Radio, the experts say “call it media”. Those experts are wrong and this is why it matters.
Many well-meaning radio consultants are afraid that emerging technology will destroy radio. These consultants even swayed the former head of NPR “National Public Media?”. Ask anyone on the street what it is; they call it Radio. Even at pledge-time the multitude of volunteers call it radio. These consultants believe that to save radio, it must become more like the internet. We already have an internet. If it were the 1950’s would we be telling radio to call itself TV? Radio survives because it is…radio first.
Changing from “Radio” to “Media” is wrong for 4 reasons.
1. It turns it’s back on 40 years of branding (for NPR). Who would tell Coke change its name from Coke? There are plenty of new popular energy drinks and esoteric teas are gaining market-share. It could make sense if you went only by the numbers. And that is exactly why the consultants get it wrong about radio repeatedly. Coke is Coke and Radio is Radio.
2. “Media” is vague. Discarded CD’s are “media”. This blog is media. “Media” also suggests that a pledge to the local PBS station benefits the NPR station. Both are public media.
3. It undervalues the service that radio gives them. Radio is Broadcasting, which can not be achieved over the internet. An entire city or town is not going to go to the same web page at the same time. In radio a concentrated population can hear a new song for the first time at the same time. The internet is narrowcasting. This blog is narrowcasting to individuals who find this topic interesting. It takes the readers effort to find it. Broadcasting finds the listener or puts content out there that washes over busy people everywhere with a blanket approach. That power to reach huge numbers of busy listeners is why we expect all radio stations to serve the public interest. They can do so much good with so little effort if they try. Keeping the name “radio” raises the awareness that this format is different and more relevant to uniting local communities. This is why listeners go out of their way to support good radio stations. They feel connected to something greater which is the station and the community together.
3. Radio is cool. As a filmmaker I saw some clients turn their “film production companies” into “video production companies”. Video was the emerging technology but “Film” was a way of being, an art. Those film companies that kept the name “Film” technically shoot on “video” nowadays but keeping “Film” in their names implies an aesthetic attention to detail. Good companies don’t have to change their names with the technology because the consumer likes them for what they do and represent. This is why corporate radio has to keep changing its name. They no longer represent the spirit of radio and must find a way to hide that fact. The merry-go-round of format changes are excuses to the investors as to why the last one failed and the why next one will be better. Public Radio however is still live and local. It is still “radio” and has a growing audience. NPR, remember where you came from, and change your name back to National Public Radio. You’ll still get to podcast and the best of those podcasts will still be radio first.
The century old National Press Club is a couple blocks from the White House. It refers to itself as “The Place Where News Happens”. After a crazy subway ride in rush hour DC, Jill and I emerged in the “Edward R Murrow” room of the epicenter of establishment-journalism. We were in DC to show the film at the DC Independent Film Festival. The press club was asking about possible new rules for yet more consolidation. I had something to say to them.
Hear my speech:
I spoke after Steven Waldman, Senior Advisor to FCC Chairman Julius Genachowski, and former national editor for US News & World Report and Michael Copps, former FCC commissioner and senior advisor for the Common Cause Media and Democracy Reform Initiative. You may hear the entire program here: http://npcboc.org/audiofiles/
A good talkshow host will:
- show that they are personally interested in what the listener has to say (or they won’t call in).
- make the subject of the interview feel comfortable.
- love their listeners and community.
- be able to improvise.
Walt Bodine was one such individual. He passed away today. I had the pleasure of shooting his last live show for B-roll for the film. This 18 second clip shows his personality. He will be missed.
The way a firm makes profit can say much about how it behaves. For instance, Private Equity makes money off of fees taken from investors and from maintenance fees from the companies that they own. They can make substantial commissions if they can sell the companies they own for a profit. This means that short-term profits that make the company appear attractive to a buyer are more important than costly long-term business infrastructure improvements that might not pay off for 10 years. This lack of long-term motivation has hurt Clearchannel because they stopped investing in their employees in favor of short-term profits by cutting as much staff as possible. Private Equity also makes money by shifting debt onto others. This is called an LBO or “Leveraged Buyout”.
No Skin in the game.
The complaint about the LBO deal is that Private Equity firms are not responsible for debt payments. Those come out of the company checkbooks of the very companies that they are buying. Even though Private Equity bought Clearchannel, they dodged the responsibility of paying off the debt by placing that squarely on Clearchannel itself. This is unexpectedly simple and legal. Clearchannel has to pay their debt to the bank and fees to the firm that gave it that debt. This is a danger when you consider that debt is a bet or a wager against future income. If the company does well, it can pay off that debt. If the company does poorly, it could go bankrupt or need to fire all the employees it can so they do not go bankrupt as quickly (Clearchannel). By not having “skin in the game” Private Equity firms can behave more reckless with a company’s debt load and it’s employees.
We made a DVD extra for the next pressing of Corporate FM that explains this in more detail.
Should Private Equity get a tax break for these mergers? Clearchannel agreed to all of the debt that is drowning it today because of a tax loophole called “interest tax deductibility”. This deduction was meant to grow our economy but Private Equity manages to do the opposite by using the loophole to finance the buyout (and elimination) of competition. Private Equity-owned companies avoided paying $127 billion in taxes since 2000 due to the loophole reports Josh Kosman, author of The Buyout of America.
What is to be done? Kosman suggests that: “the most simple solution is [by] ending interest tax deductability on corporate takeovers… It will make the most aggressive buyouts like the one for Clearchannel unprofitable so they won’t happen”. That solution also helps lower our national debt. Win/win.
In 1955, the government convicted the Kansas City Star (newspaper company) with monopoly charges. The Star had abused their power with the ownership of two newspapers, a TV station (WDAF TV) and a radio station (WDAF radio). They forced advertisers to buy ads for all 4 properties, and also punished advertisers for utilizing other media by placing their ads in unfavorable places and times. The Star was guilty of restraint of trade. Because the abuse of monopoly power was so tempting, the FCC ruled “cross-ownership” of several media forms within the same city illegal.
Since that time, high finance has entered the ring. The “Mergers and Acquisitions” lobbyists are constantly urging the FCC to allow for more mergers and more short-term profits via staff layoffs.
The FCC is now trying to reauthorize cross ownership under the radar of the Christmas rush. This would give Rupert Murdoch and his financiers unprecedented power. …FOX could own the town newspaper, two local TV stations and up to eight local radio stations in one city as well as the local internet provider.
We are supposed to be breaking these things into competing businesses not merging the the life out of them. To let the FCC know your thoughts by email click here to use Freepress.net Or you can phone up these FCC commissioners to let them know you are not in agreement with this consolidation of media power. (please be nice).
- Commissioner Mignon Clyburn — (202) 418‑2100
- Commissioner Jessica Rosenworcel — (202) 418‑2400
Back in 1996 the Gingrich congress wanted consolidate TV & newspapers. President Clinton threatened a veto. He knew that he would not have been president had his home state of Arkansas had cross-ownership between the TV station and the newspaper. When he ran for governor of Arkansas the newspaper was against him but the TV station was not. Diversity in ownership is the fuel of a rich democracy. Had their only been one owner, only one candidate would have been championed.
The podcast “Sound Track of the Week” (SOTW) has announced that they are starting “Radio Diversity Day” to take place on December 5th 2012. They say they were inspired by the movie Corporate FM. The idea was born during an hour long interview that they did with Jill and me late one evening.
On Radio Diversity Day, listeners are encouraged to call up their local radio stations and elected officials and demand more diversity in programming. Urge them to play more local music and hire more live local talent to interact with and deliver to the community authentic radio programming. SOTW has created a web page for the event here.
We are providing these additional references to help listeners.
Use this link to identify who owns the radio stations in your city. Enter only the city name and state to do a radio ownership search. You may be surprised that there are many companies that you have never heard of.
If you want to call the station:
Enter the station call letters into whitepages.com to get a phone number. When calling, be polite and remember that they hate radio consolidation even more than you do because they have to see it for what it really is every day. Ask for more diversity in programming, more local bands in rotation (pick your favorites). Ask for more diversity in the staff too by hiring people instead of taking every opportunity to fire and cost cut. Thank them for taking your call. Keep in mind that Corporate radio does not have live operators at the phones outside of 8AM-8PM M-F. Some stations have even less staff and are only there 4 hours a day!
If you want to write the station:
Enter the station call letters into whitepages.com to get the address for letters or google their webpage/facebook for emails. Tell them that you expect live, local DJs and local programing to serve the public interest, and that you want local music in rotation. Ask them to put your letter in the “Public File”. Then the FCC will have the opportunity to read your letter later. The fact that the airwaves are public property (YOURS!) means that you have the right to demand more service that benefits your local community.
Click above links above (in red) to find phone numbers/Addresses. Our sample letter details a legislative solution to the mess that has become radio. You may have to educate them on why radio is not replaced by the internet rather it is hurt most by the corporate greed that has dismantled it for quick profits.
Dec. 5th is Radio Diversity Day! Call in for better radio!
“They lump debt on the station but do not share in the risk”.
Created with cinemagr.am
The more debt there is from the corporate buyout, the more employees that will have to be fired so their former salaries can go toward paying off that debt.
For more information watch a short video expert here.
A possible new radio station called “Fayetteville Community Radio” held a screening of Corporate FM to motivate supporters behind the venture. The station is possible because new low power FM frequencies (LPFM) were legalized by bill in congress in 2010. “It fired them up” said organizer Joe Newman about the film. “It was a very good presentation for what we are fighting for. It inspired people to take that extra step”. That evening several audience members, who had left commercial radio, volunteered to help community radio become a reality in Fayetteville Arkansas.
There has been interest expressed by several other LPFM groups across the nation about using the film. As film-makers we are happy to speak at screenings (in person or skype) and help these groups get on the air because it promotes greater media diversity. A good community radio station also can put a little pressure on commercial radio to do a better job. In Kansas City, the community radio station is the only live voice on the air overnight. If you are interested in starting a LPFM station in your community contact the folks at the Prometheus Radio Project to find out how.
This is a quick and easy explanation of what has happened to many large industries across the US, not just radio. In my opinion, it is also the best explanation I have heard about Private Equity.
Radio used to make money through advertising. Radio stations had a motive to engage the public in order to sell their ratings to the advertisers. “We sold the advertiser [an] audience,” says veteran broadcaster Dick Fatherley. Here capitalism works because the station makes money by being relevant to the audience.
Nowadays radio, like many other industries, makes its money through high finance gamesmanship. Money is made by buying and selling the company rather than what the company produces. In this model it makes sense to cheapen the product for short term financial gains. In other words a station can fire an entire staff and then post the reduced overhead as if it were a profit. This works for a short while till the listener gets sick of automated radio. It works perpetually when they can do it to the entire spectrum. The loser is the listener, the community and the radio station employees.
Private Equity firms are not afraid to overpay for a radio station because the consequences of that overpayment will be directed to the countless employees that are fired in the name of “efficiency” (not themselves). Overpayment also allows them to buy-out competition that might embarrass them by beating them with better Arbitron ratings. This puts undue pressures on non-Private Equity companies to trim the same amount of staff because overpayment by private equity artificially balloons the price of the spectrum for everyone else.
I got an email from a listener who was happy that Corporate radio was dying. He thought that we should “starve the beast”, implying that if it went bankrupt, the rats would jump off a sinking ship and someone who cared about their community would buy the station back. I wish that were the case. The way high finance manages radio stations, allows them to keep them in a zombie state rather than killing them. Even if the station does go bankrupt, the same firm that sucked all the life out of the company can manage to keep the company after bankruptcy. This is called a “pre-packaged bankruptcy”. In such an arrangement, they convince a judge that they are the best ones to manage it, because they obviously know whats wrong now and they promise to pay a percentage back to debtors. The creditors get 90% of the new companies equity. Who’s complaining? The listener would if they knew about it.
Imagine you were a DJ at Citadel (a radio consolidator) where you watched all your friends get fired and the quality of the programming drop thus driving listeners away. The company is huge, thanks to debt financing and mergers spurred by a private equity firm (Forstman Little and Company). In 2009 when the company is heading for chapter 11 you may think, at long last the CEO Farid Suleman is going to get his comeuppance. It never happens. He keeps the company. He keeps it, till he sells to another radio consolidator (Cumulus) who with the help of another private equity firm (Crestview Partners) lobs even more debt onto the stations and fires even more people. This is a pattern.
If you want to “starve the beast” then we have to stop feeding the beast with tax breaks every time it uses excessive debt (leveraged buyouts) to consolidate. By ending Interest Tax Deductibility solely on corporate takeovers, you would end the financial incentive that these companies use to prey on vibrant industries (paying little to nothing in taxes). Interest Tax Deductibility is what private equity firms use to convince the companies that they lob debt onto to accept that debt. The debt is the reason good employees are fired and ultimately the reason why commercial radio sucks.
The root problem with leveraged buyouts is that they often doom the company the moment they happen because the level of debt is so high that it is unrealistic to pay it off. The banks and the private equity firms don’t care about this because they make money off this debt though fees that they charge. To starve this beast, we have to follow the money to the firms that make money off of this destruction and cut them off. These small buyout groups should not be making huge sums of money if the companies they own do not pay taxes, and they should not make any money at all if they cannot afford to keep employees who were a part of the companies long before they took over. Capitalism has taken an extremely dysfunctional turn since Private Equity firms started abusing this tax loop-hole.
Unlike Facebook or web-based music sharing applications, locally owned radio reaches thousands of people across many incomes and ages in a single area at the same time with a message unique to that area. That ability is what once moved entire cities to unite around local bands, local charities, local businesses, and new ideas. The internet may have some advantages, such as connecting individuals over long distances, but it cannot create a vast localized unity the way radio can. The local limitations of a radio tower are actually its greatest asset because the station transmits primarily within a community and is free to everyone inside that community (young or old, rich or poor, educated or not).
The internet is a companion technology not a competing technology. They do different things that can support each other as long as radio is not run like it is the internet. Good radio is radio first. It focuses on the local audience with local deejays delivering local content. By being live and local at the same time, allows a city to communicate with itself in real time on a huge scale. That’s what builds local movements to a critical mass. That is also what makes radio unique and marketable. Sadly though, most of radio is either syndicated from out of town or voice-tracked to fool you into thinking that its live and local. Deejays really aren’t that soulless. When the bankers who own radio remove the live human element, they remove the thing that makes it different from the internet. That’s what’s killing radio.
Some NPR and community radio listeners are happy that commercial radio sucks. They reason that the bland corporate programming drives listeners to them. They couldn’t be more wrong. Crappy commercial radio hurts public radio stations and the whole medium of radio itself. When a shopping mall loses all its best stores except one; there is less reason to visit. That dead shopping mall is now the FM dial.
Imagine a road trip where when as you traveled from town to town you could learn something about each town just by tuning in as you drove through. Now imagine how many people used to find new stations because of…curiosity.
It is normal for the most loyal listeners to switch away from their favorite station when they hear a song that they don’t like and then switch back 3 minutes later. But when those listeners only find crap to choose from on the other stations then it becomes normal just to turn the damn thing off. Where’s that ipod?
Young college students today have no recollection of locally owned commercial radio. It ended before they were teens. Every year more young adults go exploring their world for something new. They try tuning-in to radio until they learn that there is nothing new there for them. These listeners are not abandoning NPR, they are abandoning the entire medium altogether.
FM has become the city of abandoned competition. NPR and community radio may be a bright light in that wasteland of airwaves, but if there is no other engaging option besides those; then I’m going to search a different medium that gives me more choices. A television with 1–2 channels would be equally worthless. In order for radio to still be considered an important medium, there must be valid competition that draws in a diverse audience. Otherwise the entire spectrum may become obsolete, and redistributed to other wireless devices. That would be a grave loss because no other medium is as effective at uniting concentrated populations as radio. It is the only infrastructure that reaches everybody.