May 1996: Changes From A Management Perspective
As the radio industry has evolved in the past two decades since the Telecommunications Act, many working in the radio industry have no idea on how different things were before 1996. To help describe the changes to the industry since then I asked Dick Taylor to explain how the role of management has changed. Now Assistant Professor for Western Kentucky University’s School of Journalism & Broadcasting, in 1996 Taylor was General Manager for Spring Communications in Atlantic City NJ overseeing News/Talk 1450 WFPG, AC “Lite Rock 96.9” WFPG-FM and “Country 106.3” WKOE as part of a career as GM or Market Manager that stretched from 1982 until 2010.
To understand how the Telecom Act of 1996 was the finale of a process that began back in the 1980s, you need to understand how radio ownership regulations changed at the Federal Communications Commission (FCC) that brought us to that day in February when President William Jefferson Clinton would sign the dramatic major change to broadcast law since the Communications Act of 1934.
Radio and television ownership up till the 1985 had stringent ownership caps. Known as the 7-7-7 rule, any single person or company could only own a maximum of 7 AM radio stations, 7 FM radio stations and 7 television stations in the entire United States of America. In 1985, that cap was expanded to 12-12-12. In 1992, the rule was relaxed further for radio ownership to 18 AM radio stations and 18 FM radio stations but remained at 12 for television stations.
Something else though came along in the 1980s, Docket 80-90. Docket 80-90 reduced the mileage separation between FM radio stations thereby creating hundreds of new FM radio stations throughout America.
Unfortunately, while there were more radio stations on the air than at any previous time in America, each of them was trying to attract the largest audience share to attract more advertisers and enable them to raise the prices of their commercials. To do this, radio stations would hire consultants who would do audience research and the result was everyone doing virtually the same formats trying to attract the same people, adults 25-54 years of age.
The reality was the advertising pie was not growing at the rate of radio stations trying to cut their piece of the pie or trying to garner a larger slice of that ad pie.
What we would see were a lot of radio stations that were financially challenged.
The next bright idea to solve this problem was the Local Marketing Agreement or LMA. The LMA was a way that a successful radio station could now take over the programming and sales of one of these financially challenged stations to the benefit of both the license holder and the management company.
Sometimes you may see LMA defined as Lease Management Agreement and that is incorrect. Under FCC regulations, the licensee of a broadcast license cannot lease his license to another entity. The marketing agreement got around this by holding the licensee responsible for oversight of the operation of his/her radio station(s) in the eyes of the FCC even though in reality most licensee’s gave the LMA’ing company a blank check in running things.
With this brief historical perspective you can see how when President Clinton signed the Telcom Act of 1996 into law on February 8, 1996, the ‘horse was pretty much out of the barn.’ The stated objective of the bill was to open up markets to competition by removing regulatory barriers to entry. It was supposed to allow cable TV companies into the phone business and phone companies into the TV business thereby increasing competition and reducing rates for both services to the consumer.
A good radio friend of mine told me that he had a speaking engagement in which he was speaking on the same platform as President Clinton and had a chance to ask him a question that had been burning inside him for a long time. That question was why he signed a law deregulating radio and causing the massive consolidation of the industry. President Clinton responded I didn’t know that part was in the bill. It was added only minutes before I signed it into law. Apparently some last minute wheeling and dealing inserted the radio deregulation part into the bill, something that radio owners close to Wall Street had been pushing for.
I was a member of the Board of Directors of the New Jersey Broadcasters Association in those years leading up to the signing of the Telecom Act of 1996. Tom Milewski was general counsel and CEO of Greater Media’s radio division. Tom, along with the board of NJBA, led a vigorous fight to head off having such a deregulation of radio ownership being included in this law. New Jersey broadcasters have been at the forefront of many broadcast issues due to its being short-changed for full power radio and television signals in favor of New York City and Philadelphia. Tom Milewski never got to see the full effects of the new broadcast law he so vigorously fought against, as he passed away due to lung cancer at the young age of 49 on February 9, 1999, only three years almost to the day of the passage of the Telcom Act of 1996.
My life would change dramatically after 1996. As the radio industry consolidated ownership I would find myself being the manager whose stations were being bought by a company that already had a manager to run everything. It was like a game of musical chairs, only every time the music stopped, I was always the one without a chair.
