Radio

1. Radio Chapter 7 © 2009, The McGraw-Hill Companies, Inc. All rights reserved.

2. 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

3. HISTORY • Heinrich Hertz • Guglielmo Marconi • Reginald Fessenden • Lee de Forest • World War I -- US Navy takes over patents

4. 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”

5. 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

6. 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

7. Radio Goes Commercial • Early broadcasters were stores, newspapers, schools, businesses, not broadcasting companies • Radio stations needed revenue source • ATT station aired first “toll” broadcast

8. 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

9. Government Regulation • Interference was major problem • Radio Act of 1927 • Federal Radio Commission • Defined AM band • Standardized channel designations • Abolished portable stations

10. The Depression: 1930-1940 • Radio fared well during the Depression • Federal Communications Commission (FCC) created in 1934 • Regulated all electronic communications

11. 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

12. 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

13. World War II • Radio thrived during World War II • Ad revenues increased • NBC divested itself of one network (became ABC)

14. 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

15. 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

16. 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

17. RADIO IN THE DIGITAL AGE • Radio stations slowly entered the digital age, but they may be speeding up

18. 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

19. 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

20. 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

21. 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

22. Mobile Radio • Mobile radio on cell phones • Vast potential audience

23. User-Generated Content • Podcasting – recording an audio program and making it available for download

24. DEFINING FEATURES OF RADIO • Portable • Supplemental • Universal • Selective

25. ORGANIZATION OF THE RADIO INDUSTRY • Half a billion working radio sets in US • About 13,500 radio stations

26. 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

27. 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

28. 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

29. 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)

30. 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

31. PRODUCING RADIO PROGRAMS • The departmental structure of a radio station depends on its size

32. Departments and Staff • General Manager • Program Director • Announcers and DJs • Sales Department • News Department • Engineering Department

33. 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

34. 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

35. Sources of Revenue • Rate card: station’s advertising fees • Three sources of commercial revenue: • Network ads • National spot ads • Local ads

36. General Expenses • Five categories of expenses: • Technical • Programming • Selling • Administration • News

37. FEEDBACK • The radio industry seeks feedback about audience size and composition

38. 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.

39. 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