Monday, August 13, 2012

Movin' Down the Dial?

Talk radio in New York City is apparently heading for a major shake-up.

It was announced Monday morning that Clear Channel Communications, which owns more than 800 radio stations around the world--including some of the highest-rated news/talk stations in the U.S.--is buying WOR-AM in New York from Buckley Broadcasting. Terms of the deal were not disclosed.

Clear Channel is no stranger to the New York City. It owns five FM stations, including soft-rock WLTW, which has been the most listened to station in the market for several years. Clear Channel's contemporary hits outlet WHTZ (Z-100) is #2 in the ratings, while its other FM stations also rank in the top 10, in terms of average ratings and cumulative audience. It's a very profitable cluster for the company, although Clear Channel reported a $300 million operating loss in 2011.

So, with five profitable FM stations in NYC, why would Clear Channel invest in a "heritage" AM station that barely ranks among the top 20 stations in the city? True, WOR once ruled the roost in the Big Apple, but that was decades ago, and there's no sign the station is about to return to its former glory days. In terms of listenership, WOR has roughly half the audience of WABC-AM, home to such hosts as Rush Limbaugh, Sean Hannity and Mark Levin.

But all of that may be about to change. With today's sale, there is plenty of speculation that Rush, Hannity, Glenn Beck (and others) may soon move to WOR. It's a change that Clear Channel has engineered before, and it speaks volumes about the economics of the radio business in 2012.

Let's start with WABC. The talk outlet is now owned by Cumulus Media, which purchased it from Citadel, which snapped it up when ABC got out of the radio business in 2006. Both Citadel and Cumulus incurred serious debut with their purchases, but Cumulus managed to acquire its rival last year (just after emerging from bankruptcy), a deal that cost the Atlanta-based media company $2.5 billion.

With tons of debt on the books, a portfolio of depreciated station assets and an advertising market that is still soft, Cumulus has been slashing costs, including some of its best-known personalities. Mark Davis, mid-morning host for WBAP in Dallas (and a frequent substitute for Rush) was let go earlier this summer to save money. In San Francisco, former powerhouse talker KGO made a similar move in jettisoning radio veteran Gil Gross. Elsewhere, dozens of Cumulus employees in smaller markets were also shown the door, in an effort to cut costs.

In New York, WABC remains the city's #1 talk station, but it has historically under-performed, in terms of revenue. According to one industry publication, WABC billed about $21 million last year, not bad, but there's clear room for improvement when you consider that Clear Channel's KFI in Los Angeles billed almost three times as much. Additionally, WABC's revenue potential is limited by its programming deals with Premier Radio Networks, which syndicates Rush and Sean Hannity. Not only does WABC pay hefty programming fees for carrying those programs, they must also split advertising revenue with Premier and their hosts. That doesn't do much for the Cumulus bottom line in the nation's biggest radio market.

So, Cumulus is developing its own programming, most notably a talk show featuring former Arkansas Governor (and presidential candidate) Mike Huckabee. The program debuted earlier this year, and was widely billed as an "alternative" to Rush, since it airs in the same 12 noon - 3 pm eastern time slot. There was even speculation that Cumulus talkers like WABC, WMAL (Washington), WLS in Chicago and WJR in Detroit would drop Rush for the Huckabee show, but so far, that hasn't happened.

But Clear Channel has been known to pull Rush from a long-time affiliate when one of their own stations in the market switches to talk. That happened in Pittsburgh (where Clear Channel's WPGB-FM has become a serious challenger to KDKA); Raleigh-Durham (WRDU-FM saw its ratings soar when it became a talk station and Rush moved over from WPTF-AM) and New Orleans, where Rush pulled audience away from market icon WWL when he switched to Clear Channel's WRNO.

Now, the same thing may happen in New York with the radio giant taking control of WOR. With Limbaugh, Hannity, Beck and other shows in the station's line-up, many believe that WOR would quickly surge past WABC and become the top conservative talk outlet in the nation's biggest media market. And to make the deal even sweeter, Clear Channel (and its hosts) can keep all of the advertising revenue for themselves.

In fact, some industry insiders are now predicting the demise of WABC. Jim Farley, program director of Washington's top-rated WTOP, tells media blogger Dave Hughes that WOR will "destroy" WABC, by taking away Rush and Hannity. And while Cumulus has insisted it has no plans to get rid of Rush (or any other Premier personalities), the host "migration" could begin in a matter of weeks.

1 comment:

We are the Returned and Services League of Australia (RSL), Washington, DC sub-branch. said...

I listen to WABC regularly. If you listen even during Rush, it's amazing how often and how long they play their own interstitial spots instead of commercials. Their morning programs are Imus (who is terrible), and Geraldo (almost as bad). Their best show is Saturday Night with Mark Simone. The Cumulus people have nearly destroyed Washington DC's WMAL as well.