A Tumultuous 15 Years

In May of 1996, I started to write a weekly newsletter I called "RadioIQ," which was the predecessor to this blog.

I found this item as I was paging through old issues today:

• "It will take $15 billion in trading to complete the consolidation process -- defined as the point at which 75% of radio is in the hands of the top 10 groups." By that measure, the industry has 80% more consolidating to do, said Alex. Brown & Sons Managing Director/Sr. Media Analyst Drew Marcus, who estimated that the process will take at least two years to complete. Fast-growing groups are best positioned for success in the long run. That is especially true of the public companies. "The fastest-gaining [radio] stocks are the consolidators," said Marcus. He pegged consolidators' stock growth at 2.5 times the rate of static companies. "Individual stations are too volatile, and we don't like companies that rely on just a few." He said companies like his, which underwrite many initial public offerings, look for groups that generate no more than 25% of their cash flow from their top two stations and keep debt leverage under 6.5. - Heard at the May 1996 Kagan Future of Radio Acquisitions & Finance Conference
  
  
• "Size -- if you are a public company -- is rewarded, as is diversification," said American Radio Systems Chairman/CEO Steve Dodge. But size for size's sake can be dangerous, Dodge warned. "These are still delicate critters that have to be marketed, programmed, and sold. I don't know that anyone has proven they can effectively run a 100-plus-station radio group."

It's going to be informative to see how many of these statements also apply to Cumulus-Citadel when it closes in September and how the few remaining "small" groups like Hubbard, Emmis, Entercon, Bonneville, Townsquare, Cox et all play out their futures in the face of it.

If you read this blog, your career prospects will be shaped by it.