doesn’t necessarily account for things like large capital expenditures or deferred payments to talent that weren’t paid during quarter. That is one reason the two companies felt compelled to merge.

Another indicator for the economic status of satellite radio is the sales of the radio devices themselves. According to Business Week, Sirius and XM sold more than 325,000 portable satellite radios in the U.S. from September 2005 to August 2006, an 88% increase over the previous year. Revenue from those sales increased by nearly 50%, generating $80 million, according to consultants at the NPD Group.⁷

The industry has also been beleaguered by legal challenges. In May 2006, record companies filed a lawsuit, accusing XM of copyright infringement over portable music devices that allowed users to store and download songs from XM music channels. Record labels demanded increased licensing fees, which Sirius had already agreed to pay, though the amount has not been disclosed.⁸ XM was also asked by the FCC to discontinue production of three handheld radio devices that the agency said failed to meet FCC broadcast emission standards and created conflicts with public radio signals.⁹

The two companies’ decision to merge may alleviate some of these financial pressures. It remains to be seen, however, if the Federal Communications Commission will allow it to happen.

Talk Talent on Satellite Radio

In efforts to increase the popularity of satellite radio, both XM and Sirius continue to seek high-profile entertainment for talk shows. In September 2006, Oprah Winfrey launched her own 24-hour talk radio channel, Oprah and Friends, on XM Radio. How much of this is Oprah and how much is her friends is uncertain, but the schedule line-up suggests that the friends may make up the vast majority of the program time. In the ceaseless competition between the companies, Sirius signed on Jane Pratt, founder and former editor-in-chief of Jane magazine.

For both XM and Sirius, the average cost of increasing new subscriptions has been high, as both try to attract big names, which means big-cost.¹⁰ The Oprah deal, for instance, was sealed in February 2006 when she signed a three-year contract with XM for $55 million. Compared to Sirius’s 2005 5-year deal with Stern at $500 million, XM’s contract with Oprah was a relative bargain. But that is the gambling table where satellite radio has chosen to sit down. On a virtually commercial-free platform, it’s a high-stakes game to increase revenue through subscriptions, which the companies have been betting celebrity personalities can attract. Now they are betting on the Federal Communications Commission allowing them to merge.

HD Radio

How significant financially is the emergence of HD radio? At this point, the financial impact is marginal. But the potential is there.

One deterrent to growth is cost. There are no subscription fees, but HD requires dedicated receivers to receive the multiple signals the technology offers. The receivers are expensive compared with the cost of Internet radio or even satellite radio (the basic models cost roughly $180, compared to $60 for satellite)¹¹ and choice is limited. Manufacturers of the receivers are trying to make them more affordable, and the public seems ready to welcome that: Arbitron reports that 35% of the population would be willing to buy an HD radio if it were reasonably priced, at $50 or less.¹² That number drops to 21% when the value of the hypothetical HD radio is $100, to 9% at $200 and to a meager 5% at $300.

Some radio executives hope that as more stations provide HD signals, demand and supply may converge at a price that the average consumer considers reasonable. In October of 2006, WIYY in Baltimore became the 1,000th station in the nation to broadcast with a digital signal.¹³

In an effort to expand the reach of HD radio and make it profitable, stations banded together in December 2005 as the HD Digital Alliance. Peter Ferrara, CEO of the alliance, told Radio Ink’s Joe Howard in an interview that the alliance gave HD radio providers a chance to combine their resources and promote themselves.¹⁴ For example, they have worked with companies like BMW to put HD radios in new cars, in select models as a $500 option. Ferrara said eight other automakers are on board in the next couple of years.

According to Ferrara, station members are joining the alliance because they “understand that this is where our industry is headed. Just as we went from AM to FM, going from AM and FM to HD is an equal if not greater quantum leap in technology.”¹⁵

After all, some say that HD radio holds promise to help compensate for a medium that has been permitted to consolidate to proportions that limit consumer choice. With media ownership rules being bandied about again at the Federal Communications Commission, portending further deregulation and consolidation, HD radio could offer a solution to consumers worried about limited choice and local content. As the Washington Post writer Rob Pegoraro wrote, “In lieu of a breakup of radio conglomerates such as Clear Channel or a massive shift in programming philosophy at individual stations, those ‘HD2’ channels may be radio’s last, best hope to escape its playlist prison.”¹⁶

Internet Radio

Measuring revenue from Internet radio is not a refined science. Most radio Web sites add their revenue statements to the radio station’s overall revenue figure, or in the case of networks like NPR, to the total organization’s economic figures. NPR said in its most recent annual report, for the financial year 2005, that it spent 3.5% of its total expenses, about $5 million, on its online product.¹⁷

One of the few indicators we have on the economic viability of Internet radio comes from the 2006 RTNDA/Ball State University Annual Survey of news directors. Based on the survey responses, only 4% of news directors reported that their news station Web sites were turning a profit. Some 20% said they were breaking even, and 11% said the Web sites were losing money. The remainder of news directors said they did not know.¹⁸

Another indicator of the economic status of Internet radio is advertiser and consumer expenditures online. According to the media and communications analysis firm Veronis Suhler Stevenson, online radio advertising spending (the standard of measurement used as a close proxy for revenue) rose 77% in 2005 to $60 million.¹⁹ Furthermore, consumer revenue to stations (subscriptions to Internet radio and podcasts) increased 170% in 2005 over the previous year, to $27 million.

Internet radio — often considered a competitor to traditional radio—has demonstrated itself as a boon to some stations, particularly local public radio stations who offer an eclectic mix of content and unique talk programs. An October article in the Wall Street Journal highlighted the success of KCRW, based in Santa Monica, Calif., which reported tens of thousands of new listeners who were checking out its online stream. In October of 2006, Google Analytics, a Web analysis service, recorded 760,000 unique visitors to the site, compared to 585,000 the year before.²⁰

Furthermore, the Internet can add a potentially new audience base to radio — people outside the local community. KCRW, for example, maintains its largest online audience segment from Southern California, but its non-local audience collectively exceeds that number, with New York leading the pack, followed by San Francisco and then Tokyo.

Since public radio stations generally earn a large percentage of their revenue from listener pledges, the new online audience offers a potentially expanded pool of pledge donors. A management consultant for KCRW said that even if just 1% of its growing Web audience were to become members, it would be a financial success.²¹

In the case of KCRW, 1,000 of the 16,000 pledges it received in a recent drive came from outside the Southern California broadcast area. Could the Internet be a boon for public radio? As Ruth Seymour, KCRW’s station manager, told the Wall Street Journal, “One of the things we know is how much we really don’t know.”²²

Podcasting

The profitability of podcasting heading into 2007 also remains more a matter of potential than reality.

In July 2006, Nielsen Analytics released a report called “The Economics of Podcasting,” which reported that 6% of U.S. adults (9 million Web users) had downloaded podcasts in the past 30 days. Almost 4 in 10, or 38%, of those downloaders said they listened to traditional radio less because of podcasting. The most successful podcasts were garnering as many as two million downloads a month.²³

Those numbers make podcasts an attractive outlet to advertisers. With the medium still in its infancy, a few podcasts are already starting to generate income. National Public Radio has been actively attracting sponsors on its podcasts. Will it work? That is less clear. According to the Nielsen survey, 60% of survey respondents said that they “always” fast - forward past commercials.²⁴

Economics of Public Radio

When people think about the financial picture for radio, they often overlook one of the most important platforms for news — public radio. The fact that those stations do not carry commercials hardly means those stations are immune from financial pressure.

Public radio stations have witnessed some major changes in their funding sources in the past several years. Revenue once came largely from the federal government and listener donations, but public radio budgets nowadays are increasingly dependent on corporate advertising revenue. According to Tom Thomas, co-chief executive of Station Resource Group, a Takoma Park, Md., public radio consulting firm, public radio stations now count 18% of their revenue from businesses and 11% from the federal government. In 1980, by contrast, public radio got a third of its funding from the federal government and only 8% from businesses.²⁵ The shift has raised some concerns. A July Wall Street Journal article printed testimony from several listeners who felt that their local public stations had defected to the side of profit-maximization, causing them to tune out.

NPR, the largest programming service provider for public radio, experienced a gain in net assets of $17.7 million for the financial year 2005, according to the system’s annual report.²⁶ Of its total revenue for the year, $159 million, about $81 million came from membership dues, station programming fees and distribution services, which is about $3 million more than the previous year. Another $57.6 million came from grants, contributions and sponsorships in 2005, which compares with $267.8 million in 2004; most of that derived from the $225 million gift from the estate of the late Joan Kroc, widow of McDonalds Corporation founder, Ray Kroc.

As for NPR’s expenses for the fiscal year 2005, they increased from the previous year by about $16 million.²⁷ Spending on news and information operations increased by about $6.6 million, or 13%, to a total of $56.7 million.

Online Gurus, Google, Heading to Radio?

