Small/Medium Market Revenue Survey

As you know, we’ve been conducting our own survey to attempt to answer the question, "How does small-market revenue performance differ from the revenue numbers gathered from Markets 150 and larger?"

We posted the survey online and sent email invitations to managers and sale managers of every station in markets smaller than 150, including, of course, unrated markets.

What Have We Learned?

While the response was disappointing, the project has been instructive. Some lessons:

1. The consistency among individual responses leads us to believe that the aggregate results are probably fairly close to the truth.

 
2. Getting responses was extremely difficult. Likely reasons:
   1. Operators, especially in small markets, are busy.
   2. Most large group operators do not release their numbers as a matter of policy.
   3. Some operators were suspicious of the motives and/or privacy of the survey.
       
3. We can infer, then, that most of those who did participate were independent operators.

 
4. It has been suggested that the respondents would tend to be those with positive news to report; while the first-quarter responses tend to disprove that hypothesis, it does expose one of the many ways bias could be introduced into this type of survey.

Where Do We Go from Here?

We have been working quietly with small- and medium-market leaders—many of whom are on the boards of the NAB and the RAB—and with representatives from broadcast accounting and investment firms to encourage a large-scale effort to gather revenue numbers that are credible and statistically significant.

The open questions are

1. Can we get better participation? To do so, we have to convince groups like Cumulus—which this week announced they would no longer release numbers for their stations in Markets 100+—to play ball. This may prove difficult, but we hope that they can be made to understand why such a survey can benefit them.
    
2. Will the survey be balanced and inclusive? At least one of the firms interested in doing such a survey is proposing going first and foremost to the larger groups, counting on economies of scale—e.g., one number representing dozens of stations—to boost response and reduce cost. Notwithstanding the difficulties of getting the larger groups to participate, we still need some way of capturing data from the thousands of smaller operators for the results to be useful.
   
   Perhaps the best way ensure balance is for each of several entities to gather data from the industry segment in which it has the most visibility and credibility—e.g., the “name” accounting firms can get numbers from the big groups, while we at SMRN can get numbers from smaller groups and independent operators. All of the data flows into one company with impeccable credentials; they crunch the numbers and release the results.
    
3. Will the project be worthwhile for the firm(s) conducting the survey(s)? When they survey larger markets, those firms can and do sell products and services to the stations and groups in those markets. There are little or no such opportunities in smaller markets. The likelihood is that the industry will have to cover the costs—whether through our national associations, participating companies and/or benefactors.

There is a strong justification for such a survey, and there is a lot of interest among small- and medium-market leaders. But there are issues that need to be resolved. The words of Dr. Robert Schuller come to mind: “Don’t confuse decision-making with problem-solving.” Make the decision based on the merits; then solve the problems.

That, in a nutshell, is my exhortation to the industry: Let’s do this.

PS: Be Careful What We Wish For

According to CL King analyst Jim Boyle, “Investors have ignored the better small-market out-performance, versus the radio industry’s cyclical and secular decline.” He is advocating that Big Money invest in small markets.

I’m for anything that will make it easier for good broadcasters to secure the financing they need to build and grow, but do we want small-market radio to be subject to the forces that plague large-market radio?

I for one do not. I for one believe that a big reason smaller-market radio performs better is the absence of constrictions and the freedom to take chances, to try new things. If we lose that, we stand to lose our performance advantage as well.