Radio Industry Health Seen Main Topic of Radio Show 2017
The health of radio, with its lack of deal-making, advertising slowdown and debt-burdened industry leaders, is expected to be the main topic of the 2017 Radio Show, which kicks off in Austin Tuesday, industry experts said. “Cumulus and iHeart and their need to restructure are continuously overhanging the industry” (see 1708090069), said MVP Capital founder and broker Elliot Evers. Media ownership rules such as AM/FM subcaps (see 1704100065) and FM translators will likely also be on the menu, but the financial state of the industry was foremost in the minds of the broadcast executives, attorneys and brokers interviewed.
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The industry’s two biggest companies “facing financial headwinds” can affect confidence in radio, said Alpha Media CEO Bob Proffitt. He expects the situation to improve when Entercom's buy of CBS Radio is approved. “If their boats rise, we all rise,” Proffitt said.
Though Tropical Storm Harvey affected Austin (see 1709010042), an NAB spokesman told us the storm and its aftermath aren't expected to change plans for the show. The show website contains a list of local charities for those affected, and says that broadcasters “will join arms in Austin next week in support of those impacted by the hurricane.” The spokesman told us the conference has 65 exhibiting companies, the same number as 2016. Last year, 2,272 people attended in Nashville, while 2,170 went to the 2015 show in Atlanta, NAB told us. “Radio Show attendance naturally tends to fluctuate year to year, due to the fact that location and dates vary,” the spokesman said. “We cannot project attendance in advance.”
Though Proffitt was optimistic about Entercom/CBS Radio and its effect on the industry, other radio officials said the deal matters mainly to the principals. Because it's an all-stock transaction, it doesn’t bring new cash to the industry, said Evers, overseeing the divestitures from the deal. Outside investment is important to the industry, and the two biggest companies facing debt issues makes it harder to attract Wall Street and get bank loans, industry officials said. In recent years, the number of banks at the event and the efforts they make to engage with broadcasters has steadily declined, a broadcast attorney told us. Until Cumulus and iHeart fix their balance sheets, radio will operate under a “stigma,” Evers said.
Attendees also are likely to focus on lack of deal-making, said Patrick Communications media broker Gregory Guy. Radio is “moribund” when it comes to M&A, said Evers. Industry officials don’t expect many station moves to come out of the confab. This issue is partially related to the problems facing iHeart and Cumulus, since the debt issues tie the hands of companies that might otherwise be big purchasers of smaller stations, Evers said.
Some raised the slowdown in retail and corresponding lack of advertising revenue as another industry issue likely to be a focus. Many station owners will be looking to the digital aspects of radio, and some of the advertising options it offers, Proffitt noted. Studies show that radio can drive listeners to websites, he said. Broadcasters also are interested in the effect on radio of consumers using digital assistants such as Siri and Alexa to access the medium, said Fletcher Heald broadcast lawyer Frank Jazzo.
Radio broadcasters will be looking for information from the FCC on future radio ownership deregulation, Jazzo said. Many broadcasters are focused on the question of whether the FCC will do away with FM/AM subcaps, which limit the amount of stations of one band a broadcaster could own. Doing away with the subcap would likely lead to many larger groups unloading their AM stations, industry officials agree. Large broadcasters are getting out of AM anyway, Proffitt said. If the FCC does away with the subcaps, and Cumulus and iHeart restructure in a few years and are able to make deals, it could boost the industry, Evers said.
Although action on the subcaps isn’t expected until the FCC tackles the 2018 ownership quadrennial review, moves to do away with radio ownership limits could be part of the anticipated media ownership reconsideration order, industry officials said. Easing rules such as the radio-newspaper cross-ownership rule would possibly be even more of a boon to the industry than doing away with the subcaps, Proffitt said.
The upcoming FM translator application window and issues related to translators are also likely to be important topics, said REC Networks Founder Michelle Bradley. “Translators are a big issue,” Jazzo said. FCC Chairman Ajit Pai could announce the dates of the next translator window during his speech at the show, industry officials said. Though the FCC sometimes times a pro-radio move for the convention, it’s not clear that’s in the works this year, industry officials said. Most of the items likely to affect radio -- such as the proposed main studio rule -- are seen as too complicated or too controversial to be quickly approved in time.