US 107 FM disc jockey's Charlie James, left, and Jill Kelly broadcast live in front of the Civic Center before the start of Friday's Augusta Lynx hockey game. ROB CARR/STAFF

Radio operators consolidate

Federal deregulation allows companies to own several stations, altering market share

Web posted March 7, 1999

 Airwaves control

By Frank Witsil
Staff Writer

At one of the two Cumulus Broadcasting offices in North Augusta, general manager Gary Pizzati is frantically working. He has seven stations to run -- two AM, five FM -- and more than 50 full-time employees to watch.

It's a big change from when he ran only one station. That was boring in comparison, he said.

Since 1996, federal deregulation has allowed corporations to own more than one station in a market, and the major players in radio world have been jumping at every chance to buy as many stations as they can.

``We're growing every day,'' Mr. Pizzati said.

Just a few years ago, there were dozens of local area operators, each competing for a small slice of the market. Now there are four major groups in the area, and each one controls from about 12 to 28 percent of the market share.

The number of independent radio station operators is shrinking. More and more stations are falling into the hands of fewer and fewer operators. Groups with multiple stations in the same market are going head to head, and prices for the remaining independent stations are going up and up.

Cumulus Broadcasting, the largest radio operator in the area, with nearly 28 percent of the market, is aggressively growing in Augusta. It is consolidating operations where it can to save money, going after advertisers with several advertising representatives at the same time and focusing each station format to target specific audiences.

Cumulus has a wide variety of formats: Radio Disney, rock 'n' roll, top 40s, contemporary and country. It plans to add an all-news format on one of its AM stations. WGUS will start broadcasting CNN reports in April.

In addition, the group is attempting to buy one of the stations it manages, WZNY (105.7 FM), from Savannah Valley Broadcasting. If approved, that would bring the total number of stations it owns here to seven, the limit for this market.

In the upcoming years, many operators believe that the number of major players will get even smaller -- perhaps dropping to two or three -- and each group wants to be a survivor.

The competition

Since the Telecommunications Act of 1996 passed, companies have been buying stations throughout the nation as if they were playing the early rounds of the board game Monopoly.

The strategy: to control market share so groups can raise advertising revenue, lower operating costs, spread risks over multiple stations and create strategic advantages with flexible programming.

General Manager of WRDW Radio Station Rick Beard sits behind the microphone giving short local weather briefs during a morning show of The Fan. Mr. Beard's radio station is one of the few small family-owned radio stations struggling to stay alive among larger markets. JEFF JANOWSKI/STAFF

The formula that determines how many stations a group can own in a single market is complex: In markets with more than 45 stations, the maximum number of commercial stations a group can own is eight -- no more than five can be either AM or FM. In markets with 30 to 44 stations, the maximum number of stations is seven -- no more than four can be AM or FM. In markets with 15 to 29 stations, the maximum is six -- no more than four can be AM or FM. In markets with less than 15 stations, the maximum is five -- no more than three can be AM or FM, and no group can own more than half of the stations in that market.

Determining what constitutes a market is tricky, according to the Federal Communications Commission. Augusta probably would be considered a 30- to 44- station market, FCC officials say.

Deregulation's result in Augusta is that four broadcasting groups now control almost 75 percent of the market share, according to Arbitron Co., a rating service. In addition to Cumulus, there is also Davis Broadcasting, GHB Broadcasting and Beasley Broadcasting. Each company owns two or more stations.

``In some ways it's good. In some ways it's not very good,'' says Davis Broadcasting general manager Bill Jaeger. ``It's a different kind of competition.''

On one hand, group ownership of multiple stations limits competition by reducing the number of players in a market, he said. On the other, competition is intensified because the fewer players are more powerful and have more at stake, he added.

The new laws give groups some advantages over independents.

Companies with several stations sell different formats to reach different audiences. Cumulus, for example, will send a sales representative from each station to talk to a client at the same time. About 25 percent of their ads are sold that way, Mr. Pizzati said.

Another advantage is that a company with multiple stations can save money by consolidating departments, staff and office space. Beasley, with four stations, has only one general manager instead of four. One person can read the news that is used on all four station broadcasts.

