Rumors have been circulating for a little over a week now regarding whether or not Air America Radio (AAR) will be able to continue broadcasting through their flagship New York City affiliate WLIB. That potential trouble has led us to ask: "How important is being able to broadcast locally in New York City to AAR?"

To get a sense of what the potential impact of losing its voice in New York City might mean, we went mining through the publicly available radio ratings databases maintained by Arbitron and Radio & Records, looking to see how AAR's local affiliates are faring in the Top 100 radio markets in the U.S. Our goal – to get a good approximation of the size of AAR's listening audience in their largest markets.

We started with Wikipedia's list of AAR's local broadcast affiliates (with some adjustments, outlined later in this post), and looked at each affiliate's ratings performance over the four most recent survey periods (the most recent, Winter 2006, is only partially complete at this point), which provide a year's worth of ratings data. We found the average rating for each market over these survey periods, as well as the average rating for rating period for all these markets.

The ratings represent the percentage of each local market's listening population (Age 12+) over an Average Quarter Hour (AQH) time period. To estimate the potential size of AAR's audience in each of its local markets, we took the average rating for each market (treating it as a percentage) and multiplied it by that market's Age 12+ potential listening population.

We've summarized our results in the following dynamic table. You may click any of the column headings to sort the data from low to high or vice versa (by clicking the column heading again).

AAR's Ratings in the Top 100 Radio Markets, SP05-WI06

Rank	State	City	Station(s)	Age 12+ Pop.	SP 05	SU 05	FA 05	WI 06	Avg.	Estimated Audience
1	NY	New York	WLIB 1190 AM	15,332,000	1.0	1.2	1.4	1.4	1.25	191,650
2	CA	Los Angeles	KTLK 1150 AM	10,790,100	0.8	0.9	0.7	0.8	0.80	086,321
3	IL	Chicago	WCPT 850 AM	07,698,300	0.4	0.7	0.8	0.7	0.65	050,039
4	CA	San Francisco	KQKE 960 AM	05,829,700	1.2	1.2	1.2	1.2	1.20	069,956
5	TX	Dallas-Fort Worth	KXEB 910 AM	04,730,200	0.5	0.0	0.0	0.0	0.13	005,913
8	DC	Washington	WWRC 1260 AM	04,132,800	0.4	0.0	0.5	0.4	0.33	013,432
9	MI	Detroit	WDTW 1310 AM	03,892,600	0.4	0.0	0.5	0.7	0.40	015,570
10	GA	Atlanta	WWAA 1690 AM	03,860,100	0.7	0.0	0.4	0.4	0.38	014,475
11	MA	Boston	WKOX 1200 AM & WXKS 1430 AM	03,841,100	0.6	0.7	0.7	0.8	0.70	026,888
12	FL	Miami	WINZ 940 AM	03,505,100	2.0	1.5	1.9	1.6	1.75	061,339
14	WA	Seattle	KPTK 1090 AM	03,204,800	1.4	2.0	2.3	2.7	2.10	067,301
15	AZ	Phoenix	KXXT 1010 AM	02,938,500	1.1	1.5	1.2	1.1	1.23	035,997
16	MN	St. Louis Park	KTNF 950 AM	02,632,400	1.0	1.2	1.1	1.1	1.10	028,956
17	CA	San Diego	KLSD 1360 AM	02,484,900	1.7	1.8	3.1	2.5	2.28	056,531
22	CO	Denver	KKZN 760 AM	02,157,700	2.0	1.9	1.8	1.4	1.78	038,299
24	OR	Portland	KPOJ 620 AM	01,963,400	4.5	4.4	4.1	N/A	4.33	085,081
27	CA	Riverside	KCAA 1050 AM	01,799,900	0.0	0.0	0.0	0.0	0.00	000,000
28	OH	Cincinnati	WCKY 1530 AM	01,705,200	0.8	1.3	1.3	0.9	1.08	018,331
30	TX	San Antonio	KTXX 103.1 FM	01,552,100	0.0	0.0	0.0	0.0	0.00	000,000
38	OH	Columbus	WTPG 1230 AM	01,401,300	1.0	0.9	1.1	0.9	0.98	013,663
42	TX	Austin	KOKE 1600 AM	01,204,800	1.1	0.7	0.8	1.2	0.95	011,446
43	NC	Chapel Hill	WCHL 1360 AM	01,143,700	0.0	0.0	0.9	0.6	0.38	004,289
47	LA	New Orleans, Baton Rouge *	WSMB 1350 AM, WYNK 1380 AM	01,608,400	1.0	1.2	0.0	0.0	0.54	008,645
49	TN	Memphis	WWTQ 680 AM	01,047,900	0.8	0.5	0.5	0.5	0.58	006,025
52	NY	Buffalo	WHLD 1270 AM	00,989,400	0.0	0.0	0.0	0.0	0.00	000,000
54	NY	Rochester, NY	WROC 950 AM	00,941,600	0.9	1.4	0.8	N/A	1.03	009,730
63	HI	Honolulu	KUMU 1500 AM	00,774,500	0.4	0.0	0.4	N/A	0.27	002,065
66	CA	Fresno	KFPT 790 AM	00,711,700	0.4	0.4	0.4	0.4	0.40	002,847
67	MI	Grand Rapids	WTKG 1230 AM	00,703,400	1.0	0.8	1.2	0.9	0.98	006,858
70	NM	Albuquerque	KABQ 1350 AM	00,654,200	2.4	1.6	2.2	N/A	2.07	013,520
73	OH	Akron	WARF 1350 AM	00,597,200	0.0	0.0	0.0	0.0	0.00	000,000
74	FL	Bradenton	WSRQ 1450 AM	00,591,500	1.1	N/R	1.1	N/R	1.10	006,507
76	TX	El Paso	KHRO 1650 AM	00,573,600	0.9	1.0	0.6	0.6	0.78	004,445
79	CA	Monterey	KOMY 1340 AM	00,555,100	0.4	0.0	0.4	0.6	0.35	001,943
82	MA	Springfield	WHNP 1600 AM & WHMP 1400 AM	00,533,700	1.8	2.6	N/A	N/A	2.20	011,741
90	SC	Columbia	WOIC 1230 AM	00,485,400	0.9	0.9	0.9	0.5	0.80	003,883
96	WI	Madison	WXXM 92.1 FM	00,461,700	1.7	2.3	3.8	N/A	2.60	012,004
96	WA	Spokane	KPTQ 1280 AM	00,461,700	1.3	1.0	2.0	N/A	1.43	006,618

