Fall Format Trend Overview

Now that the fall results are in, Radiocrunch President Anthony Acampora launches part one of two-part series that looks inside the numbers. Anthony offers his insight as to where radio's major formats are headed. Results are national format trends provided by Arbitron for the fall book each year since 2001. The change is the five-year difference from 2001 to 2006. This week, Anthony goes inside Top 40, Urban, Country, and AC radio.

TOP 40/MAINSTREAM

Inside The Numbers: While Top 40 shows a decline in the five-year cycle, there is some positive momentum the last few years. The format bottomed out in 2004, but it has since shown some growth -- with increases of 4% 12+ and 8% among adults 18-34. Musically, Top 40 has seen a shift over the last year, with more Pop/Rock music coming into the fold from artists such as Daughtry, All-American Rejects, The Fray, My Chemical Romance, Nickelback, Hinder, and John Mayer. Top 40 is now sharing more music than it has with Hot AC in quite a while, and this will hopefully make skittish sales departments happier.

Our Tip: PPM is going to be a good thing for Top 40 radio. Early PPM results show a more cume-based world. There are a number of major and large markets without Top 40 stations. Will broadcasters with underperforming facilities finally fill these holes in 2007? Seems like a good idea to us.

TOP 40/RHYTHMIC

Inside The Numbers: Rhythmic really saw a boom from 2001 to 2005 -- but slipped a bit in 2006. There were a couple of key reasons:

1. Latin Urban: A number of larger Hispanic markets saw the debut of the Latin Urban stations, which definitely pulled some serious TSL from market leading Rhythmic stations. Latin Urban stations in New York, Los Angeles, Chicago, Houston, Miami, and Phoenix had varying degrees of success, but they definitely affected their Rhythmic counterparts.
2. Top 40 radio spent parts of the year very rhythmic in nature.
3. Lack of new sign-ons.

Our Tip: Rhythmic also suffered through a bit of a Hip-Hop down cycle. Many of the superstar acts they had at the end of the year -- like Justin Timberlake and Akon -- were moving to Top 40 quickly. While there have been times in the last few years when Rhythmic and Urban were very close, there were some differences in the second half of 2006.

Moving into 2007, we could see the format bounce back as Top 40 moves more into a balanced musical approach -- and the major Latin Urban stations move back down. Stationwise, there aren't a huge number of markets with Rhythmic holes, although there are holes in some markets where you wouldn't expect. Will the conservative thinking of these markets change enough to embrace this format in 2007?

URBAN

Inside The Numbers: For the most part the Urban format has held pretty well, especially since Rhythmic and Urban AC (see below) have seen tremendous growth. Strong heritage Urban stations have been able to differentiate themselves enough from their Rhythmic competitors with a very female-friendly sound.

Our tip: Urban must continue to find ways to differentiate from Rhythmic and Urban AC. The latter remains a gold-based format, so Urban can still lead on ballads and female friendly mid-tempo product. One issue facing Urban in some major markets is the continued growth of the Hispanic population. While there are growth markets for Urban radio, there are some where we may have one station too many. However, there are at least three markets that come to mind where there are glaring opportunities for the right broadcaster to launch an Urban station and own that audience.

URBAN AC

Inside The Numbers: This is a format that we have been a proponent of for years. Radio One, Clear Channel, Cumulus, and Citadel have all been wise with significant investments in this format.

However, the story in 2006 was simple: Steve Harvey. In a format that has been dominated by Tom Joyner, Harvey came in and single-handedly grew shares for dozens of stations. To credit Joyner, he has also held his own, and what we've seen is a solid expansion of shares where Joyner and Harvey go head-to-head.

2006 was also a key year in the Urban world, as for the first time Mediabase has a larger Urban AC panel than Urban -- a real sign of the times.

Our tip: 2007 will be another year of growth for Urban AC. Markets with just one could see a second, and we will be interested to see how this plays out.

COUNTRY

Inside The Numbers: Despite the fact that we hear more about Country's loss of stations the last several years in New York, Los Angeles and San Francisco, the format continues to thrive in medium and smaller markets, and we've seen additional Country stations in some top 50 markets.

Over the last year or two, we've seen new Country competitors come on in Detroit, Atlanta, Seattle, Tampa, Denver, Sacramento, Las Vegas, and Indianapolis to varying degrees of success. In Seattle, Entercom's KKWF is now in a horse race with CBS's KMPS. KCYE/Las Vegas, WLHK/Indianapolis, and WFUS/Tampa are also making serious noise. And the end of the year saw Citadel's KATC/Colorado Springs explode on to the scene and beat heritage KCCY, while WYOK/Mobile made inroads against powerhouse WKSJ.

Our tip: Country is a format that is very market-specific. The format has yet to find an outlet in some of these major markets. Debt service and Wall Street have put so much pressure on broadcasters that few of them are willing to take a chance to fill that hole, because ratings and cash flow have a limit. However, we know that Country does have a strong power ratio, and if you set realistic goals, the format can -- and will -- deliver cash flow.

AC

Inside The Numbers: The numbers for AC are seriously skewed in the fall. While you can see growth of 13% since 2001 (the first year AC went Christmas music en masse), the format is steady at best.

To give you a better gauge, the summer 2006 book showed the format at a 7.3 share nationally, but it got the Christmas spike of nearly 19%. AC is probably the only format that has the TV version of a sweeps stunt with the "holiday follies."

Our Tip: While AC continues to get that holiday bump, they never seem to be able to keep the audience once they go back to regular programming. As the Oldies format moves more into the '70s and '80s, this could become a legitimate threat to AC. In addition, the Mainstream AC audience simply isn't getting any younger.

We've taken two Soft AC clients over the last three years and successfully moved them significantly younger by adjusting their musical approach. One client went from 10th to 1st 25-54 in 18 months. The other saw increases of 43% 25-54 and saw its 10-year age range move from 61-70 to 35-44.

AC must continue to evolve with its audience, or it could wind up on the endangered list, like Oldies.

HOT/MODERN AC

Inside The Numbers: Hot and Modern AC continue to take a beating. While the 16% decrease the last five years 12+ isn't good, the big concern is the enormous 35% drop the format has seen among adults 25-54. While some of the struggles in the fall are related to TSL loss to AC, it goes much deeper than that.

The format has not had a lot of strong current product. While we did see that change in 2006 -- thanks to The Fray, Snow Patrol, K.T. Tunstall and John Mayer (to name a few) -- Top 40 competitors began to pull these songs from Hot AC. The move of Top 40 to a more adult and Pop/Rock lean was not a good thing for Hot AC.

Also, Hot ACs that traditionally have been the outlet for '80s music have been getting hammered by the launch of Adult Hits stations in a number of markets. Bonneville's successful launch of Adult Hits WARH/St. Louis appears to have played a key part in the demise of sister Modern AC WVRV. KFMB-FM/San Diego, one of America's highest-profile Hot ACs, became "Jack-FM" in 2005 after the loss of its morning show to Hot AC rival KMYI.

Our Tip: One of the benchmarks for Hot AC stations has been their morning show (see WPLJ, WTMX, WBMX, KMYI, KMXB, WLNK, and KCIX, just to name a few). This format has to develop great, compelling morning talent to win, because they are being hit on all sides musically.

In the Modern AC heyday of the mid- to late '90s, the format was more current-based. As we moved into the new millennium, we saw a shift to a more gold-based approach. The Clear Channel "Mix" stations were loaded with recurrents and gold, but it has worked.

As we move into 2007, there may be a reversal on this trend. KYSR/Los Angeles, a station that was a leader in the format for a long time, had slipped considerably. It has now gone into a more current-based direction. Early results show some growth, and we will have to watch to see if it is successful and to see if this more musically aggressive approach will translate into other markets.

The traditional thought that 25-54 women "know what they like" and "like what they know" tells us that going more current-based is risky. But, for a format in serious decline, it's an experiment we will be watching closely.

NEXT WEEK: Rock Formats, Oldies/Classic Hits, Latin, and News/Talk.