The State of Radio

Back To The Future: Townsquare Media's 'Local First' Approach To Radio May Be An Antidote To Streaming

Sweet Lenny Courtesy Photo

Steve Knopper is a Billboard editor at large, a former Rolling Stone contributing editor and the author of MJ: The Genius of Michael Jackson and Appetite for Self-DestructionThe Spectacular Crash of the Record Industry in the Digital Age.

After decades of centralized playlists and syndicated DJs, radio stations are once again emphasizing superserving their communities, and for "local first" station group Townsquare Media that led to a 20% boost in digital revenue in 2018

In the driver's seat of his 2014 GMC Acadia, Chris Barber plucks a gooey, cheese-covered piece of sausage from a slice of pizza and holds it up to the camera in his vehicle. A "local" pizza joint, explains the DJ known as Sweet Lenny, applies toppings by instinct, unlike corporate chains. "There isn't some kind of like [company] rule: 'You got to put 17 pieces of sausage in there and they need to be this big,'" he says in a video posted on YouTube. "You go to a local pizza place, they put on the amount of sausage that they see fit."

For much of this spring, Sweet Lenny of adult contemporary station WZOK-FM, which reaches roughly a third of the 150,000 residents of Rockford, Ill., every day, talked to his listeners about pizza. He played Ed Sheeran and Rihanna, but he also spent hours talking about cheese, crust, pepperoni -- and sausage -- supplementing his Chicago-accented on-air ramblings with blog posts and videoclips that chronicled his search for the broadcast market’s best pizza. (In the end, John's Restaurant Pizzeria & Steakhouse on 11th Street beat Lino's on East State Street for the top honor.)

"It sounds so small-town. But it connects with the same people who drive up and down the street," says Barber, who first worked at the station as an intern in 1999 and is now an operations manager for parent company Townsquare Media. "You can get the latest Ariana Grande news anywhere. We talk about the things that matter to our audience."

Radio started out as a local business. By the second decade of the 1900s, stations such as WHA (initially 9XM) in Madison, Wis., sent Morse code agriculture reports to local farmers, and Detroit’s news giant WWJ was broadcasting weather forecasts beginning in 1920. But that changed drastically in 1996, when President Bill Clinton signed the Telecommunications Act into law, eliminating the cap on the total number of radio stations that a single company could own and allowing the purchase of as many as eight stations in a single market (depending upon its size), sparking an era of ownership consolidation in the industry. Clear Channel Broadcasting (now iHeartMedia), in particular, took advantage of the deregulation, increasing its portfolio of stations from just over 40 to more than 850 today. In the process, it moved to a more centralized form of programming that influenced the radio industry at large -- one that relied heavily on syndicated talent such as Rush Limbaugh and Ryan Seacrest and employing playlists dictated by its home offices in San Antonio.

But as the radio industry endures an extended period of stagnation -- one that saw iHeart and another Cumulus Media declare Chapter 11 bankruptcy (both emerged this year) -- broadcasters are once again paying closer attention to the communities that their signals reach. Today, even iHeart stations market themselves to their respective listening audiences with some variation of "local first," a tagline that officially belongs to Townsquare Media, owner of Rockford's WZOK and some 320 other stations. Among the smallest are three tiny signals in Cheyenne, Wy., the 261st-largest radio market in the United States, while the largest is WKXW (NJ 101.5) in Trenton, N.J., which reaches 1 million listeners weekly.

The “local first” philosophy acknowledges that on-demand streaming platforms such as Spotify, YouTube and Pandora have rendered irrelevant the “more music, less talk!” lines that DJs once repeated ad nauseam. Townsquare's DJs and programmers have leaned in to talking more over the air, especially about traffic lights, potholes and other issues relevant to local listeners -- including the number of sausage slices on the region's best pizza.

The formula is working for the Greenwich, Conn.-based broadcast group, which boosted its overall revenue by 4% last year and its digital revenue by 20%, adding another $93.7 million in net revenue in the first quarter, an increase of 4.7%. "There's a lot of other people in the industry who have decided to do a lot of syndication. Their view is, 'Great radio is great radio,' and if you can take great radio and push it everywhere, that's the solution," says Townsquare CEO Bill Wilson, who, as a former president of AOL Media, helped build the web portal's now-defunct, Trip Advisor-like "City Guides" in the early 2000s. "Our [strategy] is quite the opposite. We want to be live and local." (Townsquare does syndicate a few of its own shows, mostly at night, including Taste of Country and Ultimate Classic Rock, “leveraging our brands that started online,” says Wilson.)