In 2006, Google, the new dominant company in search and online advertising, took its first glance at radio. In January, it acquired dMarc, a “digital solutions provider” for the radio industry. dMarc is known for facilitating relationships between advertisers and radio stations via an automated advertising platform that streamlines the process. The acquisition cost Google $102 million in cash, though performance-based payments could tack on additional $1 billion over the next three years.²⁸

The benefit to Google reportedly was to create another channel of distribution — namely radio, though it is looking at print newspapers as well — for its online AdWord clients. According to Tim Armstrong, vice president of advertising sales at Google, “We anticipate that this acquisition will bring new ad dollars and accountability to radio by combining Google’s expansive network of advertisers with dMarc’s talented team and innovative radio advertising technology.”²⁹

With dMarc’s technology, Google began testing Google Audio Ads, its new radio advertisement service, in December of 2006. The service allows advertisers to target their radio listeners by location, station type, and even the days and times they tune in. At a point when radio advertising revenue is ailing, the sorting and targeting of consumers through Google technology might breathe some life back into radio budgets. But some worry that Google’s approach may be too radical. Lew Dickey, chief executive of radio station owner Cumulus Media Inc., told the Wall Street Journal, “…the Google approach…represents the antithesis of value-added selling,” or having trained advertising specialists who can offer advertisers solutions based on their experience.

Footnotes

1. Total advertising revenue includes national, local, network and non-spot advertising (which includes non-advertising revenues such as event sponsorship, concert tickets and web revenue).

2. Radio Advertising Bureau, “Radio Revenue for 2006 Up 1 Percent Following a 3 Percent Jump in Fourth Quarter,” February 1, 2007.

3. BIAfn Media Access Pro, unpublished data.

4. Bob Papper, RTNDA/Ball State University Annual News Director Survey, “News, Staffing and Profitability,” The Communicator, October 2006. Note: The numbers are affected by the widespread tendency of news directors not to know whether their newsrooms are profitable. Since 1997 when the question of profitability has been asked in this survey, at least 50% of respondents did not know how to answer the question.

5. Ibid.

6. Erik Sass, Media Daily News, “Subs Surge for Satellite Radio, Losses Too,” October 5, 2006. Note: new end-of-year numbers for 2006 were not available in time for this report.

7. Olga Kharif, Business Week, “The Sirius Stiletto: A First Look”, September 20, 2006.

8. Bloomberg News, “XM Radio Talks with Labels over New Fees,” September 21, 2006.

9. Kim Hart, Washington Post, “Decision by FCC a Break for XM Radio,” August 28, 2006.

10. Erik Sass, Media Daily News, “Subs Surge for Satellite Radio, Losses Too,” October 5, 2006.

11. The price range for HD Radios at Best Buy, as of December 2006, was $179.99 to $999.99.

12. Arbitron, “The Infinite Dial: Radio’s Digital Platform”, April 13, 2006.

13. Ibiquity Digital, “HD Radio Achieves Historic Milestone as 1,000 th U.S. Station Begins Broadcasting in Digital,” October 16, 2006.

14. Radio Ink, Joe Howard “Peter Ferrara: Launching Radio into Digital Space,” May 8, 2006

15. Ibid.

16. Rob Pegoraro, Washington Post, “HD Radio: Clear Potential, but Uncertain Future,” April 30, 2006.

17. NPR Annual Report, 2005.

18. Bob Papper, RTNDA/Ball State University Annual News Director Survey, “TV Web Sites Helping the Bottom Line,” The Communicator, May 2006. The results, however, are based on a small sample (139 radio news directors) and should be read only as an indicator of the profitability of radio news Web sites.

19. Veronis Suhler Stevenson, “Communications Industry Forecast 2006-2010”

20. Sarah McBride, Wall Street Journal, “Public Radio Goes Global over the Web,” October 31, 2006.

21. Ibid.

22. Ibid.

23. Nielsen Analytics, “The Economics of Podcasting,” July 20, 2006.
http://www.nielsenmedia.com/nc/portal/site/Public/menuitem.55dc65b4a7d5adff3f65936147a062a0/?vgnextoid=cb34338e8998c010VgnVCM100000ac0a260aRCRD. According to the survey, the average length of podcasts being listened to was 44 minutes. And 72% of respondents said they downloaded one to three podcasts a week. Another 10% of respondents were considered “heavy users” because they downloaded eight or more a week.

24. Ibid.

25. Sarah McBride, Wall Street Journal, “Mixed Messages: As Sponsorship Sales Blossom, Public Radio Walks a Fine Line,” March 17, 2006.

26. NPR Annual Report, 2005.

27. Ibid.

28. dMarc press release, “Google to Acquire dMarc Broadcasting,” January 17, 2006.

29. Ibid.

Ownership

One story above all others dominated the landscape of radio ownership in 2006. For a decade Clear Channel was the industry giant, owning nearly triple the number of stations of its nearest rival, leading the way in automation, revenues and profits. The company rode the train of consolidation and expansion allowed by deregulation in the 1990s more aggressively than anyone else. To many in and outside the industry, it stood as a possible harbinger of where radio was headed.

Thus when Clear Channel suggested in October that Wall Street pressures and the focus on stock price were such that it could no longer manage its future as a publicly traded company, people took notice.

For now, Clear Channel’s dramatic move stands alone. But another player, Disney, has decided to leave the field altogether. Clear Channel’s decision also comes a year after other companies, namely Viacom, began to split operations; and several radio companies, led by Clear Channel itself, experimented with shorter and less frequent advertising formats.

Clear Channel Deal

While some analysts may have looked at the declining revenues and share value of the large radio corporation as clear indicators for major economic changes, few could have predicted how suddenly or how quickly the public-to-private transaction would be made.

The details of the sale bear repeating. In late October, Clear Channel announced it was being acquired by two private equity firms — Thomas H. Lee Partners and Bain Capital Partners — for a total of $18.7 billion, plus the $8.1 billion in Clear Channel debt. By year’s end the company also was discussing selling off 448 of its smaller-market radio stations, as well as its television stations.

Clear Channel had rocketed to dominance in response to changed radio ownership rules written into the 1996 Telecommunications Act. Three years later, in 1999, the Wall Street Journal named Clear Channel the fifth best-performing stock of the 1990s. By 2000, the company had purchased over 1,000 new stations. But some of the competition and many consumers grumbled that Clear Channel’s domination was diminishing the quality of the AM/FM radio dial by monopolizing key markets and homogenizing content. Meanwhile, the company’s outdoor advertising division also swelled in dominance and value. By 2004, both Clear Channel and shareholders started to notice the company’s growing pains.

Before long, the boom was over. In response, Clear Channel initiated a grand share-repurchasing program. And in 2005, it spun off its entertainment division in addition to 10% of its outdoor advertising operation. The company also experimented with new ways to maximize advertising revenue with its “Less is More” campaign, an attempt to slash the length of ads at a slightly reduced cost to advertisers.

Despite the fact that Clear Channel remained the highest revenue-generating radio owner — $3.6 billion in 2005, over $1 billion more than the second-place competitor, CBS Radio at $2.3 billion — Clear Channel’s stock value had been sliding.¹ Five years ago, its stock was valued in the range of $50.² In the months before the sale, stock values were regularly dipping below $30. With the announcement of the merger, stocks improved to the $35 range.

As of December 2006, it was not known whether the Mays family would continue operating the company, though both sides offered the usual praise for each other. But the step Clear Channel took is becoming a popular one for large media owners. In both the radio and newspaper industries, public owners have been selling their corporations to big-money private owners.³

Over all, the public-to-private strategy seems to be motivated by an agenda for long-term growth. According to the BIA Financial Network radio analyst Mark Fratrik, “By going private, these companies and their financial backers believe that they can grow in value over the long term without being concerned about investors’ quarterly targets.”⁴

Underscoring that sentiment, an internal memo from Clear Channel said of the deal, “We need to shift our focus to meet new demands in order to grow our audience and our revenue… Ultimately, we expect our overall size to grow in 2007.”⁵

Walt Disney Company/ABC/Citadel

 The year of 2006 began with the Walt Disney Company’s decision to sell ABC Radio, consisting of 22 stations, to Citadel Broadcasting. Disney had been planning the sale for some time, having begun the auctioning process in the summer of 2005. According to Disney’s CEO, Robert Iger, the sale would help the company focus on its core TV, movie and theme park businesses.⁶

Until mid-January, though, Citadel was not considered the frontrunner for sealing the deal. Other companies competing in the auction were competing broadcasters, Entercom, Emmis, Cox Radio and Cumulus, as well as the private equity firm Kohlberg Kravis Roberts.

The agreement between Disney and Citadel, announced on February 6, 2006, was valued at $2.7 billion. It will elevate Citadel Broadcasters to the third largest radio owner, up from sixth place. The deal is expected be final in early 2007.

The Top Companies

Despite the Clear Channel sale, and with its planned sale of 448 smaller stations still to be completed, the basic outline of radio ownership — who owned what stations — remained fairly stable in 2006, along the lines of the previous year.

