ORS.

TNDUSTRY ANALYSIS
Historv of Radio Leadine to News/Talk

,/

ffib,o

Radio began in 1920's in which it became the main source of entertainment in 1930's. The focus at that time was on dramas, comedies and quiz shows. Later on round tabletalk and classroom educational shows emerged as well as WWII news coverage. (1)

DurinB 1950's, FM started gaining momentum. Although it was available prior to this, Hi-Fi equipment during period helped it emerge. The first master FM radio tower erected on Empire State Building in 1965.

Q)
During the 1980's the Fairness Doctrine Act was deregulated. This act had originally evolved out of Communications Act of 1934 by FCC. It mandated that programs have open forum to discuss controversial issues with opposing views. However, many felt this inhibited free speech. The deregulation spawned today's highly partisan talk shows. (2) Around this same time in the eighties, FM radio garnered 757o of mmket so AM needed inexpensive shows to compete. Due to the deregulation news/talk shows exploded on AM. This included Rush Limbaugh in

1988 who was invited for one month try out in New York IS/ABC-AM and by 1990 he formed his own EIB Radio Network due to popularity. Many imitators and extreme talk shows with a variety of subject matter

followed in suit. (2)

In the 1990's to 2000's, Public radio emerged with an emphasis on providing less biased programming and was released on FM networks (as opposed to the standard AM for talk radio): The Telecommunications Act of 1996 allowed online radio into the spectrum ofthe broadcast industry and by 2004 Satellite Radio and HD Radio were also introduced into the market. Although there was an increasing interest in Satellite radio,

HD Radio has failed to make much impact. (3)

As of 2010 there have been over 50 FM stations reporting their programing switch to talk radio. Struggling FM stations air syndicated talk radio shows which are much cheaper because the music licensing fees associated with talk are drastically lower than licensing fees associated with gemes like Adult Contemporary. FM program executives also realize *rat they can reach a bigger and younger audience on FM. (4)

AM talk radio

has also been converting to FM in many markets since 2006. Some markets have experienced tpto200Yo market share increases by simulcasting on both AM and FM. (s)

FI!{/AM still dominates for radio listening, but online and mobile listeners are growing rapidly. FIWAM still on top for listenership, but online and mobile media may have more *Impacf' on the listener. (3)

r o

National radio market earned $16.7 (billion) in revenue for 201I (chart next page). (6)
2006 experienced the industry's greatest amount ofreveaue earned at $20 (billion) (chart next page). (6)

10

Compared to the US GDP growth rate of l.5o/o ayear the radio industry dropped by 3.6% a year during these periods. This is a 16.50/o dtop in revenue from 2006 up to 201 I (chart nextpage). (6) The radio industry's contribution to the US economy declined by 6.20/" annually also from 2006 to 201 I (chart

below). (6) From 201 1 going forward to 2015, the radio industry is only expected to grow at l.6o/a Pt lear to $18 Otllion). This is only a7.78o/o increase in growth over the next 5 years. This growth is contributed to the rebound of the economy in which more people will be in their vehicles going back to work (chart below). (6)

With the current expected growth rates the indusfiy does not appear to be getting back to the revenues
experienced lrr-2006 anytime soon. As more competition from other forms of online media and mobile media take away from these revenues, it may be difiicult to ever reach the 2006 peak revenue numbers again.
The emergence of more mobile media and online streaming the growth ofthe radio indusbry will see some obvious new threats to advertising revenue. The radio industry will no longer be competing with each other but

will be competing with all major industries involved in media and advertising acquisitions. (7) Industry

Doto
Rqlrr.|u

rrrurtry
vafud

fi6{d EaoHi*|.

wq!,

Rodio'rArEtEg

Donietia
Demord
NIA

$eldyfieodr
223.3

.q:!!#1...
2e.6
2X.2 2X.9

f, w ffi,s . ffi ffil ffi

:O13 &l* 2015
Sctor

$,E72'2 IO.BI.{ 10610 19.&9.0 10.*1A 10561 19.90,50 10.7515 1A7'i s.or3.2 11,1v.9 11062 19.?fr.!. 9,(20.0 10,619
15.576.5
16.421.2 7,C13.7 8109

a3q1.6 llf.S

TpiO l]3s.s}z 6,966 13ofi87 6394 12r.16s 7.1.25 130p62 6,963 124fi34 5.96E 109J85
6b76
1I5p90
107351

