"Spots" in radio lingo means commercials, and commercial radio (at least they got the name right) is so full of them now that even the advertisers are complaining:
- The strategy of stuffing commercial radio full of ads has backfired, as a handful of investment banks predicted slower growth, downgrading six key radio stocks — Clear Channel, Emmis, Cox Radio, Entercom, Citadel and Westwood One — and the sector as a whole.
Wall Street's piling on the industry comes two weeks after the sector's most outspoken advocate, Mel Karmazin, exited Viacom. The media conglom subsequently hinted that it may consider selling its giant Infinity radio division.
....As radio companies merged, the number of spots has surged to a high of 25 minutes per hour in some cases, said Goldman Sachs analyst Richard Rosenstein.
He and others said the ad inundation — which consumers have bemoaned for years — has eroded the value of the spots. Advertisers have started to worry that their message is being diluted by the sheer number of blurbs.
Radio stocks will be stuck, said Banc of America analyst Jonathan Jacoby, until the industry faces up to challenges.
Rosenstein said radio companies can either lower their prices or reduce the number of spots. But "it is difficult to believe that such a structural improvement in pricing/inventory can happen overnight, and could take as many as two quarters or longer to accomplish once undertaken," he added.
....Overall, the radio sector has been the slowest in the media to recover from an ad downturn and the start of the Iraq war last year. Generally, TV and newspapers have had a nice boost since then.
As a result, radio stocks are down nearly 20% since April, with many trading at or near their 52-week lows. [Variety]
Satellite radio loves to hear this kind of stuff, but satellite will never be local.
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Article comments
1 - mike hollihan
It's really weird here in Memphis. I had to stop listening to FM because it was all uniformly (in every sense) awful. What's strange is that the local AM talk guy who comes on after Rush and Sean actually has more ads, promos, newsbreaks, etc. than they do! He's forever cutting off or hustling along his (few) callers.
About a year ago, we had a windstorm (Hurricane Elvis, we dubbed it) that knocked out power to over 300,000 people for more than a week. The Clear Channel station stuck to giving out official pronouncements from the local authorities all day, but the local black-owned and operated station (legendary WDIA) simply opened the phones 24/7. Citizens called in with news about generators, ice, fresh water, fans, what stores still had food, what parts of town still had power, working gas stations, reminders to check on the elderly, news about nursing homes and hostels that needed food and fans. It was amazing to hear. They were the glue that held the city together until the utility could fix the situation. Now, they are also owned by Clear Channel.
2 - Eric Olsen
Great story, thanks mike, and I didn't mena to imply that talk radio has any fewer commercials, it's just perhaps a bit less noticeable among all the general chatter. There is a point where the listener all of sudden stops and says, "There are just too many goddmaned commercials, I am turning this shit off," and even the sheep seem to be reaching that conclusion.