Number of Stations Owned by Top Broadcasting Companies
2005

Source: BIAfn Media Access Pro, unpublished data

Clear Channel, as of the close of 2005 when that information was gathered, continued to be the clear leader in the total number of stations it owned — nearly four times the number of total stations as its next competitor, Cumulus.⁷ Similarly, Clear Channel owned more than four times the number of news channels as Cumulus. But in proportion to the total number of stations owned, 23 rd-ranked Cherry Creek formats about 24% of its stations as news, followed by 22% of Salem’s stations and 15% of Entercom Communication’s stations.

The list of top owners, according to the number of stations owned, looks much different than the top owners by revenue. The top three owners by revenue are Clear Channel, CBS and Entercom (See Economics).

Changes in ownership through 2006 have been marginal. But 2007 promises some big changes, anticipated in large part by Clear Channel’s expected sale of almost 450 radio stations.

Change in Stations Owned by the Top Companies

1999-2005

Design Your Own Chart

Source: BIAfn Media Access Pro Note: *Due to restructuring within the Viacom Corportation, Infinity is now CBS Radio

In looking at the number of markets reached by the top companies, as in years past, Clear Channel dominated for the latest year available, 2005: 189 markets versus 56 for Cumulus, which had the second-largest market reach.⁸ The top five companies other than Clear Channel, however, are closely clustered in the number of markets reached, with a spread of only 23 markets separating second-place Cumulus and fifth-place CBS Radio. The figures are similar to those for the previous year, 2004. The only real change was that Infinity, which is now CBS Radio, lost some of its market reach, going from 41 markets in 2004 to 33 in 2005 as CBS.

Number of Markets Reached by Top Companies

2005

Design Your Own Chart

Source: BIAfn Media Access Pro Note: Due to restructuring within the Viacom Corportation, Infinity is now CBS Radio

Air America Bankruptcy

One other major development in the ownership picture of radio in 2006 was the growing financial woes of the fledgling liberal talk radio network Air America.

Air America, begun in 2004 as a liberal alternative to the burgeoning array of conservative talk personalities, filed for Chapter 11 bankruptcy protection on October 13. The announcement came after two weeks of speculation and rumors, accompanied by fervent denials from Al Franken and others at Air America.

The truth of Air America’s dire financial situation was brought to the forefront by the owner of one of the stations that carried the programming, claiming that the network had not been paying its bills.

In its two years of operation, Air America had never been profitable. It reported losses of $8.6 million in its first year, 2004, and more than double that, $19.6 million, in 2005.⁹ As the Radio Business Report observed on October 16, “Seems the network got off the ground with shoestrings and credit cards in the first place. So it was never running with a decent amount of cash.”

But an internal ABC Radio Network memo disclosed in late October suggested that Air America’s financial losses may not have been due entirely to poor business decisions and lack of public interest in liberal talk, but also to an advertiser blacklist of the network. In the memo, ABC Radio Network told their affiliate stations that about 90 prominent advertisers — led by Hewlett-Packard, and including Microsoft, Wal-Mart, Visa, Exxon Mobil, Cingular and McDonalds — did not want their advertisements running during any syndicated Air America programming the ABC stations carried.¹⁰ The consequence of the ad blackout to Air America would be no sponsorship from advertisers participating in the blackout, which could significantly reduce revenue for the network. Reports of such practices are not uncommon; several advertisers exerted similar censorship of their ad content on the Howard Stern show. But because of his popularity, the ad boycott did little to affect the profitability of his program. The practice is also known to occur on other politically opinionated programming like Rush Limbaugh, industry professionals say. The leak of the ABC memo, and the identification of the advertisers, however, was unusual in this case.

Air America has continued programming on the network’s 90-plus affiliates around the country, though some of those affiliates have hinted that they might drop the liberal program from their stations.

In late January, Stephen Green, a New York real estate entrepreneur, agreed to acquire Air America for $4.25 million, which could mark new beginnings for the network. The only major change announced with the purchase was that the popular talk host and comedian Al Franken would be leaving the network on February 14 amid rumors that he’ll pursue a seat in the U.S. Senate. Green said that his goals for the company are to stabilize its finances, build upon the current Air America line-up to “assure the best radio talent possible,” and extend the platform beyond that of radio in order to reach a wider audience.¹¹

Clear Channel Timeline

The following timeline highlights some of the major activities that occurred in the brief but immense Clear Channel buyout.

October 24, 2006: Average closing share of Clear Channel stock in the 30 previous trading days: $29.99 a share.

October 25: Clear Channel announces it is evaluating “strategic alternatives.” Hires Goldman, Sachs & Company as financial adviser.

October 30: Providence Equity Partners, the Blackstone Group and Kohlberg Kravis Roberts & Company are the first to approach Clear Channel about a buyout and become the favored bidders. Bain Capital and Thomas H. Lee Partners and The Texas Pacific Group are the second consortium to bid. Rumors circulate that Carlyle Group LLC and Apollo Management LP make up a third interested party.

November 13:

• The Texas Pacific Group, who had been part of the Bain Capital and Thomas H. Lee Partners consortium, drops out.
• Clear Channel makes major restructuring plans at its radio stations by eliminating almost all of its overnight live disk jockeys, replacing them with pre-recorded “voice-tracking.”
• Bids close

November 16:

• Clear Channel announces definitive merger agreement with Thomas H. Lee Partners, L.P., and Bain Capital Partners, LLC.
• Though the buyout is valued at $18.7 billion, the total cost of the company is $26.7 billion, including the approximate $8 billion of debt. Shareholders will receive cash for their shares at a price of $37.60 per share, an increase of approximately 25% over the average price before Clear Channel announced plans to sell.
• According to Thompson Financial, the transaction is the fourth-largest buyout in history, ranking behind KKR’s 1988 buyout of RJR Nabisco Inc. for $25.1 billion; the $21.8 billion buyout of the airport development company BAA PLC in February 2006; and the $21.2 billion paid for the hospital company HCA Inc. in July of 2006.
• Clear Channel also announces plans to sell 448 radio stations in smaller markets (outside of the top 100 markets), as well as its television broadcasting division, which consists of 51 stations in 25 markets.

December 7: The date by which competing bids from third-party competitors had to be submitted. Analysts at Merrill Lynch, suggesting that the company’s worth was undervalued, said that Clear Channel should entertain additional offers. Furthermore, analysts at Stifel Nicolaus found the $37.60 share price to be low and estimated a proper selling price to be $42 a share.

January 5, 2007: The date by which all negotiations with competing third parties were terminated. Thomas H. Lee Partners, L.P., and Bain Capital Partners, LLC remain the new buyers.

January 18, 2007: Some Clear Channel shareholders voice resistance to the sale, including the largest holder, Fidelity Management & Research, and other top 10 holders.

February 23, 2007: The deadline for bids on the assets that it put up for sale: 448 radio stations and 42 television stations.

March 21, 2007: Special meeting of shareholders will vote on the proposed buyout agreement. Approval of the transaction requires that two-thirds of the votes be in favor.

Footnotes

1. BIA Media Access Pro, unpublished data

2. Yahoo Finance, http://finance.yahoo.com

3. Sarah McBride and Dennis I. Berman, Wall Street Journal, “Clear Channel’s Founders Stand to Get Windfall,” October 30, 2006.

4. Frank Ahrens, Washington Post, “Clear Channel Sale to End an Era,” November 17, 2006.

5. David Hinckley, New York Daily News, “Clear Channel Stills Voices in the Night,” November 14, 2006 For full memo, see SEC.gov Edgar site, November filings.

6. David Lieberman, “$2.78 Deal Would Put Disney Radio Unit in Citadel’s Hands,” USA Today, February 7, 2006.

7. BIAfn Media Access Pro, unpublished data.

8. Ibid.

9. Jeff Leeds, “Air America, Home of Liberal Talk, Files for Bankruptcy Protection,” New York Times, October 14, 2006.

10. Maria Aspan, “Some Advertisers Shun Air America, a Lonely Voice from Talk Radio's Left,” New York Times, November 6, 2006.

11. Katy Bachman, Media Week, “Air America Sold to SLG Radio,” January 29, 2007.

News Investment

As in years past, the situation in traditional radio newsrooms appears to be one of consolidation. The great majority of stations delivering news now do so through joint newsrooms, and the situation in those newsrooms looks increasingly complicated.

The 2006 survey of radio news directors conducted by Bob Papper of Ball State University found that over 70% of the news directors provide local news to their stations through a centralized newsroom. The average number of stations that those centralized newsrooms serve is 3.3, according to Papper’s study.¹ What’s more, over a third of news directors reported overseeing five or more stations.

Some observers worry that because the data come from a relatively small sample — 209 radio news directors representing 613 stations — it is risky to draw year-to-year comparisons. But the study is the richest data source the industry has to understand what is going on inside newsrooms, and the one most relied upon.

Those newsrooms are likely to be stretched even further as they begin to address the challenge from new media. As technology evolves and the definition of radio broadens, traditional radio will have to embrace new platforms in order to supply what its audience is demanding from other digital listening formats. The newsrooms will have to begin producing for multiple platforms as well.

