Inner City Media Bankruptcy -- Black Radio in the Crosshairs

Inner City Media Bankruptcy -- Black Radio in the Crosshairs

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“[T]he market shapes programming to a tremendous extent. Members of minority groups who own licenses might be thought, like other owners, to seek to broadcast programs that will attract and retain audiences, rather than programs that reflect the owner’s tastes and preferences.” - From Justice Sandra Day O’Connor’s Dissenting Opinion in Metro Broadcasting Inc. v. FCC, 497 U.S. 547 (1990)

“Don’t take away the music. It’s the only thing I’ve got. It’s my piece of the rock.” - From the lyrics of Don’t Take Away the Music by Tavares.

When the walls started shaking at the Joint Center’s offices during Tuesday’s earthquake, I was faced with one question: leave the building or stay inside? Similarly, the seismic transformation of the broadcasting industry brought on by mobile devices, personal computers, and digital video recorders has presented new problems for broadcasters. But Black-owned radio stations targeting African-American audiences are faced with their own fight or flight question: Can they stay profitable by offering black-only programming? What is the tipping point at which diversifying their programming will begin to alienate their listener base?

Earlier this week, Inner City Media Corporation’s creditors filed an involuntary Chapter 11 bankruptcy petition against it. Inner City Media Corporation is the holding company of Inner City Broadcasting, one of the nation’s leading black-owned broadcasters and owner of WBLS-FM/WLIB-AM in New York City. Inner City’s creditors claim that it owes some $254 million.

Inner City Broadcasting is rooted in the civil rights movement. The late Percy Sutton, former attorney to Malcolm X and a former Manhattan Borough President; and Clarence Jones, former publisher of The New York Amsterdam News, one of the oldest black-owned newspapers in the United States, founded the company in 1970. WBLS has been home to legendary black radio personalities like Hal Jackson, Frankie Crocker, Wendy Williams and DJ Red Alert. WLIB has changed formats many times over the years, but it too has featured notable personalities including Betty Shabazz, Malcolm X’s widow; and Rev. Al Sharpton. Inner City owns 15 other stations in San Francisco, CA, Columbia, SC, and Jackson, MS.

Inner City’s failure to repay its debt could be attributed to any number of causes, such as poor financial management. But saying that poor financial management is the sole culprit, and leaving it there, does little to address the issue of why Inner City’s stations have failed to generate enough revenue to pay the bills.

Let’s take WBLS as an example.

WBLS’ Glass Ceiling

WBLS has hit a glass ceiling. Barring a complete revamping of its format to include more mainstream content, it appears that WBLS has attained the highest ranking possible with an urban adult contemporary (Urban AC) format in New York. According to Arbitron, the Urban AC format is the most popular format among African-Americans. It features music by artists such as Maze Featuring Frankie Beverly, Earth, Wind & Fire Marvin Gaye, R. Kelly, Alicia Keys, Eric Benet, Ne-Yo and Usher. The “average quarter hour” (AQH) rating of a radio station is the average percentage of a population being measured listening to a radio station for at least five minutes during a 15-minute period. With a 3.6% AQH overall rating, WBLS is the number one station in New York targeting a predominantly black audience. It also ranks #8 among all radio stations in the New York metro area. WLIB, WBLS’ sister station, ranks 34th, with a .4 AQH rating.

WBLS’ closest competitor, Emmis Communications’ WRKS-FM (98.7 Kiss FM)—the only other Urban AC station in the market—is ranked at a distant #16 overall. But Kiss is half of Emmis’ combo which includes WQHT-FM (Hot 97), an urban station that skews toward the 18-34 demographic with hip-hop and r&b artists. Hot 97 posted a 3.3% AQH rating in July, placing it at #12 in the overall rankings. But with the ratings of Kiss and Hot 97 combined, Emmis is actually pulling a 6.2% AQH overall rating, compared to a 4.0 combined rating for Inner City’s WBLS/WLIB combo.

Further, Inner City has been hauled into bankruptcy, while its publically traded counterpart is carrying a similar long-term debt load without repercussions. The $254 million that Inner City owes to Yucaipa Cos. and others does not appear to be that unusual. Not taking into account other liabilities, Inner City’s debt-per-station based on the $254 million alone is $14.9 million. At the end of 2Q’11, Emmis held long term debt obligations of $327.2 million. Spread across Emmis’ 22-station portfolio, its debt-per-station is $14.8 million, just $100,000 shy of the amount of Inner City’s obligation.

Should WBLS Change Formats to Increase Inner City’s Revenue?

Radio stations change formats all the time. If a particular format is not working, most station owners are generally not averse to abruptly switching formats. For example, the radio station at 101.9 FM in the New York Metro area, also owned by Emmis, has changed formats four times over the past seven years. In 2004, the station switched from Smooth Jazz (Kenny G, Sade, Yellowjackets, Anita Baker) to an electronic/ambient music format (Massive Attack, Thievery Corporation). It switched back to Smooth Jazz in 2005 and, in 2008, flipped to Rock (Kings of Leon, Pearl Jam, Black Crowes, Blink 182). Finally, on August 12th of this year, the station changed formats yet again, switching to an all-News format.

Inner City is no stranger to programming formats targeting non-African-American audiences. Among Inner City’s 15 other stations, only 6 target African-Americans specifically. Inner City’s station portfolio also includes progressive talk, rock, classic rock (Allman Brothers, Rolling Stones, The Beatles, the Yardbirds), oldies (Elvis Presley, The Beach Boys, The Supremes, The Four Seasons, and Sam Cooke), Chinese-language, Vietnamese-language, and two sports talk, ESPN Radio affiliates.

But what is often a business-as-usual decision to change formats carries an additional layer of complexity for black-oriented stations. As in the case of WBLS, radio stations targeting a predominantly African-American audience are often intimately tied to the very heritage of the communities they serve. In our communities, having the ability to listen to black music, on radio stations owned by people who look like us, with credible air personalities we can relate to, is often about much more than entertainment. In an era of high unemployment, mortgage foreclosures, disproportionate incarceration rates, and widening achievement gaps in education, listening to black-oriented radio has a cathartic effect.

WBLS could change formats, but why should it? Arbitron reports a .5 percent increase in the number of African-Americans who listen to Adult Contemporary radio stations (Eric Clapton, