Earlier this week a news item appeared in Forbes magazine [link] about the recent Chapter 11 bankruptcy filings by iHeart Media and Cumulus Media. Apparently both companies will need to shed some its stations to raise money to satisfy creditors before the companies can emerge from bankruptcy.
This is an important new development for public radio companies. For many years, the lack of available full-market signals at affordable prices has kept public radio broadcasters from adding new noncommercial formats that are needed in their markets.
Gene Ely, a contributing writer to Forbes, put it this way in his article:
Expect to see a dramatic shedding of radio stations, likely hundreds, many at rock-bottom prices. Never mind statements put out by the company that stations will not be sold off. That’s intended to quell fears among employees and stem any flood of talent.
Currently iHeart owns around 850 stations and Cumulus owns 600. Many of these stations were acquired during the hyper consolidation era in the late 1990s and early 2000s. Because of the massive debt they acquired during consolidation they operated the stations as cheaply as possible. Higher paid employees, new program development, research and promotion were slashed. The air-sound was dumbed down, local programs were scratched and station value fell.
|Image courtesy All Access Media|
Now the whole business environment has changed. Hyper consolidation has stopped, many new competitors on multiple platforms have emerged and local service is now essential. For the past several years prices have dropped.
In other words, it has become a buyer’s market.
According to Ely, iHeart, Cumulus and several other debt-ridden companies must become leaner to survive. Companies with stations in their portfolios that don’t produce positive cash flow (and there are many of these) will need to go. If more and more stations are being sold, sale prices will fall even further.
This is what happened earlier in March when Educational Media Foundation (EMP) scooped up The Loop in Chicago for a garage sale price.
Shedding under-performing stations will soon be a top priority for iHeart and Cumulus. Ely says that “several hundred” stations will sold, many just to get them off the books.
This creates a huge opportunity for public radio broadcasters. Like EMF, public radio operators have very little debt and quite few noncom organizations can come up with the cold, hard cash iHeart and Cumulus need immediately. This is the time for public radio to add new service.
THREE MARKETS WHERE ADDITIONAL NONCOM FORMATS WILL SUCCEED: HOUSTON, ATLANTA & CINCINNATI
Lets look at the February Nielsen PPM ratings and one-year trends for three big markets that are missing key noncommercial public radio formats.
HOUSTON FORMAT OPPORTUNITIES: Classical and Triple A
John Proffitt and KUHF made a valiant attempt to establish KUHA as a fulltime Classical music station but they paid way too much ($9.5 million) for the frequency. KUHA typically had between 150,000 and 200,000 estimated weekly listeners who enthusiastically supported the station.
Unfortunately that large number of listeners could not generate enough revenue to sustain the station. KUHA began shutting down in August 2015. Since KUHA vanished, KUHF has aired Classical music on its HD2 channel with disappointing results.
There is no Triple A station in the market.
STATIONS THAT MIGHT BECOME AVAILABLE:
KROI (Radio One)
ATLANTA FORMAT OPPORTUNITIES: Classical and Triple A
For many years WABE was a dual format station and made a significant effort to maintain Classical music on the station. However, the arrival of Georgia Public Broadcasting’s WRAS three years ago caused WABE to focus only NPR News/Talk programming. Now there is no Classical music on the Atlanta dial.
Atlanta is one of the nation’s great music markets. There would be a huge out-pouring of support for a Classical station.
The need for a “music discovery” Triple A station is perhaps even larger. Though there are at least four alt-rock stations in the market, no one is specializing in Triple A. This is hard to believe in the city the raised and nurtured artists like REM.
ATLANTA STATIONS THAT MIGHT BECOME AVAILABLE:
CINCINNATI FORMAT OPPORTUNITY: Triple A
Since the much beloved Triple A station WNKU was sold, no other station has brought Triple A back. The organization that does reestablish Triple A in Cincinnati will receive healthy doses of love and support.
CINCINNATI STATIONS THAT MIGHT BECOME AVAILABLE: