The Entercom/CBS Radio Merger: What Does It Mean For You?

The Entercom/CBS Radio Merger: What Does It Mean For You?

THIS may mean nothing to you.  We beg you to reconsider.  Anyone in the music/entertainment industry should be aware of this development. 

Why? 

Radio is an extremely important broadcast medium.  THIS 2013 article in Hypebot states that the United States has 4,728 AM radio stations and 6,613 FM stations.  That’s over 11,000 opportunities for music to be thrown around our shared atmosphere. 

Now, some stations are obviously more important than others.  Even more important, some station owners are more influential than others.  iHeartMedia, our nation’s largest owner of radio stations, is arguably the most important radio conglomerate.  Pop Quiz: Did you know that iHeart is teetering on bankruptcy?  Read THIS article.  Here’s a highlight (or lowlight, if you work for iHeart):

iHeartMedia, which owns more than 850 radio stations and sponsors popular music festivals across the U.S., reiterated its April 20 warning to investors that it may not survive another year. The company has generated negative cash flow over the last two years, meaning that it’s spending more money on its debt and other expenses than it’s generating.”

THIS ARTICLE, by iHeartMedia (courtesy of CNBC), explains all of the major things the company is doing in music and entertainment, notably the iHeartRadio Music Festival, their Jingle Balls, their podcasts, their iHeartRadio Festival Latina, a new TV show coming up for FOX, and connections with Amazon Echo and Sonos smart speakers.  iHeart is in terrible financial shape, but it’s a huge company that the music (and entertainment) industry relies upon for promotion and airplay. 

What does this have to do with the Entercom and CBS Radio merger?  Lots.  First of all, as soon as the merger was announced on Friday morning, there was official news that the combined companies’ 92.3 AMP radio in New York City was flipping its format from Top 40 to Alternative.  It’s now called ALT 92.3 (so creative!).  With the absence of a Rock-leaning major station in the New York market, this fills in a gap and may help artists and labels in that genre gain more streams, sell more downloads, more on-air promotional opportunities, and move more tickets.  That’s a first, easy-to-see, benefit. 

But if you look at the statement from Entercom President/CEO David Field, you’ll read why they think this is important:

“We look forward to capitalizing on our unique positions in sports, news, music, podcasting, live events, digital, and more to provide outstanding experiences for our listeners and compelling integrated marketing opportunities for our advertisers. We now have the scale and capabilities to drive meaningful growth and to compete more effectively with other media for a larger share of advertising dollars. We also look forward to helping to elevate the Radio industry, which remains massively undervalued by advertisers despite having emerged as America’s #1 Reach medium, delivering outstanding ROI to customers.”

What word do you see repeated over and over in that statement?  Go back and look.  Yes.  You are right: 

“Advertisers.” 

Field, and his company friends, believe the can make more money from their new stable of 235 radio stations than was previously possible before the merger.  Somehow, they believe they can convince advertisers – America’s local car dealerships, skin cream purveyors, beer distributors, political campaigns, nail salons, and more small/medium/large businesses like this – to put their dollars either back into radio or into radio for the first time instead of Facebook, Google AdWords, and YouTube.  In other words, they believe they can win the war against the internet, or at least win enough battles to make more money than they’re making now. 

THIS ARTICLE, in Billboard announcing the flip of 92.3 FM, explains the term “Reach” and why that’s important to your ears.  Here’s a helpful excerpt:

“Despite changes in consumer behaviors, radio remains a top medium in terms of reach and listening habits. This year’s Nielsen Music 360 Study, out this week, found that terrestrial and satellite radio comprise 24 percent of listening time in the U.S., behind only the various forms of streaming choices, at 41 percent. That 24 percent is only down 2 percentage points since 2015, even as music streaming service continue to grow. Further, radio continues to have the biggest reach among all music mediums, at 93 percent of the U.S. population.”
No doubt, Entercom will be selling the concept of reach to current, old, and potentially new advertisers in their uphill fight against the perception that online is more effective and can be better tracked.

Field, in THIS ARTICLE, also stated some key points below when he announced the merger proposal back in February, 2017:

 We think radio is incredibly under-appreciated and under-valued,” Field said in an earlier interview. “We live in a highly disruptive world and we are all time-starved. We talk faster. We eat faster.” But he said “radio has been disrupted less than other mediums,” citing statistics on national listenership.