AAR's Estimated Average Audience and Ratings in the Top 100 Radio Markets
Age 12+ Population Sum	SP 05 Average Rating	SU 05 Average Rating	FA 05 Average Rating	WI 06 Average Rating	Overall Average Rating	Estimated Audience
99,491,700	1.0	1.0	1.1	0.8	0.96	992,308

Crunching Numbers

Wikipedia's list of AAR's local affiliates includes 84 radio stations, of which 47 are in the top 100 U.S. radio markets. After adjusting the list of affiliates (see below), we looked at the ratings data for some 40 stations in 38 radio markets. In these markets, the total Age 12+ potential listening population is 99,491,700. AAR's average rating share of this potential audience is just under 1.0 (at 0.96) which, if taken as a percentage of the total Age 12+ population, would represent an audience of 992,308 people for an Average Quarter Hour (AQH).

AAR's New York City affiliate WLIB accounts for nearly one-fifth (19.3%) of its estimated audience in the Top 100 U.S. radio markets. AAR's next two largest audiences may be found in Los Angeles (8.7%) and Portland, OR (8.6%). Rounding out AAR's top 5 markets are San Francisco (7.0%) and Seattle (6.8%).

Interesting tidbit: If we applied a 1.0 rating share to AAR's remaining markets, we would only add somewhere between 60-70,000 more listeners to the total above!

What Losing NYC Would Mean to AAR

Money is largely made in the radio broadcast business through advertising, and advertising dollars are divvied out according to not just the size of a radio station's audience, but the demographics of who is actually tuning in. We can assume that AAR's core listening audience reflects pretty much the same demographic grouping from market to market, so the financial impact of losing a broadcast affiliate will therefore be directly proportionate to the relative size of its audience.

We therefore estimate that the reduction of AAR's total advertising revenue arising from no longer being able to broadcast on its current affiliate in New York City will be on the order of 18 to 22%. The reduction in total operating revenue may be mitigated by switching to another radio station in the New York City radio market, but the degree to which AAR may be successful in obtaining an equivalent broadcast outlet remains uncertain.

What AAR's Management Should Do

If AAR is in the broadcast business for the purpose of making money in the broadcast business, AAR's senior leadership should focus first upon obtaining a broadcast outlet in the New York City market. Even if the only available options for broadcasting are stations that lack equivalent signal strength to reach throughout the region compared to AAR's current affiliate WLIB, the size of the NYC market and the potential advertising revenue it represents is simply too large to write off. Ratings 50% lower than what AAR produces in NYC today would still represent an audience greater in size than its next two largest markets.

The rest of the strategy AAR must follow would be dictated by its overall business health. If AAR were generating enough revenue from its operations to overcome the network's operating expenses, AAR could easily weather the loss of its NYC affiliate (this does not appear to be the case.) Instead, AAR's operating costs appear to outweigh its operating revenue (even before the loss of its current NYC affiliate), which means that AAR's management needs to take immediate steps to bring those costs down substantially to be in line with its looming reduced level of revenue.

AAR needs to focus upon getting the biggest return in revenue for each dollar it spends to stay in business. For example, programming whose cost to produce significantly outweighs the relative amount of revenue it brings in to the network will need to be eliminated or substantially revamped.