* * H,/A N/A

6fi8s3 65%5 1fi456

6J92fr
6,1E65

HJN N,fA

N,'A

N/A

zfi.\
233.6

N'[
il,dn

6281.t

2A-3
237fr

59gA
sb5A.3

N/A N/A H/A

M.1
2*8.3

,ol2

17,29r."t

16.9%.4 '' 11.&1\.8 17,**t"1

6,\*.2. *,*7,6 &,519fi 5,7&.3'

e7e ti72 i,965 tfig

6757 6163 6,165 659

s.6f6..3 5#8f 59167

ICSSiB 10555{

NJA
N,,A

m.7

8.1
N'/A

10159t

ET.2

Rdnk

Economynonk

14138 N/A iES 2A38 f fiA fiBg 3a5fl06 28l't706 2931705 29AfiO5 27317M N/A

Nr/A 17Bt 213/7M N/A

N/A

Size and

Growth of Radio Industrv 0-ocal)

Las Vegas market expanded drastically in the 1990's to mid-2000's with a population and housing boom which occurred before the recession. Las Vegas radio US market size ranking. Currently still at #32. (8)

Las Yegas US Ranking

Year 1990 199s 2005 2007
US Rankins

for

Las Veeas

65th 48th 38th

32nd 32nd

20ll

11

From December 2011 to date, Las Vegas radio stations have accumulated $73,570 (000's) of revenue. TalklRadio only garnered $4973 (000's) of this figure. (Appendix Chart A) "Las Vegas has become one of the fastest growing markets in the 1990s and 2000s. tn 1990 Arbitron ranked Las Vegas as the 65th largest radio market in the county. tn 1995 it was number 48 and in 2005 it was number 38. In 2007 Las Vegas ranks number 32." (8)
Las Vegas experienced a slight population decline from 1,968,831 people in 2008 to 1,952,040 people in 2009 during the peak of the recession. However, the crty has started to pick up population to 1,968,831 in 2010. As Las Vegas' economy and population continues to rebound the radio industy should continue to grow as well.

Socio-economic factors might correlate to some of the growth rate or adoption of news talk media. Las Vegas has in general has a less educated population at lSVo are college educated compared to the national average at

30%. Q7)r,,8'.)
According to David Dunning's, a psychologist at Cornell, study on education and its effect on Democracy you hove gaps in your lcnawledge in a given area, then you're not in a position to assess your own gaps or the gaps of others. " The implications of this might mean that the less educated Las Vegas population might find it more difficult to understand and enjoy the issues discussed in political talk radio. (26)
Las Vegas Talk Radio could be seen as a market poised for growth compared to the Top Ten, Regional, and Closest Ranked mmkets which all have much higher percentags5 sf talk radio than Las Vegas (see tables

"f

below). (9)

uTalk Radio AQII Share

Talk Radio Shares Per Top l0 Markets (Average isl6Yo)

for Persons 6*, Mon-Sun 6AM-Mid" e)

Talk Radio Shares Per Closest Ranked Markets (Average is 97o)

#2Los Angeles
#3 Chicago

t4.20%
20.20Yo 22.50Yo 6.50Yo

#4 San Francisco
#5 Dallas #6 Houston #7 Washington #8 Philadelphia #9 Atlanta #10 Boston #32 Las Vegas

#31 Salt Lake City

#32 Las Vegas #33 Kansas City

ts.20%
5.00o/o 9.40o/o

9.70%
18.30o/o

16.l0o/o
14.600/o 18.600/o
s%o

Talk Radio Shares Per Southwest Regional Markets (Average is12%o)

#15 Phoenix

12.3tr/" 15.20%
13.70o/o

#31 Salt Lake City #17 San Diego

#2Los Angeles
#32 Las Vegas

t4.20yo
1Vo

L2

Maior Plavers and Submmkets

National radio market share segmentation per genre based on programming indicates major players include News/Talk Radio with l4o/o average (compared to 5oZ for Las Vegas). This could be seen as either a growth market for News/Talk Radio or maybe a market where there is less of a desire or this type o programming

(AppendixChart B)

Nafional radio sub-mirket per progrunming AQH shares

Other
Programming
tOYo

(Appendix chart D)

Sports

Mexican Regional Programming

6%

Classic Hits

Y"

Compared to National statistics Mexican Regional Programming and Adult Contemporary appear to be bigger players in the Las Vegas market (chart below).

Las Yegas radio sub-mnrket per programming AQH shares ratings e0)
Other Programming
996

Sports

Mexican Regional Programming

t8%

Country Music
Wo Classic Rock

3% classic xits
6%

13

. l_ r

Las Vegas radio market - Top Three Radio Companies are Lotus Communications Corp (#1), Clear Channel Media & Entertainment(#2) and CBS Radio Inc. (#3). Most of the market share ratings are generated from the Adult Contemporry genre. (chart below) (10)

CBS Radio has dropped to the #3 spot in which higher previous ranking due to loss in AQH shares.