For Jeff Smulyan, Chairman & CEO of Emmis Communications, that means appealing to youth. In an interview with Radio Business Report on the future of radio, Smulyan declared that young people are most concerned with getting what they want when they want it. “Our task in this business is to make sure we provide that. That will mean we embrace other platforms in the process.”²

Others say the future of radio news must emphasize unique talk personalities and local content. Saga Communications’ president and CEO, Ed Christian, told Talkers Magazine that the radio industry had strayed from its core product of localism. “When we talk about localism now, it’s a mile wide and an inch deep. We need to go a mile wide and a mile deep. There are those opportunities in every market,” he said.³ Still others emphasize the content. Lee Abrams, senior vice president of XM Satellite Radio said, “Ultimately, whether it’s AM, FM, satellite, Internet or some new technology, the best content is going to win, assuming people have equal access to the signals.”⁴

But it remains to be seen what the public considers to be quality content: whether it’s a very expensive national contract with Howard Stern or a rural station’s local personality discussing the pros and cons of a new community center.

Amount of News

Based on the most recent data from the 2006 RTNDA/Ball State survey, the average radio station in 2005 broadcast 37.1 minutes a day of locally produced news during the week, 2.3 minutes less than the previous year’s 39.4 minutes.⁵ Over half of that total (20.2 minutes) was broadcast during the morning commute hours, leaving the rest of the day with a meager supply of radio news.

The declines in news minutes, though, were not the same across the various market sizes. In general, the smaller the market, the more dedication to local news. Major markets (over 1 million potential listeners) cut their supply of local news by over 50%, falling from 93.5 minutes in 2004 to just 42 minutes in 2005.⁶ Large markets (250,000 to 1 million listeners) also reduced their local news, though by less, going from 52.1 minutes in 2004 to 41.5 minutes in 2005.

By contrast, small and medium markets provided more news to their stations than they had in past years. Small markets (less than 50,000 listeners) increased local news by almost seven minutes in the average weekday to 42 minutes, more than the national average for radio stations.⁷ Medium markets (50,000 to 250,000 listeners) also upped their supply of local news, going from about 23 minutes in 2004 to 29 minutes in 2005.

As for the future, the majority of news directors (67%) said they expected to maintain the levels of news where it was.⁸ Just over a quarter (28%) said they planned to increase the supply. Only 1% said that they would reduce the amount.

Those expectations are the opposite of the previous year’s. Almost two-thirds (64%) of news directors in 2004 said that they would lower the amount of news they broadcast on their radio stations.⁹ And indeed 2005 saw a major decline, noted above, in the amount of news offered in major and large markets.

Newsroom Size

The composition of newsrooms has certainly been changing over the years, as well. As noted earlier, the average number of stations that a news director serves is 3.3, according to the RTNDA news director survey. That is down slightly from the previous year’s data, which reported 3.75 stations per average news director.¹⁰

Also down, though, is the percent of news directors who oversee just one newsroom —17% in the 2006 report compared to 27% in 2005.¹¹

If the survey is an indication of what to expect in the future, then it seems that radio news departments may have reached a sticking point, at least temporarily. Of the news directors surveyed in 2005, about 78% said they would keep their news staffs the same for the coming year. A much smaller number, 13%, planned to increase their news staffs. These expectations were in line with what they reported of their news staff changes for 2005 — 77% said that their staffs had remained the same, 16% reported that they had increased their staffs, and only 6% reported that their staffs had been reduced.¹²

Radio Salaries

Radio professionals continue to be low-paid, and the situation is not improving. Salaries in traditional radio newsrooms as a whole dropped 4.4% from 2004 to 2005, according to the RTNDA/Ball State University annual news director survey, a considerable decline considering the small up-tick of 3.2% in 2004.¹³

Salary cuts hit news producers the hardest as their median salaries plummeted by nearly 50%, going from $38,000 in 2004 to $20,500 in 2005.¹⁴ News directors and news anchors both lost about 9% of their median salaries from 2004 to 2005, with directors going from $33,000 to $30,000 and news anchors going from $26,000 to $23,500. Those drops, however, came after major salary increases from 2003 to 2004, namely a $13,000 jump for news producers. As for radio news reporters, their median salaries showed a slight rise in 2005, increasing $500 to $25,000. Sports anchors also saw a rise in median salary, going from $27,000 in 2004 to $32,500 in 2005.

The likely explanation for the dramatic fluctuations, especially with regard to news producers, is that there are relatively few news producers at radio stations anymore, making any change look more dramatic. The sample size for radio reporters and news directors is larger, making those more stable indicators of salary patterns.

Median Radio News Salary Comparisons Over Time

1994 - 2005

Design Your Own Chart

Source: Bob Papper, RTNDA/Ball State University Annual News Director Survey “Where the Jobs Are,” RTNDA Communicator, June 2006. Note: Based on survey responses of news directors

Radio news salaries remain below those of television. Radio news directors make less than half of what their television counterparts make: $30,000 versus $75,000, according to the RTNDA/Ball State survey.¹⁵ The gap between the two broadcast media grew in 2005 as the radio news directors’ median salaries dropped $3,000, while television news directors’ median salaries rose by $2,000. Similarly, salaries for radio news anchors were about half of their television counterparts: $23,500 compared to $58,500. That gap also grew from the previous year. The difference in salaries between news reporters of the two media, however, is not as great — $25,000 for radio and $28,000 for television. Though radio news producers once stood out above their counterparts in television, that trend reversed in 2005, giving television news producers almost $9,000 more in earning power.

Median Salaries: Radio vs. Television

Survey of news directors, 2005

Design Your Own Chart

Source: 2006 RTNDA/Ball State Newsroom Survey Note: Based on survey responses of news directors

As newsrooms move to a business model that serves not one but several stations, are they able to offer their staffs more enticing salaries? Survey responses in the RTNDA study are inconclusive. While there are certainly fewer newsrooms serving only one station, it does not appear that salaries have increased much despite the added responsibility of serving more stations. Except for a dip in salaries in newsrooms that serve 2 to 3 stations, news directors maintain consistent salaries regardless of the number of stations they serve. Reporters, on the other hand, must serve at least four stations before they earn more than $20,000.

Radio Salaries, by Number of Stations Served

Survey of news directors, 2005

Design Your Own Chart

Source: Bob Papper, RTNDA/Ball State University Annual News Director Survey “Where the Jobs Are,” RTNDA Communicator, June 2006. Note: Based on survey responses of news directors.

As far as the size of the newsroom goes, significant salary jumps occurred for news directors, anchors and reporters in larger newsrooms, those with five or more full-time staff members. For anchors and reporters, this is probably because these positions don’t exist in the smallest of newsrooms. Salaries for news producers, on the other hand, stayed pretty much the same regardless of the size of the newsroom.  

Radio Salaries, by Full-time Staff Size

Survey of news directors, 2005

Design Your Own Chart

Source: Bob Papper, RTNDA/Ball State University Annual News Director Survey “Where the Jobs Are,” RTNDA Communicator, June 2006. Note: Based on survey responses of news directors.

Comparing newsroom salaries according to the ownership structure of stations shows a couple of contrasting patterns. News anchors and news producers at independent stations received higher median salaries than at group-owned stations. But compared to the previous year, overall salaries for radio staff at independently owned stations suffered more in 2005 than for their counterparts at group-owned stations. The one exception to that trend was that the median salary of news producers at independently owned newsrooms outpaced that of producers at group-owned newsrooms, a reversal of the situation in the previous year.

Public Radio

Public radio, led by NPR, has been making new strides in the newsroom to deliver public radio to more ears, and eyes via the Web. The year 2006 marked a major initiative by NPR to understand how it could help public radio stations strengthen their relationships with their listeners. The initiative was called “New Realities” and sent NPR staff members across the country early in the year to talk to hundreds of station leaders about the future of public radio. The discussions resulted in the Blueprint for Growth, released in July. Among other things, the blueprint stresses the need to encourage listener participation and create more of a conversation between NPR, its audience and its member stations. Online, NPR plans to combine this new, expanded content with its older material to build what they call “an open archive.”¹⁶

In July Bill Marimow, then vice president of NPR’s news division, told Current magazine that “The goal in the long term is to make sure that everything we produce for broadcast has an online, podcast, cellular phone component to it. That’s a long ways away, but we’re moving in that direction.”¹⁷

Besides the digital push that NPR is forging, public radio broadcasters are also looking for ways to draw in younger audiences. One of the new programs that NPR tested in 2006 was a two-hour morning newsmagazine aimed at listeners aged 25 to 44. The program borrows news topics from Morning Edition and All Things Considered, but makes them lighter and more relevant to relatively young audiences by featuring feedback from that age range and a more casual reporting style. The program is being promoted on podcasts, Web streams and HD radio multicast channels.

