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By Kent Larsen
News Analysis: Bonneville Faces Future of Radio
CHICAGO, ILLINOIS -- The Telecommunications Act, signed into law in February
1996, has transformed the radio industry in the past five years, and in the
process transformed the LDS Church's Bonneville International Corp. But the
full effect of the act may still not have been felt, as technologies enabled
by the act transform the industry yet again.
One of the act's major changes was to raise the ownership cap on radio and
television stations in a single US market and eliminate the nationwide cap.
Now a single company can own up to eight stations in a major market. As a
result of the change 9,600 radio stations have changed hands -- more than
two-thirds of all radio stations.
In general, the change has meant a change of strategy for those companies
that own multiple stations. Before the act, large broadcasters, like
Bonneville, sought to get a single station in many markets, looking to earn
their money from national advertisers who are seeking to reach a nationwide
audience.
But since the act, these same companies have tried to concentrate their
holdings, trying to reach the limit in each market, and offer to their
advertisers, now including local advertisers more than before, an audience
that crosses a variety of radio formats -- classical, rock, pop, jazz, etc.
The change also allowed the broadcasters to save money running stations,
allowing them to share the costs of overhead, advertising sales, etc. among
all the stations they own in one area.
Bonneville has followed this same model, selling stations in markets where
it only had one station, and purchasing stations in other markets.where it
can build a group to share costs. In the past five years, Bonneville has
dumped stations in New York City and Los Angeles, among others, while
picking up new stations in Washington DC, St. Louis, and most recently,
Chicago.
While these changes have probably been good for Bonneville's (and therefore
the LDS Church's) bottom line, the benefit for LDS Church members isn't the
same. Where Bonneville once tried to make its LDS Radio available in many
markets (it was available using special 'subcarrier' radio tuners), it has
now dropped the service, since Bonneville isn't trying to get stations
covering a wide portion of the U.S.
This question of LDS Radio is more than just radio services to the LDS
market, however. It is also a question of what Bonneville's role is, beyond
a business that the LDS Church owns. Most Church-owned businesses seem to
have a purpose that supports the Church in addition to making money. If
Bonneville's radio stations also support the Church's mission, how are they
doing this, in view of the changes in the radio market? And if they are
simply business investments, why not sell them now, when radio stations are
fetching good prices? Or, if they are business investments, will the Church
be able to supply the capital for Bonneville to remain a big player in radio?
Since delivery of its signal by 'subcarrier' is no longer viable, LDS Radio
is available over the Internet, one of the new technologies that have been
helped by the Telecommunications Act. The Act led to greater investment in
the telecommunications hardware that the Internet runs on, making it much
more widely available. But the Internet may also represent a new threat to
Bonneville and other radio stations.
But Bonneville is trying to meet that challenge also. The monitoring service
Arbitron reported January 29th that online radio listeners heard more than
16.8 million hours of audio programing on the Internet during October 2000,
and Bonneville was rated by the service at 13th in number of hours
delivered, at 229,900 hours. However, those hours didn't make Bonneville a
very big player in online radio, and LDS Church members will immediately
note that those hours must have included the 10 broadcast hours of the LDS
Church's General Conference. If Conference attracted just 10,000 listeners,
it would account for nearly half of Bonneville's delivered hours.
While Bonneville does make the radio content of its stations available on
the Internet, however, the Arbitron study makes it clear that broadcast
radio stations are not the programing that is most listened to on the
Internet. Of the top 5 sources of audio webcasts, according to Arbitron,
only one, ABC Radio, represents traditional radio programming. The others,
including NetRadio.com and Live365.com, aggregate audio content from many
sources.
The growth of Internet radio isn't completely captured in the Arbitron
numbers, however. Running a radio station on the Internet is simply cheaper
than over radio waves, and may be viable for much smaller players. Analysts
agree that this will probably mean lots of different 'stations' on the
Internet, splitting up the audience into many small pieces. Logically,
Bonneville is already providing services for LDS listeners (through LDS
Radio) and for Utah listeners (through KSL radio) and other geographic
areas. But Bonneville may also face a lot of different stations trying to
reach these same audiences. KZION, a small LDS-oriented Internet station, is
already webcasting its audio signal to LDS listeners. Others will surely
follow.
Another technology that could prove to be a threat to Bonneville and
traditional broadcasters is set to start next month. Two companies, Sirius
Satellite Radio, Inc., and XM Satellite Radio, Inc. both plan to start
broadcasting radio signals by satellite to special radio tuners that they
will sell. Sirius will provide half of its programming commercial free, yet
charge a $9.95 a month subscription fee for the service. These companies say
that their service will eventually have an effect on traditional radio
similar to the effect that cable TV has had on broadcast television.
It remains to be seen, however, whether Bonneville will even have to meet
these challenges, let alone if it is able to do it. Radio analysts feel that
Satellite radio, which is currently aimed at listeners in their cars, is
unlikely to gain more than a toehold, while other analysts point out that
most radio listeners are in their cars, where Internet audio isn't yet
available.
If the analysts are right, then Bonnneville is in a good position for the
foreseeable future. But if these new technologies take off like other areas
of the Internet or like Cable TV, then Bonneville may face serious competition.
Sources:
Satellite Radio Industry Sends Signal
Chicago Tribune 18Jan01 B4
By Tim Jones
Streamers Streamed More Than 16 Million Hours of Programming to Listeners Online
Arbitron 29Jan01 B4
NetRadio takes top spot for total aggregated hours; 1.31.01
Consumers Yet to See Benefits of Telecom Act
Chicago Tribune 28Jan01 B4
By Tim Jones: Chicago Tribune
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