LosVegas rodio AQH shares per parent company stations psy

18.00%

16.OM

t4.Wo
t2-oa%
LO.@Ya
8.O0.7o

6.OWo 4.OA% 2-OA%

o-o0%

-"-"*"'e")'$**"$15d*"-"-"-5$.""':'*n
National Trends in NewslTalk Radio

The main frend in radio as well as News/Talk radio is that we are seeing more and more shows and programming available online and mobile media. It is important to be able to track this data and be able to report this it as part of listenership market shares. Since the emergence bf online/podcasts/streaming radio more amateurs are starting their own shows, which in 2005 many national radio companies had to write down their values. (11) There is debate on whether conservative talk radio is dying. Listeners of talk/radio seem to be on the decline in
some national markets according to John Avlon of "The Daily Beast". (12)

r o o o

As the unemploynent begins to decline more listeners will be back in their cars and on the way to work. This could also improve some listenership into the future. (6)
Companies such as WEEI-AM out of Boston are starting to make the swirch from AM to FM. This has proved successful in this market because the Redsox games were broadcast on this station Las Vegas, however, does

'

not have this same leverage. (16)

t4

National Issues in News/Talk Radio

There are opposing views indicating that conservative talVradio might be losing listenership on the radio because more yiewers are going directly to the program's website or streaming mobile applications that they

want to listen to. (13)

It is becoming more important to gather data on the listeners in radio. As more

media and the Internet, the industry

users are utilizing streaming

will

be better able to track user data and preferences and mmket to them

making a stronger impact with advertising. This remains more difficult with traditional radio. (14) Advertisers are becoming aware of this ability to fiack the listeners more and they are demanding more focused marketing approaches. Radio stations have to become more aware of their audience and they will need to come up with better ways to market to them other than radio commercials. More focused approaches such as gaining email addresses to send coupons to consumers within the demographic each company is trying to reach is becoming more important. (14) Being able to target users more than a demographic approach but with specific interests can "redefine" the value ofadvertising. This could lead to an increase in the costs ofadvertising and help generate revenue for the industry. (14)

If radio begins to bring more focus to digital advertising, more digital agencies will take notice ofthe radio
industry. Traditionally these agencies did not focus too much on radio, but as the shift becomes more apparent to online and direct emaiUtext marketing this could open up more potential advertising dollars to the radio industry and further increase revenues. {14) Radio will begin to do more cross branding with location-based mobile media. If websites such as "Foursquare" begin to notice a more concentrated reach with radio they can begin to do more brand marketing with each

other. (14)
As the unemployment begins to decline more listeners will be back in their cars and on the way to work. This could also improve some listenerlhip into the future. (6) As mobile companies begin to limit or charge additional amounts for data consumption, we may see an emergence of radio transmifters installed in smartphones. This may be already occurring with devices such as Blackberry and could be a component ofthe ever so popular iPhone. (15)
Companies such as WEEI-AM out of Boston are starting to make the switch from AM to FM. This has proved successful in this market because the Redsox games were broadcast on this station. Las Vegas, however, does not have this same leverage. (16)

Any genre of radio in Las Vegas is going to need to utilize and measure more online and mobile media going forward. This is where the future of radio is heading and it will be crucial to keep up with the technological changes in order to gain more revenue through advertising.
The main concern in the radio industry is acquiring and tracking better data of the listenership in order to appeal to business advertisers. As this is improved as indicated in our trends analysis this may no longer be an issue.

News/Talk radio appears to be in a debate on its future. Some information indicates that it could be a dying industry. However, radio is having a difficulttime tracking listeners as various forms of media have emerged.
15

\__

Althorrgh HD radio has not had such an impact in the industry, if it emerges it could revitalize the radio industry as it's' reception becomes clearer and can compete with technologies such as satellite. (17) TalklRadio has an older demographic, which doesn't utilize such newer forms of media such as mobile and online. If this industry wants to compete and gain or retain listenership they need to reach out to younger generations with these newer forrns of media. (17) News/Talk radio can be found directly by streaming at the programs websites. These programs can also be found by geffe tlpe websites such as www.tunin.com where you can select these genres. This is a good practice for these programs but becomes a harsh competitor for radio stations ryl5hing to compete for the same
syndicated shows.

Kev Trends in Las Vegas

o . o r

Las Vegas has had many forrnat switches and company mergers over the last ten years.

