Globe: 'Why AM Stations are Disappearing' - Puget Sound Radio Dot Com

RADIO SILENCE: Kingston, Ont., is the latest city to lose its AM radio stations, but it likely won't be the last. Tired of stagnant revenue and tiny profits, broadcasters are jumping to the FM dial every chance they get
by GRANT ROBERTSON
Globe & Mail Report on Business
MEDIA REPORTER

February 6, 2008

Almost 30 years of Ray Bergstrom's life have been spent as a disc jockey on AM radio. But the most agonizing music selection he ever made came last month when he chose Roy Orbison's It's Over to be the final song played on Kingston's 960 AM.

Oldies 960 was abandoning AM for the smoother-sounding - and far more profitable - FM dial. The station, owned by Corus Entertainment Inc., would remake itself as Lite 104.3 FM, and in January the AM station signed off for good, sinking into a static abyss.

It is a growing reality in the radio industry these days as broadcasters seek regulatory permission to flip AM stations to FM, where profits and audiences are bigger and the signal is more reliable in urban centres.

The industry has seen the trend coming for a long time, but Kingston is ahead of the curve. When Oldies 960 jumped, so did the other two AM stations in town. For the first time since the dawn of radio there, AM is off the air.

"For people like me who grew up in the sixties and fell in love with AM radio, it's the death of something near and dear," Mr. Bergstrom said as he programmed adult contemporary tracks for Lite 104.3's afternoon show.

Bittersweet in so many ways for the industry, since most broadcasters see little future in AM outside of the largest urban centres where news, talk and sports stations find success, but music formats struggle to make a profit.

Most of Canada's biggest radio broadcasters have either been approved to flip at least a few of their AM stations in certain markets, or are awaiting clearance to do so. Some other small Canadian cities, such as Thunder Bay, have also seen the AM dial fall silent.

Figures kept by the Canadian Radio-television and Telecommunications Commission indicate there were 178 commercial AM stations at the start of 2007. This is outside of the CBC, which is a public broadcaster. However, at least a dozen stations a year have been seeking to flip.

Were it not for limited space on the FM dial in major markets, coupled with restrictions on how many FM stations a company can own in any one market, AM stations in Canada would be dwindling even faster, several broadcasters say.

In addition to Corus, Rogers Communications Inc., CTVglobemedia Inc., Pattison Broadcasting Group Ltd. and the CBC are all looking to switch wherever there's an unclaimed frequency.

"This is going on in markets everywhere, and it's safe to say that everyone with AM operations that hasn't found a profitable niche is looking seriously at doing something about their AM stations," said Duff Roman, acting head of radio for CTVglobemedia, which acquired CHUM Ltd.'s radio network last year.

At stake is the profitability - if not the viability - of a station. The average AM station makes $118,000 a year, while the average FM station pulls in $659,000. Not surprisingly, the number of AM stations has been steadily eroding. The 178 AM stations represents a 40-per-cent drop from the 287 that existed a decade earlier.

Meanwhile, FM stations have more than doubled to 419 from 192 in 1996, owing to a mix of stations moving over from AM and a willingness by the CRTC to grant licences for new FM stations.

A move by the CBC to shift several of its AM stations to FM, or at least operate them simultaneously on both dials, has sped up the trend, some executives say, since the CBC takes big audiences with it when it moves to FM.

"The fact is, about 80 per cent of all people under age 54 do not listen to AM," said John Hayes, president of Corus Radio. "The CBC has been very effective in moving their services to FM because they know that's where the audience is. So we've been all over the commission to allow us to flip AM to FM where we can."

The CBC, which is applying to exchange its Vancouver AM station for three FM signals that will cover the same area of southwestern B.C., says the move is more about signal disruption than audiences.

"AM still has tremendous advantages over FM on the distance it's able to cover," said Ted Kennedy, chief of staff for CBC English Radio. "But the issue we're having, and it's an issue facing everybody, is that with modern construction techniques in major urban centres, AM doesn't penetrate the buildings as well."

But the biggest hurdle in big cities is scarcity of available signals on the FM dial. In downtown Vancouver, there is only one spot remaining on FM and rival broadcasters would also love to have it.

"FM is a much more valued signal," said Rael Merson, president of broadcasting for Rogers, which has converted stations in Victoria and Winnipeg. "When the product you are selling is music, the quality of the audio is of paramount importance."

Ownership rules limiting broadcasters to a pair of English and French FM stations in any given market also stand in the way of such aspirations. Corus applied last year to simultaneously broadcast one of its AM formats in Winnipeg on FM to get a better signal in the city. It was turned down by the CRTC because the move would have given the company three FM stations there.

Such ownership and frequency restrictions may be the only thing keeping AM music stations from being relegated to the history books.

"Let's face it, there's a lot of people including my kids who have grown up never having listened to AM radio, except when I forced them to listen to me," Mr. Bergstrom says.

Though he did contemplate other tracks for that final song - including Steam's 1969 chart topper Na Na Hey Hey Kiss Him Goodbye, Mr. Bergstrom figured Mr. Orbison put it best when he crooned: "There's someone new. We're through, we're through."