New Audio Investments

One of the latest threats to traditional radio is an auxiliary jack that is being included in new cars. The “AUX” option can be used to plug any portable audio device into the car’s stereo system, (including a guitar, as seen in the Volkswagen commercials with the Guns’n’Roses guitar legend Slash, and another with John Mayer, rocking out through car speakers). More commonly, consumers will be plugging in their iPods, Zunes (a new Microsoft digital media player released in November) or other MP3 players. Though industry fears are high, it’s uncertain whether the new device will affect traditional radio listening any more than the introduction of cassette players and 6-disc CD changers in cars. The only difference is that the stack of audio options is growing. And it certainly won’t stop with the AUX plug. Some automobile manufacturers are more seamlessly embracing the iPod into their audio features by eliminating the need to even touch the actual MP3 player, enabling the car’s stereo functions to control the song selection. And still other cars, like some Volvo and Mercedes-Benz models , are being outfitted with USB ports and hard drives. Next up? Wireless cars.¹⁸

The iPod is seen by many analysts as a greater threat to traditional radio than satellite radio. Steve Jobs, CEO of Apple, has predicted that 70% of new cars sold in the U .S . by the end of 2007 will offer iPod connections as an option.¹⁹ That is particularly threatening because the car is typically seen as the primary domain for radio listening, especially during the morning and evening commute hours when advertising rates are highest. Also, six major airlines agreed in November 2006 to program their in-flight entertainment systems to accommodate iPods beginning in mid-2007.

Radio is teaming up with mobile marketers to turn radio advertising campaigns into an interactive experience through a listener’s cell phone. Katz Radio partnered with the mobile marketing firm HipCricket, to announce the launch of a mobile messaging and advertising service called Katz Mobile on October 11.²⁰ The service uniquely lets radio listeners receive consumer coupons through their cell phones in response to advertising and promotions that they hear on the radio. Katz Radio’s president, Mark Gray, said individual stations or advertisers could choose to offer interactive features like quizzes or polls to increase interest and activity , and , of course, to increase advertising revenue. Clear Channel, ABC Radio, Fox Sports Radio, Cox Radio, Premiere Radio Networks and Westwood One have been using similar HipCricket services.

Radio Newsroom Diversity

Radio newsrooms, long disproportionately male and Caucasian, are becoming more so, according to the latest data.

The RTNDA/Ball State University annual survey of newsrooms found the percentage of minorities in the radio newsroom fell to 6.4% in 2005, the latest year available, its lowest level since the survey began.²¹ A year earlier the number was 8%, which in turn was down from 11.8% in 2003.

The majority of the decline from 2004 to 2005 came from declining numbers of Hispanics (down to 1.9% from 6%) in the radio newsrooms. The numbers of blacks (up to 2.5% from .7%) and Asian-Americans (up to 1.8% from .7%), however, actually climbed a bit.²²

The top positions in radio newsrooms are even more homogenous. Almost 96% of radio news directors are Caucasian, as are almost 98% of radio general managers.²³

Looked at another way, only 12.4% of all radio newsrooms in 2005 even had minorities on staff.²⁴ The number fell almost 5% from the year before. On a positive note, minorities in major and large markets fared better, with minorities making up 46.7% and 21.1% of those news staffs, respectively.

The situation for women is better than that for minorities, but a far cry from equilibrium. Women made up just shy of 25% of the workforce in radio newsrooms in 2005, which is fairly consistent with years past.²⁵ But just over half (52.7%) of radio newsrooms across the country operate without any women on their staffs. Approximately one out of five news directors (20.4%) were women in 2005, down about 4% from the previous year (24.7%). There is no clear pattern regarding the size of markets in which women are more likely to be included or to hold top positions.

Footnotes

1. Bob Papper, RTNDA/Ball State University Annual News Director Survey, “News, Staffing and Profitability,” The Communicator, October 2006. Survey responses came from 209 radio news directors and general managers representing 613 radio stations.

2. Radio Business Report, October 16, 2006.

3. Kevin Casey, Talkers Magazine, “The Future of the Stick,” November, 2006.

4. Ibid.

5. Bob Papper, RTNDA/Ball State University Annual News Director Survey, “News, Staffing and Profitability,” RTNDA Communicator, October 2006.

6. Ibid.

7. Ibid.

8. Ibid.

9. Bob Papper, RTNDA/Ball State University Annual News Director Survey, “News, Staffing and Profitability Survey,” RTNDA Communicator, October 2005.

10. Bob Papper, RTNDA/Ball State University Annual News Director Survey, “News, Staffing and Profitability Survey, ” RTNDA Communicator, October 2006.

11. Ibid.

12. Ibid.

13. Bob Papper, RTNDA/Ball State University Annual News Director Survey “Where the Jobs Are”, RTNDA Communicator, June 2006.

14. Ibid.

15. Ibid.

16. “A Blueprint for Growth: Moving from Current Realities to New Realities,” NPR. Available online at http://www.current.org/pbpb/npr/NPRBlueprintForGrowthJuly06.pdf

17. Mike Janssen and Steve Behrens, Current magazine, “NPR working with stations ‘can be much, much stronger, ’ ” July 17, 2006.

18. Joseph B. White, Wall Street Journal, “Car Audio Faces the Music,” October 9, 2006.

19. Radio Business Report, “Assessing the iPod threat,” October 6, 2006.

20. Erik Sass, Online Media Daily, “Katz Radio Launches Mobile Ad Services,” October 13, 2006.

21. Bob Papper, RTNDA/Ball State University Annual Survey, “Year of Extremes,” RTNDA Communicator, July/August 2006.

22. Ibid.

23. Ibid.

24. Ibid.

25. Ibid.

Digital

By the Project for Excellence in Journalism

As radio’s future for growth gains new potential, so have the possibilities for the medium online.

That is something of a turnaround. Initially, the Web was primarily text-oriented. Audio online seemed less intuitive to Web users. Traffic for early Internet radio was not impressive. And radio Web sites overall have tended to lag behind others in content.

That seems to have changed with the growing popularity of MP3 players and other mobile delivery systems, the majority of which are audio-based.

Radio Investment Online

As with businesses of almost any sort these days, the vast majority of traditional radio stations have Web sites. According to the 2006 RTNDA/Ball State University Annual Survey of news directors, 87% of all radio stations had their own Web sites by the end of 2005.¹ Independently owned stations and those with small staffs were less likely to have them.

The development of the sites is less impressive. The average number of full-time employees devoted to Web site content is a relatively meager 1.1, according to the RTNDA survey. Stations in the largest markets tended to devote more — 2.2 full-time employees versus .8 in small markets — and the smallest-market stations were more likely to have people devoted only part time to the Web product.² News directors at small stations reported, on average, that more than three-quarters (76%) of their staffs share responsibilities between the broadcast and online content. That was true of just 17% of stations in major markets.

The cautious approach to the Web may be at least partly linked to the limited return on investment radio stations are seeing there. According to the RTNDA survey, station news directors were more than twice as likely to report their Web sites losing money than making any — 10.5% versus 4.2%.³ Another 20% reported breaking even. (Most, 65%, didn’t actually know whether their station sites were financially successful or not).

Could added investment make the sites more appealing to audiences and thereby to advertisers? Or would increased resources go unappreciated, leaving stations in worse financial shape than before? It’s something of a chicken-and-egg problem, with little resolution in an industry in transition on the question of which — online investment or online revenue — must come first.

Digital Content

And what of the content on these sites? The evidence suggests that radio Web sites differ widely in how much they offer and the regularity with which they update news content. Even their greatest asset — local news — is not uniformly present on the sites.

The RTNDA survey found that as of 2005 only 70% of radio Web sites provided local news, down from 77% of those surveyed the previous year.⁴ That was true even though in public opinion surveys, Web users continuously report turning primarily to radio Web sites for local news.⁵

To get a closer look at the specific features of different news Web sites, the Project conducted a detailed site study of 38 news Web sites rooted in the various media platforms, from newspapers to cable TV to Web only site. We looked at the kind of content they offer, the technology levels employed, the relationship with users and the economic structure. The overall findings across the 38 sites (as well as an interactive tool to help citizens evaluate their favorite news sites) can be found in the Digital Journalism chapter.

For the radio component of the analysis, we looked at the Web sites of NPR, as a national distributor of content to public radio stations, and WTOP, as a Washington-based local news radio station. Both are among the strongest operations in news radio and are likely to represent the high end of what the industry is offering.

Both were among the more sophisticated news sites studied and had moved to providing more online than they could in their original medium.

National Public Radio (www.npr.org)

NPR.org is becoming something of an identity unto itself, a destination offering substantially more than just radio programs moved online. The site leads with a top story usually presented as a package with multiple links and multimedia components. That is followed by a list of other top news stories, which, once accessed, are offered as both audio and text.

Below the top stories comes a mix of news content, including a list of top e-mailed stories (updated continuously), a sidebar of news topics for further reading/listening, and Associated Press headlines.

Amid all this content is a clear sense of the NPR brand—a clear emphasis of this site, and a category where it got some of its highest marks. The vast majority of stories posted on the site are researched and written by NPR’s staff, something it accentuates by offering bylines to most stories as well as links to the author’s biography. In addition to the NPR content, the site augments its stories with a limited selection from the A.P.

