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Sports radio’s grand slam

The format is coming to dominate local radio. But is it about profitability, market share, or prestige?

Illustration by Dave Wheeler
Hit the scan button on your car radio and odds are it will stop on
a sports station.

For radio, it is not the best of times. The industry was hit hard by the long national recession and continues to face unprecedented competition from iPod and Internet music services. But among the carcasses and desperate cases is a diamond. Or should we say a gridiron? 

Hit the scan button on your car radio and odds are it will stop on a sports station. Or a sports broadcast. Or a sports talk show. In a weakened industry, sports radio has never been so strong. Twenty-five years ago the Twin Cities had no full-time sports station; today it has three, plus two others for which sports is a primary audience driver. No single format has as many outlets on the local dial.

Yet sports remain a niche offering, attracting a predominantly male audience, and a mostly middle-aged one at that. Which raises questions about why sports has emerged to dominate local radio and whether its current prominence (and that of the stations that air it) is sustainable. 

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“It’s a pretty simple calculus, actually,” says Dan Seeman, vice president and market manager for Hubbard Radio (1500 ESPN, KS95, MyTalk) in the Twin Cities. “With sports comes passion. There’s a new storyline every day. Sometimes it changes hourly. From a programming standpoint, it’s the gift that keeps on giving.”

In that respect, sports radio is the direct beneficiary of ESPN’s 24-hour global news cycle. “The country’s fixation with sports is not ebbing,” says Minnesota Twins President Dave St. Peter. “Sports provide the ultimate in reality programming.”

Listeners who pay attention

Radio makes its revenue from advertising, not listeners. But the kind of listening that sports radio elicits is the most compelling to advertisers. “Those formats have an attentive audience,” explains Jen Walz, media investment supervisor at Campbell Mithun advertising’s Compass Point Media. “There’s higher time-spent-listening as well. And they don’t engender the turnover at commercial breaks that you get from music formats.”

“Sports is known as a good format for advertisers,” says B. Eric Rhoads, chairman of Radio INK, an industry trade publication. “It’s a lucrative money maker because it commands what we call a ‘power ratio.’ Stations with a high power ratio can command three to four times [standard revenue] for a ratings point.”

Consolidation fever

Deregulation in broadcasting has led to concentration of station ownership. The Twin Cities radio market is dominated by a handful of big national players.

  • Clear Channel Communications (San Antonio, Texas) Local properties: KFAN-FM, Cities 97, K-Talk, K102, KDWB, Kool 108
  • CBS Radio (New York) Local properties: WCCO Radio, Jack FM, Buz’n Country
  • Cumulus Media(Atlanta) Local properties: 105 the Ticket, KQ92, 93X
  • Hubbard Radio (St. Paul) Local properties: 1500 ESPN, KS95, MyTalk

There are downsides to a live and local sports format. Sports radio operates with substantially more programming talent and subsidiary staff. “It’s undoubtedly among the most expensive formats to run,” explains Seeman. 

And the audience that advertisers are paying for is relatively one-dimensional. “It’s a male, 25-to-54 audience, largely,” says Walz. “It doesn’t do well with teens.” But as men age, “all the data shows they tend to gravitate away from exclusively music to spoken-word radio,” says Scott Jameson, operations manager for Cumulus Media’s Twin Cities broadcast group (KQRS, 93X), which includes new sports format the Ticket (105 FM). 

The rise of sports radio in the Twin Cities is intriguing, because this has never been known as a hard-core sports market. “We’re not a working-class town like the most rabid sports towns are,” says Judd Zulgad, who co-hosts mid-mornings on Hubbard Radio’s 1500 ESPN. “People have other things to do with their time, and the income to do it.”

We’ve also not been home to many championship teams; winning tends to drive interest and passion. “In fact, we haven’t had many good teams, period,” notes Dan Barreiro, afternoon drive host on Clear Channel Radio’s KFAN-FM. “But I think sports radio provides a form of therapy and a place to vent.”

In the Twin Cities, KFAN is the dominant sports format in revenue and demographics, but as parent Clear Channel struggled with leverage accrued in waves of ownership consolidation (it owns six Twin Cities stations), it shed employees and managers. Two of KFAN’s founding executives, Seeman and CBS/WCCO Radio’s Mick Anselmo, departed to manage KFAN’s direct competitors. They now seek to dethrone what they helped build. 

All in all, it’s a relatively unusual dynamic. “I’ve not seen markets [of the Twin Cities’] size where there are so many sports stations,” says Mark Fratrik, chief economist for the national consulting firm BIA/Kelsey, which analyzes media businesses.

It’s a competitive landscape that demands a scorecard and a playbook.

Who has staying power?

From the ratings and revenue grids, it’s clear which signals draw the largest audience and reap the greatest revenues for their owners, but in a world of fickle formats, do all five of these stations have what it takes to stay in sports? 

KFAN 100.3 FM: The ’FAN lights the fire

Relatable, everyman approach has struck a chord with local fan base. Read Story

KTWN 96.3 FM: The Pohlad radio play

Does ownership have long-term commitment? Read Story

The Ticket 105 FM: Ticket to a trimulcast

Is four hours of local programming per day enough to make a dent? Read Story

WCCO Radio 830: A resurgent neighbor?

Reacquiring Vikings for 2015 would be a game-changer. Read Story

ESPN 1500 AM: Live, local, and laboring

A haven for hard-core fans, but perhaps too analytical and detached a take for many listeners. Read Story

Perhaps not profitably so. “Our experience is you can’t make money in a market in sports if you’re not number one or two,” says Radio INK’s Rhoads. That’s KFAN and WCCO by most measures. 

WCCO is a unique case, because it is acknowledged to be profitable, but has seen its sports content diminish. Anselmo, unwilling to give up the mantle of go-to sports station, says observers should keep an eye on the Vikings broadcast contract (currently held by KFAN), which is up for grabs for the 2015 season: “It will take them into their new stadium, it will be a big deal. The question is who is going to be able to afford it, who is going to have that freedom?” And he smiles.

Being privately held and locally owned, KTWN and its owners, the Pohlad family, can play a long game, whether, as the supposition goes, ownership is biding its time waiting for Hubbard or CBS to get desperate to buy another FM signal, or it is truly trying to blaze a new format trail with baseball and “community,” as they market it.

The Ticket and ESPN 1500 have little in common as formats, though much as business ventures, but they are both the poor sisters in ultra-profitable local radio groups. The low-overhead, high-synergy Ticket needs merely to exist and provide its male-focused audience an outlet for Cumulus advertisers who want a sports audience. 

Hubbard’s 1500, with its high overhead, lack of football or baseball, and AM signal, seems the most vulnerable—except that the Hubbards, like the Pohlads, can afford to be patient because they are privately held and 1500 has the added factor of the Hubbards’ strong emotional connection to a heritage station.

Greg Gerlach has his doubts. He’s the general manager for the Gopher Sports Properties division of Learfield Sports (which produces and markets sports play-by-play for the university) and, he says, “I’m not sure the market can support four to six sports-oriented formats.”

For now, though, it appears the market doesn’t have to.

ratings chart
Courtesy of Twin Cities Business

The play-by-play gamble

One of the great ironies of sports radio is the pitched battles that go on between stations for the rights to air often unprofitable team broadcasts. Stations pay large sums for these rights and then rely on indirect economic benefits. There is debate within the industry about the relevance and utility of play-by-play.

“You can build with or without it, but you need play-by-play to build audience quickly,” says Clear Channel’s Gregg Swedberg. “We like it because it brings new people to the station.” Football, and to a lesser extent baseball, are appointment listening, where fans will seek out a broadcast regardless of whether they regularly listen to the station. Clear Channel’s Market President Mike Crusham says stations that act as a team’s radio home benefit with access to coaches and players for station programming.

Odds are, as Hubbard Radio’s Dan Seeman explains, when you get in your car the next morning, it will be turned to the station you listened to for the game last night—in which case you’ll be exposed to its programming and maybe become a regular listener. “When a team is playing well, it can add half a million listeners” to the monthly audience, Seeman says. So when Hubbard lost the Twins, they lost a lot of sampling. 

In the past, sports teams paid their way onto a radio station with a rights fee, and then sold the ads, but that’s archaic. “It was getting too hard to make your nut,” says CBS Radio’s Mick Anselmo, “because a broadcast outlet can’t offer signage, suites, tickets, experiential perks.”

Nowadays stations often pay for the rights to air a team, and the team controls ad sales and produces the broadcast. Sometimes the station gets a cut, other times it only benefits by exposing listeners to promotions for its programs and perhaps keeping them around for sampling. 

“Unlike television, the radio sports broadcast model is still about advertising revenue,” explains the Twins’ Dave St. Peter. “And nobody sells the Twins better than the Twins.” But not all stations want play-by-play. St. Peter says as stations invest more in talent, they can be reluctant to give up dozens of program slots per month for what is essentially a three-hour advertisement for a sports team. 

Twin Cities BusinessThe other area of conflict that can arise is when stations criticize teams whose games they air. The Vikings, under owner Red McCombs, notoriously dropped KFAN for several years after needling from Dan Barreiro. “I give our management a lot of credit,” Barreiro says. “No one ever asked me to tone it down.”

The Twins were also tolerant, during the Hubbard era, of derision from the station’s air talent during two near-100-loss seasons in 2011 and 2012. “We have to have a thick skin,” says St. Peter, “but the positives outweigh the negatives.” Namely, it’s better to be talked about than ignored.

Is AM radio doomed?

For years, it’s been an accepted premise that spoken-word formats were the province of the AM band, providing it with a measure of stability. But with three of the local sports broadcasters now on FM and sports and talk stations making the move nationwide, the industry is questioning the future of AM radio. “It’s not clear that the industry can protect the band anymore,” says B. Eric Rhoads of Radio INK.

And there is a growing ad rate disparity between the bands, says economist Mark Fratrik. 

revenues chart
Courtesy of Twin Cities Business

Which is why the Twins wanted so badly to be on FM. “There are advantages in being where the listeners are,” says Twins President Dave St. Peter. “And it becomes increasingly difficult to bring listeners back to AM as more formats move to FM.”

Even WCCO Radio’s Mick Anselmo agrees, sort of: “The only station in this market not challenged by being on AM is WCCO.” 

The hope for AM is technology. “AM is challenged right now,” admits Hubbard’s Dan Seeman. “In a battle with FM, AM is not fully equipped. But in streaming, in mobile, it’s a fair fight.” He hopes that as car technology improves, AM stations will be able to be streamed at the same sound quality as FM.

This article is reprinted in partnership with Twin Cities Business.