Why radio still matters

Michael J. Pallerino

May 1, 2008

It's a typical morning on 680 The Fan. The Rude Awakening, aka Christopher Rude and Perry Laurentino, are bantering about an upcoming bowling match against perennial-troubled Tennessee Titans cornerback Adam "Pacman" Jones and his attorney (and Business to Business online contributor), Manny Aurora. In the background, morning show producer Jonathan Chadwick is trying to hurry the banter along. There are many things to cover, many guests and bits to work in. ESPN's Chris Mortensen is slated to talk about potential Falcons' draft picks. New Hawk Mike Bibby will discuss his role with the team. Braves outfielder Jeff Francoeur wants to talk baseball and what's on his iPod. CBS 46 Morning News' Dagmar Midcap has weather updates. And Atlanta's iconic traffic reporter Jim Bissell has what roads to avoid.

But that's just the tip of the programming iceberg. Between the updates, reports and general hysteria of another Atlanta morning, Rude is prepping his morning conversation with Jason Joel, co-owner of Mall of Georgia Chrysler Dodge Jeep. But Joel isn't a guest – not really. He's one of 680 The Fan's major advertisers, a sponsor whose 60 seconds of daily airtime serves as a strategically positioned marketing campaign.

His updates range from specials on new and used vehicles for 680 listeners at the dealership or by visiting the dealer's and/or radio station's Web sites. The Rude/Joel banter works as well as any drive-time morning team – which is good business for everybody. As a dealership on the outer fringe (Buford, Ga.) of 680's core listenership, Joel helped create the campaign with station executives to monitor just how much bang he's getting for his buck.

At a time when print media is re-defining itself, this is the new face of Atlanta radio.

Atlanta's new radio game

"Today, it's all about accountability," says David Dickey, president of Dickey Broadcasting Company, which runs 680 The Fan. "[In the past] there wasn't a lot of accountability from Madison Avenue. People just threw around the buzzword ‘branding,' not necessarily even knowing what it meant. They weren't holding any of the mediums accountable – radio, TV, billboards, newspapers. If you were throwing a couple hundred grand at a station every year, they assumed the station was going to deliver. They assumed the station was going to create extra awareness. That's great, but awareness doesn't always sell a pickup truck or an insurance policy."

d.dickey

In today's radio market, the bottom line is driven by how a station delivers an advertiser's message to the listener in a way that shows a tangible return. "What it comes down to ultimately is what can you do, not as a sports radio station, but as a sports marketing company?" says Andrew Saltzman, president of Big League Broadcasting, which runs 790 The Zone. "We talk about endorsements and testimonials and integrated programming and branded content. Putting Budweiser on for a 30- or 60-second spot is wonderful. But it's about how you integrate said client into the fabric of your programming. We have 15 hours of live and local radio programming a day – 15 hours to integrate an advertiser."

The Atlanta radio market is changing, indeed. Gone are the bountiful '90s, where double-digit growth to the tune of 20 percent or more was prevalent. Whether by coincidence or instability, the relatively flat Atlanta market recently has been a lightening rod of change, so much so that you need a scorecard to keep up. This has forced radio stations (all mediums, really) to work harder for business.

Still big business

According to BIA Financial, which tracks revenues for the radio and other markets, radio sales in Atlanta for 2007 were $398.5 million, down 3 percent in 2006 (See Top 10 markets by revenue, page 39). Other top markets include New York, Los Angeles, Chicago, San Francisco, Dallas-Fort Worth, Houston-Galveston, Washington, D.C., Boston and Philadelphia.

"Radio still is big business in Atlanta," says Rodney Ho, who covers the radio and television beat for the Atlanta Journal-Constitution. "There's enough opportunity out there for people. But it's kind of a no-sum game right now. What you grab – maybe what you take – from somebody else, makes it a little tougher environment. The stations are trying to adjust and maneuver their chess pieces the best they can."

Cox Radio, which runs News/Talk 750 WSB, Kiss 104.1, B98.5, 95.5 The Beat, 97.1 The River and is home to Neal Boortz and Clark Howard's syndicated programs, is one of those companies maneuvering through the maze. Cox Radio Atlanta is part of Cox Radio, one of Cox Enterprises' major subsidiaries. Cox Radio owns, operates or provides sales and marketing services for 86 stations (71 FM and 15 AM) in 19 markets.

"From a listening standpoint, the Atlanta market is pretty exciting," says Chris Wegmann, VP of Cox Radio Atlanta. "Companies are trying to find niches in the market. If you look at the changes at Citadel and the changes at Cumulus, you will see that people are trying to find their spots in Atlanta radio.

"The market is really trying to redefine itself," Wegmann adds. "Music changes. Tastes changes. Part of this reflects the market changes. Look at the formats that have survived; they have done so by evolving. You have to constantly research the market and deliver what is needed. It's more competitive out there [the Internet has taken money from newspaper and radio]. The pie has grown, but it has not grown to accept all these mediums. So has it been tougher? Yes."

The local game

It appeared as if it would be just another Friday on the Atlanta airwaves.

But Friday, Feb. 29, 2008, was a bit different, even by sometime cryptic Leap Year standards. After a series of inter-office meetings, the management at Citadel Broadcasting, which operates Eagle 106.7 and Kicks 101.5, dumped nearly its entire on-air staff, citing cost-cutting measures.