The other area where NPR.org excels is in allowing users to customize the NPR content to their own interests or needs. Both RSS feeds (“really simple syndication”) and podcasts are prominent features, situated in the upper left-hand column of the homepage. The RSS link takes users to a page where they can choose to receive particular categories of news feeds (e.g., opinion), specific programs (e.g., Morning Edition), topics (e.g., children’s health), or particular member-station feeds (e.g., KQED in San Francisco). All in all, there are 52 categorical RSS feeds and 19 member station feeds. Another feature extensively employed on the NPR site is podcasts. The podcast link from the homepage takes the user to an extensive directory of podcasts organized by “this week’s picks,” topic, title and by station provider. As of February of 2007, though, the site had yet to embrace the latest trend of mobile phone delivery.

NPR.org was in the mid-level range when it came to use of multimedia forms. Audio features were prominent, with some live streaming options, podcasts and other MP3 downloads. These are supplements, though, to the more common text and photo elements on the home page. And, the site did not offer video content.

Clicking further inside the site, however, reveals more of a multimedia feel. Once users click on a story headline from the main page, they are taken to the transcript of the story (or a synopsis) and are then presented with the choice to read or listen to the story. Indeed, NPR.org stands out in offering about 85% of its content simultaneously as textual narrative and audio streams or podcasts.

A big question facing all online entities is one of economics. NPR.org hosted only two advertisements on its home page, one self-promotional, the other a PBS logo. Still, it does find a way to draw in some revenue. The site charges users for some archive material: $3.95 for a single archived transcript, or $12.95 for a monthly subscription to the archive (up to 10 transcripts).

WTOP Radio (www.wtop.com)

Washington-based WTOP represents an entirely different look at radio online, one which is simultaneously local and national in scope. The homepage features an obvious lead story; an invitation to visitors to listen to WTOP radio news; weather and traffic information for the day; and a prominently featured local news section. Advertisements also have a heavy presence.

WTOP.com ranks in the top tier for offering customizable options. Users can subscribe to both RSS feeds and podcasts, and its RSS feeds are relatively varied (totaling 12 different feeds, all of which are different categories of news). WTOP also goes further than NPR in providing on-demand listening options: visitors can sign up for content delivery (headlines, weather, traffic and breaking news) to their mobile phones.

WTOP.com is still largely about narrative text (it makes up close to three-quarters of the content with still photos the second-most common form). Still, it did make some effort at multimedia forms (falling in the mid-level range of all sites studied) with some presence of video stories, slideshows, interactive graphics and yes, live streaming audio. Listening makes up only a small though prominent part of the Web site’s homepage with a section called “ Audio Center” that is devoted to live streaming of the WTOP radio station content.

The site puts less emphasis on its own original branded content, relying mostly on the A.P. The heavy use on wires reflects the larger reality of radio today — even in Washington, D.C., national and international news comes heavily from sources other than the station itself. And even for local stories, only some had WTOP staff bylines; most came from the A.P., along with a few contributions from the Washington Post.

Economically, WTOP seems to emphasize revenue streams from its Web site, as opposed to simply leaning on its radio station for cash-flow. It averaged close to 20 different ads on its home page, only one of which was self-promotional. Ad eyeballs, it seems, are the way users pay for use of the site. All the content is free and there no registration is necessary.

Other Radio Web Sites

To broaden our understanding of radio-based Web sites, we conducted a quick study of five other online radio offerings to compare with NPR and WTOP.

Radio site comparisons 

Source: PEJ Research

The main finding in this abbreviated site comparison is that NPR and WTOP are unusually advanced in their online presence. Only two of the five other radio Web sites (WAOK in Atlanta and KTRH in Houston) offered podcasts, and none stressed their news content enough to provide an RSS service to their Web visitors. Those two sites were also the only ones to provide news in the form of video. That gave them a “medium” score on the multimedia question. Despite being fairly low-tech Web sites, all provided a live streaming connection to actual radio content from the station. Beyond that, the five sites differed quite a bit in their content.

2007: A push for digital content?

Heading into 2007, stations may also feel more drive to develop other digital components, such as Internet listening, podcasting, satellite radio, HD radio, and content delivered to cell phones and PDA devices.

The advantages of those new listening options vary, but in general they all include expanded listening choices, customizability and portability. Ray Davis, program director for WTAM in Cleveland, told Talkers magazine, a journal about talk radio, that his goal was to provide more on-demand products through the Web site so he could complement the radio station and increase revenue. The talk host Chris Core also noted the increasing number of downloads of his show. He added that “I hope my union (AFTRA) changes its Stone Age policy of not allowing commercials to be played over the Internet. We are wasting a huge potential source of money and ratings.”⁶

Clear Channel — the largest radio organization, still owning nearly 1,200 stations (with a fairly big selloff in the offing) — has been making a big push online. Evan Harrison, executive vice president of Clear Channel and head of the online music and radio division, told Talkers magazine that his company has equipped upward of 600 stations’ Web sites with the capacity to stream content live. He added that Clear Channel had seen a growth in online radio streaming of 50% from 2005 to 2006. Through the use of on-demand sound (podcasts) and the application of a video component to the standard audio content of radio, Harrison says that Clear Channel is really focusing on getting creative to devise new revenue streams. He also says that 14,000 of its traditional advertisers have already signed up to reach Clear Channel’s online consumers as well.⁷

Satellite Radio Online

Satellite radio, already an alternative to traditional radio listening, is also expanding its options by pushing its product online.

Sirius Satellite Radio offers an online service that includes Internet access to live streams of all its music stations, and a limited selection of its news, talk, sports and entertainment channels, about 15 channels. But the service does not come free. Non-subscribers must pay the standard $12.95 a month that regular subscribers pay. Regular satellite subscribers, however, automatically receive access to the online version. They can also add Internet-only subscriptions to the account for an additional $6.99 a month. Online users can also opt to pay for improved CD-quality audio.⁸

XM Radio also provides an Internet version of its product. Like Sirius, XM offers only a modified list of its 170 channels online, including about seven non-music channels. XM is marketing its online product as a unique alternative to its satellite line-up, by offering several online-only channels. The cost for non-subscribers to XM’s regular service is $7.99 a month. The cost to current subscribers is uncertain; the Web site informs its customers that “If you already subscribe to XM or are taking an XM trial in your new car, you may be eligible for XM Radio Online, at no additional charge.” It is unclear what the stipulations are.⁹

Conclusion

Overall, radio has been slower than other media to incorporate new listening formats into its traditional format. That could stem from a perception that online listening and podcasting are direct competitors to traditional radio listening. But such an argument hasn’t stopped newspapers, which also compete directly with their own online product, from being leaders in developing sophisticated online products.

Regardless of the reason that radio has been slower to develop online, the imperative exists, and news and program directors are beginning to realize it. Though traditional radio looks to remain a part of people’s lives for the foreseeable future, the digital era is certainly upon us. As audience numbers for broadband Internet, podcasts and satellite radio grow, people are getting more and more accustomed to the ease and choice offered by the new digital devices. To compete, traditional radio, likely through HD Radio and Internet radio, will have to offer the same portability, customizability and choice that the new audio options provide.

Footnotes

1. Bob Papper, RTNDA/Ball State University Annual News Director Survey, “TV Web Sites Helping the Bottom Line,” RTNDA Communicator, May 2006.
Note: Survey was conducted in the fourth quarter of 2005. Results are based on 139 radio news directors and general managers representing 450 stations.

2. Ibid.

3. Ibid.

4. Ibid.

5. Ibid. Note: Weather is ranked fourth, traffic 14 th and local sports 8th.

6. Alan Linder, Talkers magazine, “The Talk Media Industry Looks Ahead to 2007,” December 2006/January 2007

7. Kevin Casey, Talkers magazine, “Clear Channel’s Online Content Battle Plan,” December 2006/January 2007

8. http://www.sirius.com

9. http://www.xmradio.com

Public Attitudes

The public’s relationship with radio has moved a fair distance since the medium’s debut in the 1920’s. Gone are the days when it was a stationary sound box that the family gathered around. Today, radio is a portable audio device that may carry music or news from a variety of different sources, not bound to broadcasting a traditional AM or FM signal.

Yet even though the traditional AM/FM dial has lost some of its clout and audience, the quick embrace of portable audio platforms signals the enduring appeal of the power of listening — its intimacy, mobility and adaptability to different styles of content.

According to the 2006 Pew People and the Press biennial news consumption survey, people turn to radio primarily for information. Three quarters of radio listeners cited that as a reason, just as respondents did for newspapers, Internet and television. But radio was also rated highly — more than any other medium — as a place to “pass the time.”¹ That seems to reflect another quality that is vital to radio’s appeal: people can do other things while listening, whether driving, walking, cooking, or surfing the Internet.

What type of news do people look to radio for? The data suggest that it’s a medium with no particular specialty. Of the nine types of news that Pew surveyed in 2006, radio was not a top-three preference for any. It fared the best for political news, but even there came in fourth of seven information media at 5%, ahead of only magazines, talking with people and “other.”² Radio seems a medium for general information and for talk, a jack of all subjects.

News Media That People Turn To

2006

Design Your Own Chart

Source: Pew Research Center for the People and the Press biennial consumption survey, “Online Papers Modestly Boost Newspaper Readership,” July 30, 2006.