This would continue for the next “lucky” 13-years. The result was general managers became market managers. Market managers were general managers of clusters of radio stations in a single market. This would evolve to market managers that would oversee clusters of radio stations in multiple markets, with fewer managers, less people overseeing more radio stations in more places. Much of this due to Wall Street’s involvement in constantly pursuing increasing shareholder value and the rest do to the “land rush” of radio signal acquisition that occurred after 1996 where companies just tremendously over-paid for radio stations because they had lots of cash flowing in from Wall Street and everyone was trying to buy all they could while they could.
Radio owner/operators knew that you made your money in radio at the time you bought a radio station. Wall Street investors never took the time to get their heads around that basic principle. That’s how we ended up with the largest radio company in the world having the largest debt of any radio company in the world as well, a debt that exceeds the entire gross revenue of the entire American radio industry.
The good news is the radio business is still a great business to be in. Radio, long the best frequency medium for advertisers, now is also the number one reach medium as well. 93% of Americans are reached by radio every week.
Commercial radio in America turns 100 in just a little over three years and I will be celebrating the power of radio when it does.
As the first round of deals following the passage of the Act closed there was an uptick in format changes.
Paxson Communications made the first big move of May as it flipped Rock 103.5 WSHE Miami to Adult Alternative “The New 103.5“. By the end of the year, WSHE would tweak a drop to the newly created Modern AC format and rebrand as “103.5 Planet Radio” WPLL. To fill the gap created by the loss of WSHE, Clear Channel would evolve All 70s “Big 106” WBGG-FM to Classic Hits.
As MACAmerica closed on its purchase of Oldies “Twice 103.5” KTWC Phoenix flipped to Smooth Jazz “103.5 The Oasis” KOAZ to protect new sister AC 99.9 KESZ against competing Smooth Jazz “95.5 The Coyote” KYOT.
Country music returned to FM on Long Island NY following the demise of 103.5 WYNY New York in February. Barnstable flipped newly acquired 94.3 WMJC Smithtown from a simulcast of Classic Rock 103.9 WRCN to “Country 94.3“.
Baltimore got a second Country outlet as Alternative “100X” 100.7 WGRX became “Froggy 100.7” following a weekend stunting as All-Disco “Polyester 101“.
After a pair of stations flipped in April, Las Vegas saw another major format change as Regent Broadcasting Country 93.1 KEYV became “Big Oldies 93.1” KBGO after coming under common ownership with Country 101.9 KFMS.
Secret Communications brought Alternative “104.7 The Revolution” WNRQ Pittsburgh under common ownership with “105.9 The X” WXDX leading to the flip of WNRQ to Smooth Jazz as WJJJ.
Multiple stations flipped in Louisville as Clear Channel consolidated its newly acquired stations. Country simulcast “The Hawk” 1080 WHKW/107.7 WHKW-FM relocated to what was Classic Country 98.9 WKJK, while the Classic Country format and call letters moved to 1080. With Clear Channel acquiring 1080 and the IP to the Hawk, Regent Communications moved All 70’s “Cool 103.9” WQLL’s format to 107.7, but with a renaming to “Star 107.7” WSFR while 103.9 became Smooth Jazz WSJW.
Sinclair Communications acquired AAA “93.7 The Coast” WKOC Norfolk VA and flipped it to Active Rock “K94” to differentiate it from new sister Alternative 96.1 WROX. The flip at WKOC would be short-lived as the Coast brand and AAA format would quickly return.
Gannett flipped AC 100.7 WUSA-FM Tampa to Hot AC “100.7 Kiss-FM” with market legend Mason Dixon coming aboard as PD/Morning Host from crosstown Hot AC “Mix 96” 95.7 WMTX. Three other staffers made the move from WMTX to WUSA with Dixon.
After a failed move to Alternative “95.1 The Edge” WEDJ Charlotte completed its shift back to CHR with a rebranding to “95.1 Kiss-FM” WNKS.
Florida was the center of the deal-making universe in May.
Cox and Infinity matched up on a swap where Cox sent Classic Rock 105.9 WCKG and All 70’s “Y107.9” WYSY Chicago to Infinity for Standards 990 WHOO, Classic Rock 96.5 WHTQ and Rock AC 98.9 WMMO Orlando.
Chancellor Media paid $165 million for OmniAmerica’s eight stations in three Florida markets. The deal gave Chancellor CHR 95.1 WAPE and “Rock 105” 104.5 WFYV Jacksonville, Urban “102 Jamz” WJHM, Hot AC “Mix 105.1” WOMX and CHR “XL 106.7” WXXL Orlando, News/Talk 850 WEAT, Oldies 94.3 WOLL and AC “Sunny 104.3” WEAT-FM West Palm Beach.