So, Sweet Lenny spends the winter commenting on Rockford's potholes; WBLM, a classic-rock station in Portland, Maine, loads playlists with songs by the J. Geils Band, rock-and-blues icons from nearby Boston; WRRV, in Poughkeepsie, N.Y., brings promising acts to a local brewpub for Thursday-afternoon simulcasts. "So much of the radio competition has gone either syndicated or voice-track," says Erik Hellum, Townsquare's COO for local media. "It's a key point of differentiation."

And that local programming registers with businesses from the broadcast area. Hellum says 90% of Townsquare stations’ advertising comes from local companies, such as family-owned Clapper Construction in Otego, N.Y., a WRRV sponsor. Their marketing budgets can buy more than local spots. Hellum says advertisers are able to take advantage of a suite of Townsquare Interactive advertising products, including tools that boost Google views and help advertisers build websites. There's even a digital-marketing specialist available to provide search engine optimization.

The local-first concept is so fashionable these days that even major broadcast groups like Entercom -- which became the second-largest station group behind iHeart (based on revenue) when it acquired CBS Radio in 2017 -- are emphasizing it. Tim Murphy, executive vp corporate business development, says Entercom was founded in 1969 on the principles of local radio and has "never wavered." "It's clear within seconds that our DJs drove by the same traffic you did that day; they're raising money for the charity in your town; they can speak [the local] shorthand," he says. "It has now separated us from iHeart in terms of what makes us special."

In the streaming era, every listener has access to the same music, so songs no longer define stations' identities the way they once did. In the last two or three years, programmers have drifted away from tag lines such as "Your Country Station!" toward personalities, even in big markets where it's hard to define local culture. In Detroit two years ago, Beasley Broadcast Group extended the contract for WRIF morning team Dave & Chuck the Freak through 2023; in Washington, D.C., Entercom recently returned longtime local DJs Jason Kidd and Albie Dee to hits station WIAD (94.7 The Drive). "As an industry, we went through a period where we researched a lot and controlled the format tightly -- it was very prepared, very structured, very music-focused," says Steve Newberry, executive vp strategic planning and industry affairs at the National Association of Broadcasters. "A consultant said to me about six months ago: 'You no longer want to be known as the station that plays rock music; you want to be known as the place where people who love rock music hang out.'"

After decades of Big Broadcasting that gave rise to independent promoters that were hired by labels to break singles at the top radio companies, those who promote indie-label singles to radio stations, such as Nashville’s WRLT (Lightning 100), are relieved that the pendulum is swinging back to local radio. "The localization is truly key, because the people they have on the radio in those hyper-focused, localized stations connect with [listeners] -- they're friends with them," says Jeff Ballard, senior vp national promotion for Nettwerk Music Group. "That's how radio was when I was a kid."

That's not to say Townsquare's formula is successful on every level. The company's stock price has dropped by over half during the last five years, to about $6 per share, reflecting Wall Street’s attitude toward the business in general. “They have been a victim of the general malaise of the radio industry. Cumulus and iHeart were in bankruptcy. Most of the headlines have been bad,” says George Reed, a longtime broadcast analyst for the Media Services Group brokerage. “Their small-market focus hasn’t won them many fans on Wall Street. The Street is looking for growth stories and not finding them in the radio sector," he adds. "Radio brings strong, predictable free cash flow to the table, but that metric is not sexy.”

While broadcast advertising revenue has been declining on a national level for several years, stations that emphasize the local touch point say that they've been able to monetize the hundreds of blog posts and videos their DJs and on-air personalities produce on stations websites every day by pairing them with ads. Each of Sweet Lenny's pizza-tasting videos has just 1,000 or so YouTube hits, but they draw ads, such as, recently, a trailer for Rambo: Last Blood, and his WZOK blog pages are festooned with banner ads -- and not just from pizza joints.

In Portland, Herb Ivy, longtime operations manager for classic rock WBLM, used to work for a company that ran hundreds of stations and sent playlists and promotional strategies from its headquarters. When Townsquare took over the station, his corporate superiors changed direction, asking for more local talent and more production, not just of on-air shows but blog posts and social media. “We’re taking radio personalities and teaching them to become digital contributors,” says Ivy, also the station’s morning man known as The Captain. “[When] you [post] an article digitally about something you talk about on the radio, [like] the new water park opening, it will get tens of thousands of unique views on the website. That’s so big and so local. It’s fascinating.”


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