Slide 1
Joseph R. Dominick
University of Georgia-Athens
© 2005 The McGraw-Hill Companies, Inc. All rights reserved.
Slide 2
Part II
Media
© 2005 The McGraw-Hill Companies, Inc. All rights reserved.
Slide 3
Chapter 7
Chapter Outline
Radio
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
The Radio Industry
© 2005 The McGraw-Hill Companies, Inc. All rights reserved.
Slide 4
History
 Early Radio Milestones
1887 – Hertz sends, detects radio waves
1896 – Marconi sends wireless Morse Code
1906 – Fessenden broadcasts voice and music
Post WWI – U.S. Navy takes over patents
© 2005 The McGraw-Hill Companies, Inc. All rights reserved.
Slide 5
History
 Big Business
GE, AT&T, and Westinghouse invest in
Radio Corporation of America (RCA)
Sarnoff – “radio music box”
 Mass Audience
Frank Conrad of Westinghouse begins
garage radio station  KDKA (1920)
 Better Receivers
1926 – radios more user-friendly
By 1930 – 17 million sets sold
© 2005 The McGraw-Hill Companies, Inc. All rights reserved.
Slide 6
History
 Radio Goes Commercial
WLS, WGN, WSM, WHB
AT&T sells ad time on WEAF (1922)
 Networks
Share program production – save money
NBC is first network (1926)
1937 – NBC has 111 affiliated stations, CBS 105
 Government Regulation
Radio Act of 1927 sets up FRC
FRC allocates bands and bans portable stations
© 2005 The McGraw-Hill Companies, Inc. All rights reserved.
Slide 7
History
 The Depression: 1930-1940
Radio grows
Roosevelt creates FCC to regulate entire
electromagnetic spectrum (1934)
 Birth of FM
Armstrong demos FM to RCA – Sarnoff is
not interested – so creates his own station
 Radio Programs
Soap operas, “The Lone Ranger”
Wartime radio coverage and radio news
© 2005 The McGraw-Hill Companies, Inc. All rights reserved.
Slide 8
History
 World War II
Network news thrives as public follows war
developments with “name” correspondents.
Ad revenues double 1940-1945
Supreme
Court
(1943)
NBC
NBC
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ABC
Slide 9
History
 Innovation and Change: 1945-1954
FM technically superior to AM
FM and TV use same bands
FM moved to 88-108 MHz, making halfmillion radios useless
TV affects radio networks; stations become
more local
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Slide 10
History
 Specialized Formats
Stations lose network affiliations
Local personalities emerge
Station develops “Top 40” format
Clock hour invented
© 2005 The McGraw-Hill Companies, Inc. All rights reserved.
Slide 11
History
 Growth and Stabilization: 1955-1990
# stations: 3343 (1955)  7000 (1970)
DJs’ Top 40 power leads to payola
FM emerges
FCC’s nonduplication rule (1965)
FM begins evolving different sound
NPR starts up (1970) with 80-station network
© 2005 The McGraw-Hill Companies, Inc. All rights reserved.
Slide 12
History
 The Volatile 1990s
Telecommunication Act of 1966
Unlimited station ownership
Increases same-market ownership to eight stations
Result: a flurry of mergers and acquisitions
Consolidation and employee cutbacks
Clear Channel owns stations in 190 markets
Talk Radio: Rush Limbaugh, Howard Stern
© 2005 The McGraw-Hill Companies, Inc. All rights reserved.
Slide 13
Radio in the Digital Age
 IBOC -- in band, on channel
Simultaneous analog and digital
Set to debut in 2004
 Satellite radio
Satellite-to automobile
XM radio and Sirius subscription service
Mixed commercial and commercial free
Music, talk, news
© 2005 The McGraw-Hill Companies, Inc. All rights reserved.
Slide 14
Radio in the Digital Age
 Internet radio
Specialized formats
Small audiences
Copyright Arbitration Royalty Panel (2002)
Small Webcaster Settlement Act of 2002
© 2005 The McGraw-Hill Companies, Inc. All rights reserved.
Slide 15
Defining Features of Radio
PORTABLE
SUPPLEMENTAL
Radio
UNIVERSAL
SELECTIVE
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Slide 16
Organization of the Radio Industry
 ½ billion working radios in USA
 12,000 radio stations in operation
 Local stations, networks, and syndicators
Networks
Local
Stations
Syndicators
© 2005 The McGraw-Hill Companies, Inc. All rights reserved.