In a move that Ho dubbed the "Leap Day Massacre," the only ones to survive the station's vaunted on-air line up were Cadillac Jack, Dallas McCade and Bill Celler. Gone were legendary Eagle morning man Rhubarb Jones; Kicks morning co-host Kristen Gates; Kicks afternoon DJ Wylie Rose; Eagle afternoon jock Steve Mitchell and mid-day gal Sandy Weaver; and Kicks night-time jock Scotty O'Brien.

In a quick span across the dial, Ho says all five stations at Cox Radio; Salem Communications Corp. (WFSH-FM 104.7, WNIV-AM 970, WLTA-AM 1400, WGKA-AM 920, WAFS-AM 1190); and Lincoln Financial Media (Star 94-FM, WQXI-790 The Zone-AM) are doing well. However, some Clear Channel stations (WGST 640 AM, The Bull 94.9-FM, Project 9-6-1-FM, The Legend 96.7-FM, El Patron 105.3-FM, VIVA 105.7 FM) are struggling for consistency. "[Overall] the Atlanta radio market is very unsettled right now," Ho says. "For years, this was a fast-growing market, faster than the rest of the nation. It could be the economy or it may be that radio has never been the favorite place to go. It always had to fight TV and print for attention. And now it has to fight the Internet."

The expanding choices for today's advertisers make it harder for radio. The Arbitron numbers show younger people aren't listening to the radio – especially traditional AM and FM – like 12- to 24-year-olds did, 10 years ago. They're listening to their iPods; they have the Internet. There are scores of other musical options available.

Yet, radio still has the staying power and old-school drawing power to remain relevant, says Business to Business online contributor Mitch Leff, president of Leff & Associates, an Atlanta-based public relations agency that tracks the media market. "Radio is a medium that's underappreciated in terms of its reach and power," he says. "Morning and afternoon drive-time stations have a captive audience. When you're taking that increasingly long commute every day, there's nothing to do but listen."

Andrew Saltzman

Atlanta radio executives remain bullish on the market, saying that what's happening now will correct the market. The clustering of major markets did not work, which means companies that went public put themselves under the scrutiny of Wall Street. "The radio market is the perfect storm," says Saltzman, who grew up watching his father run the famed WOR in New York City. "[What's hurting it?] It's the economy. It's the industry. It's the market. Everything is going on right now. If you are a station that might not be No. 1 or No. 2, you have to bring unique, added value and marketing programs along with the programs.

"How do you better serve the community where you have mounting corporate pressures to deliver a certain number to the street?" Saltzman adds. "That's the biggest challenge. Does a GM have the juice and the opportunity to do some things he can do, or is he handcuffed by the corporation that owns him?

"That's why you're going to see some of the bigger stations divesting themselves of some of these stations where the multiples (radio stations are bought, sold or traded at a multiple of their cash flow) weren't what they used to be," he adds. "It used to be 18 to 20 times back in the good old days, and then 16 and 18. But today it's eight to 10. And eight to 10 isn't bad. You're going to see some stations continue to trade and some newer players come in. There are a lot of broadcasters licking their chops to pick up some new stations in some great markets.

"Radio stations still throw off 50 cents on the dollar," Saltzman continues. "And 95 percent of the people in Atlanta, and around the country for that matter, use radio weekly. So the medium is as vibrant and as relevant as ever. While Atlanta still may be under-radioed, there are more choices out there."

The next frontier

For some, the Internet continues to be an untapped revenue stream. Just as newspapers and magazines are forging new revenue paths in cyber space, so is radio. Market success means developing ways to touch, reach out and build one-on-one relationship with the listener.

That's where the Web comes in. In a metro area where people literally are locked in their cars in the mornings and evenings – and sometimes in between – station owners continue to seek ways to become a portal for unique and useful content. And in some cases, that means driving listeners to their Web sites.

Dickey, who also grew up in the radio business, believes the medium is raising and diversifying its game. He says a radio station's marketing prowess will continue to help burn its identity and revenue streams through the Web.

"Look at Monster.com or Match.com," he says. "Besides the money they put into creating their sites, what is one of their largest expenses? Marketing. [But] we're vertically integrated. We can create these sites and then market them ourselves. 680.com is one of the largest advertisers on 680 The Fan. You can listen online. And we're getting ready to unveil the third generation of our Web site, which includes podcasting and live chats.

"[Through the Web] we can develop a national platform and be heard by 40 percent of the country," Dickey continues. "Because we are vertically integrated, we can create a job Web site, a matchmaking site, an auto site, a classifieds site, and then have the ability to promote that far more than any of those other sites [Monster.com and Match.com] could ever afford to do."

Wegmann says in the not-so-distant future, car radios will be equipped with the Internet. "This means you can drive all the way across the country and listen to Neal Boortz and Clark Howard on WSB without ever changing the dial," he says.

So where does the Atlanta radio market stand today? Will the "Leap Day Massacre" mean other personalities and/or stations may fall? Will the "Steve & Vikki" show move down the dial again? Can "The Regular Guys" stay in one place without "being asked" to leave – again? Will stations like Star 94 continue to spend hundreds of thousands of dollars to promote an on-air team like it did its "Morning Mess?" And how many Spanish stations are too many?

Perhaps Saltzman sums it up best. "Radio in Atlanta is alive – well for some people, not so for others. The truth is that radio will not look the same. If you looked at where it was two years ago, a year ago, you wouldn't think that sitting here on May 1, 2008, it would look this way. And I believe that when we look at it on May 1, 2009 or 2010, it's not going to look this way."