Paxson Communications continued to purchase as many Florida stations it could with a plethora of deals. News/Talk 610 WIOD Miami came over from Cox for $13 million. Rock 100.3 WDIZ Orlando was acquired from Times-Shamrock for $22.5 million, while the company announced its intent to acquire Hot Talk 104.1 WTKS from Press Communications for an undisclosed amount. Paxson then agreed to purchase nine stations from Southern Broadcasting for $21 million as it added Rock 92.5 WPAP and Oldies 94.5 WPBG Panama City, Rock 101.5 WTKX-FM and Alternative 107.3 WOWW Pensacola, Talk 1270 WNLS, Country 94.9 WTNT, Hot AC 100.7 WTPS, Rock 101.5 WXSR and Oldies 107.1 WSNI Tallahassee. A final deal netted Standards 590 WGNE, AC 98.5 WFSY, Smooth Jazz 99.3 WEBZ in Panama City from Boss Radio Group for $2.85 million.
It was described as a “merger” of equals that already shared some services following the $250 million purchase of New City Communications by Cox Broadcasting. The deal brought eighteen stations in seven markets to Cox as it added New City’s stations in Atlanta, Birmingham, Fairfield County CT, Orlando, San Antonio, Syracuse and Tulsa.
The second biggest deal of the month came as Clear Channel purchased Radio Equity Partners for $235 million to bring nineteen stations in Columbia SC, Fort Myers, Greensboro, Memphis, New Orleans, Oklahoma City, Providence and Springfield MA.
Colfax Communications purchased Sundance Broadcasting for $95 million to add Standards 550 KOY, Urban AC 1230 KISO, Smooth Jazz “95.5 The Coyote” KYOT and Alternative “101.5 The Zone” KZON Phoenix, Standards 920 WOKY and Country 106.1 WMIL Milwaukee, and News/Talk 630 KIDO, Classic Rock 103.5 KARO and Oldies 104.3 KLTB Boise. Colfax already owned Oldies 960 KOOL/94.5 KOOL-FM Phoenix.
SFX Communications sold its two Dallas AMs as it exited the market. News/Talk 1080 KRLD and the Texas State Network were swapped to CBS for Classic Hits “93.7 The Arrow” KKRW Houston, while Susquehanna acquired Sports 1310 KTCK for $14 million.
Bonneville entered the Washington DC market with the purchase of Country 820 WQSI Frederick and 70s simulcast “Xtra 104” 103.9 WXVR Braddock Heights/104.1 WXTR Waldorf MD from SFX for $25 million.
Entercom, Nationwide and Secret pulled off the rare three-way deal. Secret sent Alternative 107.5 KTBZ Houston and $13 million to Entercom for Alternative 104.7 WNRQ and Country 107.9 WDSY Pittsburgh. KTBZ and $12.5 million were then swapped to Nationwide for Rock 99.9 KISW Seattle.
American Radio Systems agreed to swap their recently acquired Classical stations in Detroit and Philadelphia to Secret for two stations in Sacramento. 105.1 WQRS Detroit and 95.7 WFLN Philadelphia went to Secret, while ARS added Standards 1380 KMJI and Rhythmic CHR 102.5 KSFM. American Radio Systems also acquired Smooth Jazz 101.9 KSSJ Sacramento from Olympic Broadcasters for $14 million.
Benchmark Communications sold its three stations in Norfolk VA to two buyers as Oldies 95.7 WLTY went to Susquehanna for $6.5 million, while News/Talk 790 WTAR and AAA 93.7 WKOC (see above) went to Sinclair for $8.1 million. Benchmark then sold its 70s 96.5 WLEE and Alternative 106.5 WVGO in Richmond to ABS Communications for $14.5 million.
SFX Broadcasting sold the three stations in Louisville it was purchasing from PRISM Radio Partners to two buyers. Talk 790 WWKY and Rock 100.5 WTFX went to Clear Channel for $6.9 million, while AC 106.9 WVEZ went to Regent for $12.6 million.
Jefferson-Pilot added a third station in San Diego as it purchased Oldies “K-Best 95” 94.9 KBZT from Anaheim Broadcasting for $30 million.
Tichenor Media acquired Urban AC combo 98.9 KSOL San Francisco/99.1 KYLZ Santa Cruz from Crescent Communications for $40 million.