News/ Talk Radio although has less market for News/Talk radio than other markets ratings do not appear to have gained momentum even with KXNT switching to FM

KXNT is the highest ranked News/Talk radio station in Las Vegas above NPR (KNPR locally) which
fraditionally has more some of the most popular news talk programs around the nation. (9)
CBS Radio, Lotus Communication Corp. and Clear Channel Media are the biggest radio operators in the Las Vegas Market. (10)
Las Vegas

\-'

o o

will experience much of the

same problems with radio as does the national markets competing

with

Online Streaming, Satellite and Podcasting. Contemporary Music has even a Ligger market share in Las Vegas than in other cities and appears to be doing better than any other category. Talk radio only garners about 5% of the market share which could be

Best Practices

o o o

Radio stations that use conservative talk radio need to stay within those existing confines in order to not alienate audience expectations. (18)
Conservative talk radio programs have as well as their advertisers have a strong hold on their audience and she be wary to move away from their existing forrnats in order to not lose this grasp Syndicated Talk Radio is much cheaper than music stations as they do not have to worry too much about royalties. This proves to be an excellent way to build market share and additional profits

16

Most successful national talk radio programs Os)

16 L4

t2
10

Weekly Cume {Millions}

t
t_
r
Rush Limbaugh has been the most successfirl conservative talk radio hosts since the early nineties. He was the pioneer of conservative talk radio and has had a huge following ever since then. He has adopted online streaming directly from his website. Although these forms of media have been successful for him, he has remained out of the satellite radio market. (13)
Sean Hanmty is second in the market also been in close syndication within the same radio sub-markets as Rush. His success has even landed him a popular television show Honnity and Colmes as well as being a published author (20)

o r

Michael Savage has been in 3'd place in the conservative talk radio ranking. He also began his radio show in the nineties and due to popularity earned a spot on television with The Savage Report- (21)

All of th top programs have listed above have heen successful because they have built a core audience over a long period oftime. Conservative Talk Radio seems to have very loyal listeners compared to &e more liberal
audience which looks to other forms of media for their sources ofnews and entertainment.

Although the radio industy is in decline and was especially susceptible during the peak of the recession, most of these top talk radio programs had gained listeners during this period. (3) (Appendix Chart C)

L7

Even as these radio shows have remained popular more and more Americans are getting more of their news from online media. Radio as well as Television and Newspapers are slipping drastically as sources. Currently

Radio and the Internet are tied at34Yo with the Internet (online) on a sharp rise in the market. (22)

Successlul Medio

lor

News and Entertainment ez)

llilhere People Got Heurs Yestetday

6A 56
ed

Ulatched ntrtrsotrTY

4.4

34
i+ :l

Got nesrrs enline

s4 9A 9A OO OA g4 06 {}A
pEtq nEEE*nH
CEE"{TEA.

1{}

lune -?S, 281S.

A Successful Market

One market that has experienced some growth in talk radio is in the Public Radio system. Some reports indicate that the younger generations are growing tired of biased radio and are looking for more "innovative "and

"though provoking" "worldwide programs". Thus, more stations me looking to international stories. (23)

Programs such as Rush Limbaugh are still doing well. Some are reporting that his numbers are declining. However, opposing views indicate that more users are going directly to talk radio progftm websites. (12) This can be said for liberal talk programing as well. (24) The future of the radio market looks quite bleak for standard FIWAM^ In order to compt and have more successful revenue generation the market will need to incorporate more qpes of "new-media" marketing. This

will open the door to more advertisers and more focused advertising which they charge higher rates. 1f4;

18

In summary, the radio industry appeqrs to be ofaltering business. Some of the audience might

be

gained by the

returnirug worlcforce who is bouncing back as we slowly creep out of the recession- However, the recession has qlso made businesses look very closely qt their advertising arpenses. Companies are more cautious as to where
to place those dollqrs, andthqt hqve mode the market more competitive thsn ever. They acpect more than just general demographic listeners, but they now what to be able to trqck and lorow etcactly what this demographics interests and buying habits are. The best wry to get this information is through online adveftising. Radio will need to cross into more online media in arder to compete. This witl allow radio to not only gain more clients, but as the information is more valuable, they can also charge higher rates for advertisingwithin this medis. Radio will need to stream more, and lure more audiences ta their direct websites so that they can get listeners to

participate there.

Talk rodio will also benefit from moving more listeners to online and mobile media. Agaiq this will oid in advertising directly to those listeners demographics and buying interests. However, this will alsa help bridge
the gap to ayounger generation of listeners.AM has become antiquated andveryfew listeners of theyounger generations utilize this bsnd. FM is increasingly movtng in the sqme direction. Internet Media whether tlrough online or mobile is the only increasing trend

Radio in gmeral needs not to think of listenership in the same manner as thE, have in the past. Radio as we know it is in a downward spiral. Radio will hove to diversifi its media completely qnd be more competitive with their online and mobile presence. Rodio should be only a piece of the big companiesfocus goingforward In order to survive the technological changes and trends, the Radio industry needs to sturt thinking of themselves as the "Media" Industry or nEnlertainment' Industry with radio only being a piece of their arsenal.

19