Another Merger, Another Loss for Listeners
Just when you thought things were looking up — Cumulus Media stock price sinking like the Titanic, both Cumulus and iHeart laden with so much debt that bankruptcy is all but inevitable, and CBS unable to figure out a way to sell its group of stations — the bottom fell out.
Instead of getting closer to breaking up radio monopolies and returning radio to smaller owners who want to compete and create, we are getting another mega-group.
CBS announced last week that it will merge its 117 radio station group with Entercom’s 127 in a special tax-free deal, creating another huge group of 244 stations, far less than iHeart’s 850 or Cumulus’ 460 but still another too-large effective monopoly. This can’t be good.
The problem is that as the companies have gotten larger, they have been far less successful financially as the lack of innovation has driven active listeners away in droves. While CBS was once known as a well-run company, that descriptor was lost over the past two years as it, like its competitors did prior, cut costs instead of innovating programming. I can see little positive with combining it with Entercom, at least at the outset.
Radio needs smaller ownership limits and smaller companies, not larger. The current model never brought promised efficiencies, so instead of trying to grow revenue, managers cut costs. Promotions, programming, anything that would attract listeners and make them active, loyal participants in the station’s identity was lost. Today over much of the FM band, stale formatting has led to radio becoming a background entertainment service. Much like the Muzak service once heard in department stores years ago. Ad revenue has declined as much as 40 percent over the past decade.
And AM is even worse, with so little reason to listen, one ownership group is actively investigating the idea shutting the entire band down for good.
The one thing that the deal has going for it is that many consider Entercom a decent company that may — if it still allows its local managers to actually do their jobs — continue to be well-run. Entercom will control the operations of the merged company, and the deal doesn’t encumber the company with the huge debt load that is facing iHeart and Cumulus. Perhaps now that CBS station group isn’t trying to look good to a potential buyer, constant cuts as seen at the company over the past two years can cease. I don’t believe it, but it is a possibility.
The merger will put a few markets where the companies overlap in a position of being over the current ownership limits. In Los Angeles, Entercom owns only once station: KSWD The Sound (100.3 FM), but CBS owns KROQ (106.7 FM), KRTH (101.1 FM), KAMP (98.7 FM), KTWV (94.7 FM), KCBS-FM (Jack, 93.1), and KNX (1070 AM) along with television stations KCBS-TV Channel 2 and KCAL-TV Channel 9.
This puts the new Entercom one over the local ownership limit of five total FMs. Which one would go? Tough call, as the company has to consider revenue, costs, signal strength and more. KROQ has the worst signal even if it brings in tons of revenue. One thought has KROQ moving to another frequency.
But your favorite station may be in jeopardy not only due to the required selloff, Entercom may actually be stupid enough to put an all-sports format such as the horrible CBS-Sports once heard on KFWB (980 AM) on a local FM. They’ve done similar moves in other cities.
All sports is bad enough: sports talk in Los Angeles has never even come close to earning what one might consider respectable ratings … and it is one reason for the mass exodus of AM radio listeners to FM. But CBS Sportsradio is the bottom of the barrel, and the idea of putting it on an L.A. FM is being thrown around by industry observers. Yet even just carrying Rams football lowered ratings on The Sound, so perhaps common sense will prevail.
Even so, up to two of your favorite stations may be in jeopardy as this moves forward. RadioInsight.Com mentioned a possible swap involving The Sound to Cumulus, owner of KLOS (95.5 FM) … effectively removing KLOS’ main (and usually higher-rated) competitor. Other observers say that The Wave is vulnerable, as it is reportedly the lowest revenue-generating station of the CBS cluster. In the end, anything can happen as the company balances revenue, costs, and sale profits.
As I said from the start of this column, this merger can’t be good, at least for listeners.
I’ll reverse myself if Bonneville takes back ownership of The Sound. One of the best companies in the industry, Bonneville owned The Sound until a swap two years ago put it under the Entercom brand.