AAR could, in the interim, continue operating as it does today, but the impact would be to significantly increase its effective cash burn rate, setting it upon a course toward bankruptcy, sooner. Even with additional cash infusions from "white knight" investors, there's little business sense it keeping a business afloat if it isn't at least operationally profitable, and it makes even less sense if its management takes no steps to make it so.

Unless, of course, AAR is continuing in the broadcast business for some purpose other than that of making money in the broadcast business. If that's the case, their troubles may only be beginning.

Previously on Political Calculations

The Future of Air America

We kicked off our series of posts analyzing Air America Radio viability as a business with this post. We really didn't think it would go much further than this!

Air America, Again

We found that AAR doesn't just have competition from the right - it has it on the left as well....

The Financing of Air America Radio

A throw-away post that let us fill space with some information on where AAR got its financing that we had come across in our previous analysis.

Time to Harvest or Divest

As AAR appeared to be running into significant turbulence, we updated our original strategic business analysis, finding that what AAR's management needed to do was to find "white knight" financing or to start making moves to significantly cut its costs.

A Top Ten Countdown

We couldn't resist applying a list a bankruptcy lawyer came up with for a failing company to AAR's known problems - lucky thing AAR has benefitted from the generosity of multi-millionaires with deep pockets.

Profiles in Semi-Obscurity

Another space-filler post where we just unloaded background information about various members of AAR's Board of Directors that we had come across in previous analysis.

And Since This Post....

A Bigger Footprint

An intrepid e-mailer let us know that AAR's flagship affiliate WLIB had a bigger footprint than just the New York City market - plus, we find that roughly half of AAR's audience is in just five cities.

Profiling a Handful of AAR's Local Affiliates

Once again, we unload information we collected in other analysis. This time, we estimate just how many local AAR affiliates there are by determining where they're not.

Adjustments Made to List of Affiliates

Wikipedia's list of 84 AAR affiliates (accessed on March 10, 2006) was not as up to date or as accurate as we might have hoped. The following adjustments were made for this analysis:

Listed Affiliates Not Carrying Sufficient (or Any) AAR Programming

We omitted any listed AAR affiliate from this analysis that carried fewer than five hours of AAR programming on weekdays (not including rebroadcasts). We did so since the ratings for these stations would most likely be the result of the station's other programming. This excludes the following stations:

• KSRO 1350 AM – San Francisco, CA (4).
• WPTT 1360 AM - Pittsburgh, PA (23).
• WTAM 1100 AM - Cleveland, OH (25).
• WHJJ 920 AM - Providence, RI (36).
• WJNO 1290 AM - West Palm Beach, FL (46).
• KRXA 540 AM - Salinas/Santa Cruz, CA (79).
• WMAS 1450 AM - Springfield, MA (82).

We did include affiliates that broadcast just five hours of AAR programming per weekday. In the top 100 radio markets, these stations include:

• KUMU 1500 AM – Honolulu, HI (63).
• WARF 1350 AM – Akron, OH (73).

Adding Affiliates Not Listed

We added former Phoenix affiliate KXXT 1010 AM (15) since it only recently stopped broadcasting AAR programming.

Affiliates Not Broadcasting AAR Programming Long Enough

We removed Sacramento affiliate KCTC 1320 AM (26) since it did not broadcast AAR programming during the Spring, Summer and Fall 2005 rating periods.

Combining Ratings for Affiliates

We combined the ratings for AAR's two affiliates in Boston (11). We also combined AAR's two affiliates that are in close proximity to each other in the Springfield, MA (82) radio market.

We've also combined the ratings for New Orleans (47) and Baton Rouge (83), this time by averaging the ratings of both cities together, while only adding the population figures. This is a special case, which we justify doing given the mass relocation of people from New Orleans to Baton Rouge following September 2005's Hurricane Katrina.

Other Notes

Ratings of Zero

Now, about those stations that have ratings equal to zero. The obvious question that might be asked about these stations is "If the ratings are zero, does that mean that nobody is listening?" The answer is that might indeed be the case, but it would be highly unlikely! Given how the ratings are measured, it's much more likely that the survey simply missed capturing an adequate number of members of the station's audience to be recorded. It's mainly an indication that substantially fewer people are tuning in compared to other stations with measurable ratings in the same survey.

It's also very likely that across the spectrum of AAR's broadcast affiliates, some affiliates are "over-represented" much as these stations are "under-represented." Both these effects should cancel each other out in the big picture, leaving a relatively small error in the size of AAR's total listening population.

Age 12+ Population

We used the Age 12+ Population since it's readily available in the publicly available databases of radio ratings. We justify using this data (as opposed to specific demographic data that measures the real audience for a radio station) since we're trying to gauge the size of a potential listening audience – as opposed to allocating advertising dollars according to who's actually listening (which is why the more detailed data is collected!)

Stations with Less than 100% AAR Programming

Using the publicly available radio databases, we can't drill down into the data enough to see how many listeners for a given station are listening to their AAR programming content. We therefore assumed that the station's overall ratings are shared by their AAR content.

Labels: business

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