Measuring a different way, a survey by the Radio and Television News Directors Foundation found that local radio news programs came in fourth on a list of seven news sources, ordered by the percentage of people who identify their major source of news.³

Most Popular News Destinations
2006

Source: Bob Papper, RTNDf/Ball State University Annual News Director Survey, “Future of News Survey,” October 2006
Note: Percentage of respondents citing the news source as their major source of news

One measure of the public’s attitudes is the level of trust in certain news outlets. Such numbers are not as readily supplied for radio as for other media. National Public Radio is the only radio outlet about which the Pew Research Center for the People and the Press survey asks respondents to rate believability. Compared with many outlets, NPR ranks pretty well on the believability scale. Since 1998, NPR’s believability among the public has been growing, albeit slightly, while other major news sources’ rankings have been sinking. What was once a 24-percentage-point spread between top-ranked CNN and NPR has now closed to eight percentage points, though CNN still leads.⁴

News Source Believability

1998 - 2006

Design Your Own Chart

Source: Pew Research Center for the People and the Press biennial consumption survey, “Online Papers Modestly Boost Newspaper Readership,” July 30, 2006.

Compared with other information sources, the public also views local radio newscasts as “newslike.” In a survey by Bob Papper and the RTNDF, respondents were asked to score 13 media programs based on a 1-5 scale of how “newslike” they were. Local radio newscasts came in fourth (4.0 on the scale), after local TV news, cable newscasts, and network evening newscasts, each at 4.4. Talk radio programs like Rush Limbaugh and Al Franken scored ninth (2.4), just above Entertainment Tonight and the Daily Show (tenth and eleventh, respectively, with scores of 2.3 and 2.1).⁵

Media consumption choices are also influenced by a person’s overall interest in the news. The vast majority of people who “enjoy the news a lot” (52% of the population) turn to newspapers for their regular news diet (66%).⁶ Rush Limbaugh’s talk radio show regularly attracts only 6% of such news junkies. Radio over all has a similar problem. In general, radio (whether NPR, religious radio or Rush Limbaugh) is the least likely to attract the attention of those who enjoy the news a lot. Even NPR only regularly attracts 23% of that category of people.

Media That News Junkies Turn To

2006

Design Your Own Chart

Source: Pew Research Center for the People and the Press biennial consumption survey, “Online Papers Modestly Boost Newspaper Readership,” July 30, 2006.

Political news junkies show a similar trend, seeking out their political news from newspapers. Slightly more than a quarter of such people, 28%, say they are regular listeners to NPR. Ten percent of them listen to Rush Limbaugh.⁷

Media That People Turn To For Political News

2006

Design Your Own Chart

Source: Pew Research Center for the People and the Press biennial consumption survey, “Online Papers Modestly Boost Newspaper Readership,” July 30, 2006.

Footnotes

1. Pew Research Center for the People and the Press biennial media consumption survey, “Online Papers Modestly Boost Newspaper Readership,” July 30, 2006.

2. Ibid.

3. Bob Papper, RTNDF/Ball State University Annual News Director Survey, “Future of News Survey”

4. Pew Research Center for the People and the Press, News Interest and Believability Index, June, 2006.

5. Bob Papper, RTNDF/Ball State University, “Future of News Survey,” October 2006.

6. Pew Research Center for the People and the Press biennial news consumption survey, “Online Papers Modestly Boost Newspaper Readership,” July 30, 2006.

7. Ibid.

Talk Radio

The modern era in talk radio effectively began with the Federal Communications Commission’s repeal of the Fairness Doctrine in 1987.

Under the doctrine, all sides of controversial and political questions had to be given equal representation on the airwaves. The result up to that point was that radio talk programs consisted primarily of general (non-political) talk and advice. The big names were people like Michael Jackson in Los Angeles, whose program included interviews with celebrities, authors, and civic leaders.

With the doctrine’s repeal, radio shows could become more one-sided, more freewheeling, ideological, and political. And it didn’t take long. One of the first to gain popularity under the new rules was a new voice out of California named Rush Limbaugh. Within a year or two of the new rules, Limbaugh’s provocative denunciations of Democrats became a phenomenon. Stations quickly began to pick up his syndicated show, and other conservative names followed his lead. Being controversial seemed a plus. Among the imitators were G. Gordon Liddy, convicted in the Watergate scandal, and Ollie North, implicated in Iran Contra.

That popularity is clear enough in the numbers. In the wake of the regulatory change, the number of stations carrying the talk format swelled from about 400 nationwide in 1990 to some 1,400 in 2006, according to Inside Radio, a growth of almost 250%.¹  

In the last five years (2001-2006), the growth rate has been a respectable 23%. But much of the explosive growth happened early on.

News/ Talk Radio Growth

1990 - 2006

Design Your Own Chart

Source: Arbitron, “Radio Today: How Americans Listen to Radio, 2006 Edition,” February 14, 2006 Note: No figures available for 2000

Talk radio runs the gamut of topics. But it remains most associated with conservative talk — though even that may be misleading. Talkers magazine, the leading talk radio publication, examines nine separate categories of the format in which “general issues/political talk” leads as the most-programmed talk style. Sports talk is second, followed by “hot talk” or “shock jocks” like Howard Stern. In order, the remaining six talk forms are: popular culture talk (lifestyle, entertainment), financial talk (business, finance, real estate), home talk (home maintenance and improvement, gardening), health talk (diet and fitness), psychology/relationship talk (emotional/mental health issues, romance, family), and specialty talk (computers, automotive).

 Conservative Personalities Dominate

Personality, not just ideology, is a defining quality of the most popular talk programs, and here the first of the new age of talkers remains the most popular of all. Rush Limbaugh, whose career began in 1984, remains the No. 1 talk show host on traditional radio with 13.5 million listeners as of the spring of 2006, according to Talkers magazine.²  

He was once far ahead of his competition, but some of Limbaugh’s fellow conservative talkers are catching up. According to the Talkers estimates, Sean Hannity has 12.5 million listeners followed by Michael Savage with 8.25 million, Laura Ingraham with 5 million, Neal Boortz and Mike Gallagher each with 3.75 million, and Bill O’Reilly with 3.25 million. 

Talk Radio Audience
2003 and 2006

Source: Talkers magazine, “Top Talk Personalities,” Spring 2006

Liberal talk radio personalities fall much further down the list, according to Talkers’ estimates. Ed Schultz ranks first at 2.25 million listeners; the comedian Al Franken is second at 1.5 million, followed by Randi Rhodes and Alan Colmes at 1.25 million listeners each. (Franken announced in early 2007 that his last show would air on February 14. He is said to be considering a run for the U.S. Senate.) 

Is the audience for talk still growing? Some data would suggest it is. According to the Pew Research Center for the People and the Press, the number of regular listeners to talk radio grew to 20% of adult Americans in April 2006, up from 17% two years previously. Except for months leading up to an election, that number has been on the rise, and was as low as 13% ten years ago.

Survey data would also suggest the audience for Limbaugh in particular has dropped from the mid-1990s, but is stable today. In 1994, according to research from Pew, 6% of Americans said they listened to Limbaugh regularly, and 20% said they listened “sometimes.” In the most recent survey, 2006, Pew found that 5% of the public listens to Limbaugh regularly, a figure that has remained steady over the past 12 years, but occasional listeners dropped to 11% in 1996 and has basically stayed there in the 10 years since.³  

Who Listens to Talk

Talk radio also attracts a different audience, even from more conventional news and information on radio. The talk radio audience is younger than the more inclusive “news/talk/information” format. More than a third (36%) are between 25 and 44 years old, compared with 23% in the broader news/talk/information grouping. According to Arbitron, talk personality stations tend to attract a younger audience by distinguishing themselves with “edgier programming.”⁴

Listeners To News and Talk Personality

2005, by Age

Design Your Own Chart

Source: Arbitron, “Radio Today: How Americans Listen to Radio, 2006 Edition,” February 14, 2006

Other characteristics of the talk radio audience, according to the Talkers magazine’s Talk Radio Research Project released in the fall of 2006, are that listeners tend to be male (55%) and white (65%). In addition, 65% of the audience report household incomes between $30,000 and $70,000.⁵

The audience is also distinctly conservative, but not necessarily Republican. Talkers magazine data put the party breakdown at 23% Republican, 14% Democratic, and a majority, 57%, Independent. The Pew Research Center for the People and the Press finds a more equal spread among regular listeners to political talk radio: 32% Republican, 35% Democratic and 30% Independent.

How do such listeners see themselves? When asked to describe their own political philosophy, Talkers found that 38% said conservative, 14% liberal and 41% moderate. The Pew Research data put the breakdown for “regular” listeners at 43% conservative, 23% liberal and 30% moderate. While that audience is conservative, it should be noted that the general public also identifies itself more that way. The Pew Research Center finds that the ideological breakdown for the general public is 36% conservative, 21% liberal and 35% moderate.

Whatever their politics, talk radio’s listeners can be activists with an impact. A campaign led by the blogger “Spocko” in 2006 was designed to get advertisers to boycott the San Francisco talk radio station KSFO-AM for what were deemed racially, religiously and violently offensive commentary by four KSFO radio hosts. According to the San Francisco Chronicle, three large advertisers responded to the campaign by removing their ads.