Slide 17
Organization of the Radio Industry
 AM and FM Stations
AM = Amplitude Modulation
Travels farther
Clear channel
– single dominant station with strong signal (50 KW)
Regional channel – shared by several stations
Local channel – shared by many stations
FM = Frequency Modulation
Better quality; less interference
Class C – most powerful signal (100 KW)
Classes B and A less powerful
© 2005 The McGraw-Hill Companies, Inc. All rights reserved.
Slide 18
Organization of the Radio Industry
[Insert Figure 7-2 here]
Figure 7-2 Simplified Diagram of the Electromagnetic Spectrum
© 2005 The McGraw-Hill Companies, Inc. All rights reserved.
Slide 19
Organization of the Radio Industry
 Station Formats
Programming chooses an audience
Three basic formats
Music –
Urban, AC, Top 40, Contemporary, Country
Black / Ethnic –
Hispanic, Polish, German, etc.
News / Talk
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Slide 20
Organization of the Radio Industry
 Format Homogenization
Consolidation – cheaper to use same
programming in all regions
Low-risk decisions – it worked here, it
should work there
Use of a limited band of radio consultants
Use of focus groups and surveys
© 2005 The McGraw-Hill Companies, Inc. All rights reserved.
Slide 21
Organization of the Radio Industry
 Voice Tracking
A single DJ records intros, extros, chatter
Music mixed in later
Total program delivered to local stations
© 2005 The McGraw-Hill Companies, Inc. All rights reserved.
Slide 22
Organization of the Radio Industry
 Noncommercial Radio
1,900 stations (2003)
Most owned by educational institutions
Several channels set aside
NPR (National Public Radio)
530 affiliate stations
Each pays NPR a usage fee
Corporation for Public Broadcasting
Funded by Congress
Sponsors nonprofit stations
Public Radio International
© 2005 The McGraw-Hill Companies, Inc. All rights reserved.
Slide 23
Ownership in the Radio Industry
 Telecommunications Act of 1996
5100 different owners in 1996
3800 different owners in 2002
2 companies: 33% of ad revenue in 2003
Clear Channel Communications
Infinity Broadcasting
© 2005 The McGraw-Hill Companies, Inc. All rights reserved.
Slide 24
Producing Radio Programs
 Departments and Staff
General Manager
Program Director
Sales department
News department
Programming department
Engineering department
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Slide 25
Producing Radio Programs
 Putting Together a Program
Music Format: uses a format wheel
Talk Format
Topics depend on time of day
Some additional electronics
Moderator with delay system
Screener for incoming phone calls
All-News Format
Also uses programming wheel and cycle
Large staff and lots of equipment
© 2005 The McGraw-Hill Companies, Inc. All rights reserved.
Slide 26
Producing Radio Programs
[Insert Figure 7-3 here]
Figure 7-3 Format Wheel for a Contemporary Rock Station
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Slide 27
Economics
$ Advertising revenue has increased recently
$ Consolidation efficiency
$ Dot-com instability
$ Revenue
$ Rate card
$ National advertising (5%)
$ Regional or national spot advertising (17%)
$Local advertising (78%)
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Slide 28
Economics
$ Expenses
Technical – Engineering staff, equipment
Programming – Talent, tape/CDs, licenses
Selling – Sales staff
Administration – Management and clerical
staff, interest on loans
$ News – Covering stories
$
$
$
$
© 2005 The McGraw-Hill Companies, Inc. All rights reserved.
Slide 29
Feedback
 Ratings provided by professional research
organizations
 Major company is Arbitron
Monitors 262 markets nationwide
Random sample of listeners
3-4000 day-to-day diaries with 45% return rate
End product is ratings book
© 2005 The McGraw-Hill Companies, Inc. All rights reserved.
Slide 30
Feedback
A rating is the ratio of listeners to a
particular station to all people in a given
market.
A share of the audience is the ratio of
listeners to a particular station to all
radio listeners in a given market.
© 2005 The McGraw-Hill Companies, Inc. All rights reserved.
Slide 31
Feedback
 Radio Audience Profiles
Two radios per person in USA
1/3 are in cars
Typical day
3/4 of all adults will listen to some radio
Average person has radio on for about three hours
Most listen during rush-hour drive-time
As people age, they tend to evolve from one
format to another
© 2005 The McGraw-Hill Companies, Inc. All rights reserved.
Slide 32
The Radio Industry
 Entry Level
Small market
Versatile – any job asked to do
Most jobs are in programming and sales
 Upward Mobility
DJs – larger markets and better time slots
Sales
Better accounts
Sales manager  General manager
© 2005 The McGraw-Hill Companies, Inc. All rights reserved.