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Radio

Chapter 7

© 2009, The McGraw-Hill Companies, Inc. All rights reserved.

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CHAPTER OUTLINE

• History• Radio in the Digital Age• Defining Features of Radio• Organization of the Radio Industry• Ownership in the Radio Industry• Producing Radio Programs• Economics• Feedback

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HISTORY

• Heinrich Hertz

• Guglielmo Marconi

• Reginald Fessenden

• Lee de Forest

• World War I -- US Navy takes over patents

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Big Business

• After the War, corporate America saw radio’s potential– RCA

• Radio seen as wireless telegraphy

• Few thought of broadcasting to wide audience– David Sarnoff, “radio music box”

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Mass Audience

• Frank Conrad began broadcasting from his garage– KDKA, Pittsburgh, 1920

• RCA, GE, ATT started radio stations– Radio listening became a national craze

• Radio found its role as a broadcast medium

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Better Receivers

• Before 1926, radios were bulky, filled with tubes and batteries, and hard to tune

• Between 1925-1930, 17 million radio sets were sold

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Radio Goes Commercial

• Early broadcasters were stores, newspapers, schools, businesses, not broadcasting companies

• Radio stations needed revenue source– ATT station aired first “toll” broadcast

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Networks

• Allows stations to share program content– Cuts costs

• Allows advertisers to reach larger audience

• First network was NBC (actually two networks), then CBS– Amos ‘n’ Andy

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Government Regulation

• Interference was major problem

• Radio Act of 1927– Federal Radio Commission

• Defined AM band• Standardized channel designations• Abolished portable stations

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The Depression: 1930-1940

• Radio fared well during the Depression

• Federal Communications Commission (FCC) created in 1934– Regulated all electronic communications

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Birth of FM

• Mid 1930s, Edwin Howard Armstrong

• Frequency modulation (FM) superior to amplitude modulation (AM)

• Demonstrated to RCA, which was more interested in developing TV than FM

• Development hampered by World War II

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Radio Programs

• During Depression, people wanted diversion and escape– Action-adventure programs– The soap opera

• Network radio news grew– Live coverage of special events– Coverage of World War II

• Edward R. Murrow

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World War II

• Radio thrived during World War II– Ad revenues increased

• NBC divested itself of one network (became ABC)

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Innovation and Change: 1945-1954

• FM – Technically superior to AM, but struggled– Spectrum location changed in 1945

• TV– Changed content, economics, functions of

radio

• Specialized radio formats were introduced– Clock hour

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Growth and Stabilization: 1955-1990

• Number of stations more than doubled

• Payola – record producers bribed DJs to play certain music

• FM emerges and evolves

• FCC non-duplication rule

• National Public Radio begins, grows to 160 affiliated stations by 1980

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Radio: 1990-Present

• Telecommunications Act of 1996– Unlimited station ownership– Same-market ownership increased to 8 stations

• Flurry of mergers and acquisitions• A few group owners dominate the industry

• Talk became hottest AM format• Format specialization increased on FM• Competition from satellite radio, Internet radio,

iPods

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RADIO IN THE DIGITAL AGE

• Radio stations slowly entered the digital age, but they may be speeding up

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Web sites

• Early radio station web sites simply streamed broadcast content

• Now, sites contain additional information and services

• Stations use web sites to generate revenue

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High Definition (HD) Radio

• HD radio improves signal quality of terrestrial radio stations– FM sounds as good as CD– AM sounds as good as FM

• Compression allows stations to send multiple programs simultaneously

• Free to receive content, but HD receiver needed• Broadcasters and listeners find the technology

expensive• Currently there is little additional programming

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Satellite Radio

• XM Radio and Sirius Radio– Digital radio services to car or portable

receivers for home use– Local channels for major cities with weather

and traffic information– XM and Sirius would like to merge– Exclusive programming (Howard Stern, Oprah

Winfrey)– Churn – subscribers don’t renew

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Internet Radio

• Traditional broadcasters stream signals on Internet

• Internet-only stations– Specialized music formats– Target listeners dissatisfied with traditional

radio– Biggest challenge is financial

• Must pay royalties to writers and composers, plus performers – broadcast doesn’t pay royalties to performers

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Mobile Radio

• Mobile radio on cell phones – Vast potential audience

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User-Generated Content

• Podcasting – recording an audio program and making it available for download

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DEFINING FEATURES OF RADIO

• Portable

• Supplemental

• Universal

• Selective

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ORGANIZATION OF THE RADIO INDUSTRY

• Half a billion working radio sets in US

• About 13,500 radio stations

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Local Stations, Nets, and Syndicators

• Local radio stations• Network radio

– Dominant 1930-1942– Today’s leading networks: ABC, Westwood One, Dial

Global

• Syndicated programming– Star-based programs: Rush Limbaugh, Sean Hannity,

Tom Joyner– About 50 companies provide specialized shows for

syndication

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AM and FM stations

• Amplitude Modulation (AM)– Signals travel further (especially at night)– Vulnerable to interference– Clear, Regional, Local channel classifications

• Frequency Modulation (FM)– Better sound quality– Less vulnerable to interference– Three classes reflect station’s power: A,B,C

• AM-FM distinction is not applicable to digital radio

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Station Formats

• Format: consistent programming designed to appeal to specific audience– Attracts advertisers wanting to reach that audience

• Three basic format categories– Music– Ethnic– News/Talk

• Format Homogenization• Voice Tracking

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Noncommercial Radio

• 1945 -- FCC set aside frequencies

• 2007 – about 2400 noncommercial stations– Universities, private foundations– Funded by gifts, grants, donations,

underwriting

• National Public Radio (NPR)

• Public Radio International (PRI)

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OWNERSHIP IN THE RADIO INDUSTRY

• Telecommunications Act of 1996– Flurry of mergers and acquisitions– Industry controlled by a few big companies,

including Clear Channel, Cumulus, and Entercom

• By 2007, there are signs that this trend may be changing

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PRODUCING RADIO PROGRAMS

• The departmental structure of a radio station depends on its size

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Departments and Staff

• General Manager

• Program Director– Announcers and DJs

• Sales Department

• News Department

• Engineering Department

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Putting Together a Program

• Music format– Format wheel (format clock)

• Talk format– Topics geared to local audience– Requires more equipment and technical expertise

• All-News format– Also uses programming wheel and cycle– Costly: Large staff and many technical facilities

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ECONOMICS

• Competition from satellite services and devices to play iPods and MP3 players in cars.

• Drive time audience, time spent commuting are both increasing

• Radio is cheap to produce and distribute

• Radio lends itself to target marketing

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Sources of Revenue

• Rate card: station’s advertising fees

• Three sources of commercial revenue:– Network ads– National spot ads– Local ads

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General Expenses

• Five categories of expenses:– Technical– Programming– Selling– Administration– News

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FEEDBACK

• The radio industry seeks feedback about audience size and composition

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Ratings and Shares

• Arbitron major provider of radio ratings– Surveys 280 markets, about 3,000-4,000 people per

market asked to complete diary• Rating: ratio of listeners to a particular station to

the total number of people in a given market• Share: ratio of listeners to a particular station to

the total number of people actually listening to radio at that time

• People Meter: Arbitron and Nielsen Media Research. Automatically detect and record exposure to radio.

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Radio Audiences

• 575 million radio sets in US– 1/3 of these in cars

• On a given day, ¾ of adults will listen to radio

• Average person has radio on 3 hours daily• Listening highest during drive time (6-10

am; 4-7 pm)• As people age, they prefer different

formats