One building can house several stations. Davis Broadcasting has all four of its stations at one office, on Bennett Lane in North Augusta. Cumulus, which has two offices in North Augusta, plans to save money by consolidating both next year at one location, off Carolina Springs Road.

The concerns

Consolidation is making some companies money, but it is also putting people out of work and putting pressure on the little guys -- the independent and single-station operators -- to sink, swim or sell.

Brett Panter, the new marketing director for Cumulus Broadcasting, recently lost his job in Detroit after a station buyout and staff reduction. He fortunately found a job locally. But a lot of jobs are getting cut.

``Its a whole different ballgame,'' he said.

Some longtime broadcasters are concerned that in the quest for the almighty dollar, bottom-line companies are cutting too many corners and lowering the quality of broadcasting, too.

That doesn't mean all companies with deep pockets that are taking advantage of deregulation are ruining radio, said 22-year radio-industry veteran Coni Sansom. A general manager for GHB Broadcasting, she believes the company she works for is committed to offering quality.

But some big companies aren't, and that concerns her.

Group ownership also changes how the independent stations operate.

It forces them to find their own niche and serve it -- often picking up the listeners and advertisers that the big guys miss or overlook.

Click on the chart above to see a larger version.STAFF

Rick Beard, station manager of one of the ``last mom and pop stations in this community,'' as he puts it, makes this analogy. He equates what's happening in radio with what happens in retail when big corporations decide to build a mega-mall or super-store.

``You have to find your quaint little shop to offer,'' he said.

His station, WRDW-FM, survives by targeting a specific audience.

But in markets where a group wants to buy, it is willing pay big bucks for independent stations -- 20 to 30 times a station's cash flow -- and many of them are selling out.

Some radio experts speculate that within the next few years there will be even fewer major players in the Augusta market. Each of the four major groups here has its own strategy and plans to survive.

Cumulus is going after several formats to cover the full spectrum of the market. GHB has only two, but popular, formats -- country and soft rock. Davis and Beasley are targeting their formats to appeal to specific segments of the market. Davis is going after the urban, African-American audience, and Beasley tries to appeal to upper-income, adult audiences.

Each group is interested in acquiring more stations.

``We definitely would like to buy more stations,'' says Beasley General Manager Kent Dunn. ``The more properties you can own, the more you can control.''

The race is on.

``May the best man win,'' Mr. Pizzati says.

Frank Witsil can be reached at (706) 823-3352.

Airwaves control

Since deregulation, four broadcasting groups now control about 75 percent of Augusta radio station market share, according to the latest Arbitron Co. ratings. Here are the groups and the stations they own or manage and their formats:

Cumulus Broadcasting: (seven stations)

Radio Disney (1340 AM), Disney programming

WGUS (1390 AM), CNN news, beginning in April

WRXR (96.3 FM), rock 'n' roll

WEKL (102.3 FM), rock 'n' roll

WBBQ (104.3 FM), adult contemporary

WZNY (105.7 FM), top 40

WUUS (107.7 FM), country

Davis Broadcasting: (four stations)

WTHB (1550 AM), gospel

WAEG (92.3 FM), rhythm and blues

WAKB (96.9 FM), adult contemporary

WFXA (100.9 and 103.1 FM), urban contemporary

GHB Broadcasting: (two stations)

WSLT (98.3 FM), light adult contemporary

WKXC (99.5 FM), contemporary country

Beasley Broadcasting: (four stations)

WGAC (580 AM), news, talk

WGOR (93.9 FM), oldies

WCHZ (95.1 FM), active rock

WAJY (102.7 FM), adult nostalgia

Others: (nine stations)

WFAM (1050 AM), Christian talk

WKIM (1230 AM), solid gold soul

WRDW (1480 AM), talk, sports

WKZK (1600 AM), gospel

WAFJ (88.3 FM), Christian

WLJK (89.1 FM), South Carolina Public Radio

WACG (90.7 FM), Peach State Public Radio

WLPE (91.7 FM), Christian

WIIZ (97.9 FM), urban contemporary, gospel