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Economics

Economics

All the evidence suggests that news remains a vital and profitable component of radio. Some owners appear more successful economically at producing news than others. And it appears to be more important to some companies than others. But outside of one broadcast organization, news is an integral part of the mix for every major company, even if less and less of the news on that station is original local programming.1

Overall, stations listing news as their primary format (not including Talk stations) brought in revenues of $1.37 billion in 2002, out of total radio revenue of $12.72 billion. If we look at just the top-five radio companies for which information is readily broken down, news stations on average account for 11 percent of all revenues, though that ranges from as little as 4 percent at one company to as much as 18 percent of revenues at another.2

Number of Stations Owned by Top Companies*, 2002
News vs. all
Design Your Own Chart
BIAfn Media Access Pro, unpublished data
* Top-five companies that own news format stations

News station holdings by some companies appear to do much better than others.

At Infinity Broadcasting, which is owned by Viacom (CBS), 12 percent of its stations are News/Talk, but they provide 18 percent of the revenue. At Clear Channel, on the other hand, 11 percent of the stations are News/Talk but provide 8 percent of revenue. At Entercom, a company that owns stations in a variety of formats and is the exclusive radio broadcaster of the Boston Red Sox and the Kansas City Royals baseball teams, news is also more important, providing 15 percent of its revenue (coming from 13 percent of its 105 stations). These percentages may well be a reflection of the size of the market in which the owners are running news stations.3

Revenues of Top Companies, 2002
News stations vs. other stations
Design Your Own Chart
BIAfn Media Access Pro, unpublished data
*Top-five companies that own news format stations
Revenues from News Stations for Top Companies*
1995 – 2002
Design Your Own Chart
BIAfn Media Access Pro, unpublished data
*Top-five companies that own news format stations

Beyond these broad figures, getting a handle on the economics of news broadcasting is difficult. Again, most of the available data is through surveys. The best source we have found is the annual survey of radio news directors and general managers originally conducted for the Radio-Television News Directors Association (RTNDA), by Professor Robert Papper and Associate Professor Michael Gerhard, who teach telecommunications at Ball State University in Indiana.

The evidence here suggests some confusion over profits, at least at the station management level. In 2003, 25 percent of the news directors and general managers surveyed said that their stations made profits on news, up 10 points from 2002. The majority, 58 percent, reported that they did not know whether their stations made money on news, a figure that has moved around in recent years but has remained above 50 percent since 1996, when the respondents were first given the option to say that they did not know.4

Why such uncertainty? Part of it is likely traced to the administrative structure of radio stations. News is no longer necessarily a local product in radio. It may be no surprise that general managers at Urban music stations would not know whether the hourly news briefs presented on their stations actually made money, especially if the station in question does not have a news director on staff, but instead runs a report generated by a central organization. Furthermore, a station whose primary format is Tejano or Album Oriented Rock simply might not be concerned enough with the money made by news briefs to do the accounting. They are, after all, selling advertising time based on the audience captured by their music, not their news.

But this should not discount the higher percent reporting profits, and the data suggest that half of that increase came from station executives who reported losing money on news the year before and the other half from those who said they did not know.

Radio News Profitability
Survey of news directors, 1997 – 2003
Design Your Own Chart
Source: “RTNDA/Ball State University Annual Survey,” 1997 through 2003

Footnotes

1. BIAfn Media Access Pro, unpublished data. Every station in the American Family Association, the fifth-largest radio group in the country, lists religious as its primary format. The stations do air news, but it is not their primary format.

2. Ibid

3. Ibid

4. Radio-Television News Directors Association (RTNDA), “RTNDA/Ball State Univeristy Annual Survey,” 1999 through 2003, www.rtnda.org