Field’s plan is to grow radio to 8 percent to 10 percent of the advertising pie and boost digital and events revenue. The deal will vault the Bala Cynwyd company, based in a plain multistory office building, into the big time with a sweeping footprint of 244 radio stations in 23 of the top 25 markets, generating $1.7 billion in annual revenues and employing more than 5,000.

What do people in the industry have to say about this?  Why should college students or young up-and-comers in the industry care?  We asked a few folks associated with radio and they shared their thoughts with us. 

John Boulos: VP of Promotion, Atlantic Records 

John is the 2017-2018 Executive-In-Residence for the William Paterson University Music & Entertainment Industries undergrad and graduate programs.

(This merger) shows the belief in the traditional radio model.  There was major money invested to do this and Entercom did it to strengthen their ability in more markets to compete for advertising dollars against iHeart and Cumulus.” 

Joe Riccitelli: GM, RCA Records

Joe’s background is in radio, having been a promotion exec at various labels since the mid-1990s, including the Island Label Group, Jive, and where he is now at RCA.

Any time 2 major platforms/partners become 1, it just waters down your ability to use them effectively. Format switches in a couple of these major markets has not helped either. They may help alternative radio markets, but we are seeing in general that format having less an effect on music consumption.

Elena Lanza: Oracle Entertainment & Marketing

Elena has experience independently managing and consulting on dance music projects, from an operational standpoint.  She’ll be a guest, with Lucas Prata, on the Music Biz 101 & More radio show/podcast on November 29th.

“Let’s see, other then the obvious (merger = fewer jobs ) why should college students care about a merger of two of the biggest conglomerates in a dying medium? This can be a loaded question.
 
“Well, from a promotion standpoint, it gets even harder to “break” new music. These days it’s nearly impossible to put the words “break new music” in the same sentence as the word Radio (Traditional Analog, Terrestrial radio) anyway.
 
“Think of it this way, back in the heyday of radio, DJs picked the music they played (Yes, there was payola and other factors involved… later call out research and later PPM, but that’s another story). A promoter had endless opportunities to get their music played. Then as things streamlined, Music and Program Directors started picking the music for an entire station. THEN with chain clusters came this invention of the “Regional Program Director” and in turn “National Program Director”  or someone who pick the majority of what is to be played on all of that conglomerates’ stations (of a specific genre) throughout the Nation. Yes, each station has a local programing department, but they answer to a higher power, and it makes it that much tougher. I mean (and Lucas, can tell you well) even mix show DJs aren’t event allowed to play a song that’s not on the approved playlist for said station.
 
“That being said…

The bigger the merger, the harder it gets.
 

“On a high note, if anything its had to make us think out of the box and more creatively.”

Lucas Prata: CEO – Prata Promotions 

Lucas has years of experience promoting music to Top 40 and Dance radio stations around the country.  Lucas will be a guest, with Elena Lanza, on the Music Biz 101 & More radio show/podcast on November 29th.  

“I think college kids should really pay attention to something like this especially if they think they want a career in radio. It just goes to show how difficult it’s becoming to hold down a “career” in the radio space today. It was always a slippery road not knowing what city you would be in next but this is just another level of it. I think if I was a senior in college and I wanted to be in the “music business” I would focus a lot more on the many platforms out there that are delivering music to us now. I have friends that used to be in radio for decades that now work for streaming services and are making more money than ever and actually ahead of the curve.

“My advice is look to the future if you want to have a secure job and get involved in new apps and music platforms that are just beginning.

Radio is DEAD.”

Your Knowledge Presented By:

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For full details about the Music & Entertainment Industries Program, including courses, the minor, and our MBA, click HERE.

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Professor David Philp is Assistant Professor Music Management & Popular Music Studies at William Paterson University. He is the co-host of the only FREE advice college radio-based music & entertainment industry talk show in America, Music Biz 101 & More, which airs live most Wednesday nights and is available as a podcast HERE every night (days too).  Your favorite professor is also co-author (with Dr. Steve Marcone) of Managing Your Band – 6th Edition.  Reach him at PhilpD@wpunj.edu or find him on LinkedIn HERE.

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