Howard Stern and the Satellite Challenge

One other powerful talk personality who has commanded much media attention is the “shock jock” Howard Stern, most recently for his move from CBS Radio to satellite’s Sirius Radio. In 2003, his radio audience stood at about 8.5 million listeners, which placed him third on Talkers magazine’s list of top talk personalities. Since his move to Sirius at the beginning of 2006, it is more difficult to quantify his audience. Sirius ended 2006 with just over 6 million subscribers, an 82% increase over its close-of-year 2005 figure of 3.3 million.⁶ While Stern’s move to Sirius may have contributed to the growth, there is no way to measure the extent to which he was responsible for the subscription gains.

But Sirius certainly gave him some credit. In October of 2004, at the time of Stern’s signing, Sirius made an agreement that if the subscription base exceeded 3.5 million by the end of 2006, he would receive a stock-based performance bonus. In early January, Stern received that bonus in the form of more than 22 million shares of Sirius stock, valued at about $83 million.⁷

Big-name talk personalities are becoming increasingly popular on satellite radio, which at the end of 2006 had a combined subscriber base of 13.6 million (of which XM Radio reported 7.6 million subscribers and Sirius 6 million. See Audience). Both satellite companies capitalize on their extensive selection of commercial-free music channels, while also offering an ever-growing selection of news, sports and entertainment programming with “limited” commercials.⁸ Besides Stern, Sirius boasts unique programming from Martha Stewart, the comedian Raw Dog, Playboy Radio, Court TV Radio and such syndicated political talk personalities as Michael Reagan, G. Gordon Liddy, Ed Schultz and Stephanie Miller. XM boasts unique talent from Oprah Winfrey and Friends, Ellen DeGeneres, Tyra Banks, Opie & Anthony and Bob Edwards, as well as syndicated talkers from conventional radio, Laura Ingraham, Glenn Beck, Bob Costas and Air America.  

Liberal Talk: A Future or a Failure?

Talk radio hosts are overwhelmingly political, and overwhelmingly conservative in their ideology, according to talk personality listenership numbers. In fact, of the 40 talkers that made it on the Talkers magazine list of top hosts, only six were liberal (Ed Schultz, Al Franken, Alan Colmes, Randi Rhodes, Stephanie Miller and Lionel).⁹

In an effort to alter those numbers, Air America, amid much fanfare, hit the airwaves in the spring of 2004 with a liberal lineup highlighted by Al Franken and the comedian and actress Janeane Garofalo. Compared with other popular talk programming, however, the network never garnered much of an audience: it reported in late 2006 that its programming reached about 2.4 million listeners weekly.¹⁰

Though it got off the ground with significant financial backing, the network stumbled through two and a half years before filing for Chapter 11 bankruptcy in October 2006. Despite its financial problems, Air America has remained on the air and has retained most of its affiliate stations, though several opted out of their contracts. Recent news reports say there is a preliminary agreement to sell Air America to the New York real estate executive Stephen Green.  

Tom Taylor, editor of Inside Radio, says the network was too concerned with being the antidote to Rush Limbaugh rather than providing great entertainment and making great radio. The advantage of Rush Limbaugh, according to the radio consultant Walter Sabo, is that “he’s a great broadcaster, not a great conservative.” On the other hand, none of Air America’s talk talent, aside from Randi Rhodes, had any previous experience in radio.  

Another possible explanation for the lackluster reception for liberal talk radio, some analysts say, is that its conservative competition is inherently more entertaining. As Tom Taylor suggested, conservative “bumper sticker” language is easier to talk about and easier to understand — conservatives stand for cutting taxes and supporting the troops. The progressive stances don’t seem to come in such neat packages — it’s more complicated than, for instance, raising taxes or not supporting the troops.

Others argue that the conservative talk movement is only a response to the rest of the mainstream media, which many conservatives believe is predominantly liberal. It has been an argument for years among some conservatives that NPR is the liberal voice of radio, a claim NPR would dispute. Regardless, it seems too early to tell whether the financial ills and relatively low audience numbers for Air America spell doom for a liberal talk genre.

There seems to be at least one rising liberal talk star, Ed Schultz, the most popular talk radio host of his persuasion on the air with 2.25 million listeners.¹¹ His show, “The Ed Schultz Show,” began broadcasting in January 2004 and airs from Fargo, N.D. In its brief existence, the show is already syndicated to over 100 stations, including 9 of the 10 largest markets, and Sirius Satellite Radio.

The Future of Talk Radio

The proliferation of new media outlets does have some in the radio industry worried about the future of talk. Ed Christian, president and CEO of Saga Communications, takes a proprietary stance on the idea of sharing traditional radio content with new competitors like satellite radio or the Internet. In an interview with Talkers magazine, he said that “the two things that distinguish our medium [traditional radio] from any other are localism and exclusive content. I believe in not sharing that content with anyone else.” Based on that principle, Christian removed Sean Hannity from the programming schedule at WINA in Charlottesville, VA when the popular radio personality started syndicating on satellite radio. In Hannity’s place, Christian put on a live, local talkshow which he said has been very successful in “whipping our former program.”¹²

Underscoring the need for unique programming, Talkers magazine’s publisher, Michael Harrison, wrote that “the survival of terrestrial radio…boils down to one thing and one thing only: they must program exclusive content unavailable on any other medium.”¹³

In such an environment, radio owners and program directors are predicting that investing more in local talk talent may be the key to continued survival. But at least some industry players and observers predict that recruiting the talent may not be easy. Because of the ease, financial efficiency and popularity of programming nationally syndicated shows, they say stations find it costly and difficult to cultivate good local talk hosts who can attract a large audience.

Scott Fybush of Inside Radio warns that “The problem with staffing local talk talent is that it costs money, and talent is hard to find.”  

Another potentially important issue for talk radio is the changing political landscape. In light of the 2006 midterm elections, there has been much speculation about how the Democratic Congressional win will affect talk radio — with no clear consensus emerging.  

Most conservative talk personalities believe that the party shift will bode well for their shows, giving them more fodder to attack the Democrats. Others say that politics doesn’t matter at all. For instance, Greg Knapp, a talk show host for Radio America, believes that talk radio isn’t driven by elections or politics, “unless you’re Rush Limbaugh.”¹⁴ But as the Texas-based conservative host Lynn Woolley told Talkers magazine, “bubbling under the surface is the liberal resentment of conservative talk radio.”¹⁵ Woolley predicts that the Democratic leadership, especially with the prospect of a Democratic president in 2008, might push for a return of the Fairness Doctrine, which would mandate equal representation of political opinion on the airwaves.

A reinstatement of the policy whose repeal ushered in the modern era of talk radio would dramatically shake up the industry. For now at least, most observers believe that despite changing winds in Washington, it is unlikely to happen.

Footnotes

1. M Street Directory 1989-1999 and Inside Radio, Radio Book, 2006-2007. Inside Radio, formerly M Street Corporation, redefined the news/talk category to remove the category of sports talk. It began recording stations with the all-sports format in 1994. Before that, the news/talk figures reflect a removal of the estimated sports talk stations. According to Scott Fybush of Inside Radio, the number of sports stations was insignificant before 1993.

2. Talkers magazine, “Top Talk Personalities,” http://www.talkers.com/main/index.php?option=com_content&task=view&id=17&Itemid=34. Talkers bases its analysis on Arbitron’s Spring 2006 Monday-Sunday weekly cume ratings, supported by other reliable indicators in rated and non-rated markets. Estimates are rounded off to the nearest .25 million listeners.

3. Pew Research Center for the People & the Press biennial news consumption survey, “Online Papers Modestly Boost Newspaper Readership,” July 30, 2006.

4. Arbitron, “Radio Today: How Americans Listen to Radio, 2006 Edition,” February 14, 2006.
Note: Talkers magazine also similarly reports the 25-44 age group at 37%.

5. Talkers magazine, “The Talk Radio Research Project,” http://www.talkers.com/main/index.php?option=com_content&task=view&id=16&Itemid=33. Data are drawn from interviews with listeners of general news/talk radio across the U.S., supplemented by input from talk radio programmers, hosts, sales personnel, radio station in-house research, and some studies by academic institutions.

6. http://www.sirius.com

7. Sirius news release, “Howard Stern Earns Incentive Payment Reflecting Record Subscriber Growth,” January 9, 2007.

8. XM offers approximately 170 channels versus Sirius’ 130, as of December 2006.

9. Talkers magazine, “Top Talk Personalities,” http://www.talkers.com/main/index.php?option=com_content&task=view&id=17&Itemid=34

10. Air America press release, “Air America Radio Announced Today That It Has Filed for Chapter 11 Protection,” October 13, 2006.

11. Talkers magazine, “The Top Talk Radio Audiences,” as of spring 2006.

12. Kevin Casey, “Speculation on the Future of the Stick,” Talkers magazine, November, 2006.

13. Ibid.

14. Ellen Ratner, Talkers magazine, “News/talk radio gears to post-election environment,” November 2006.

15. Ibid.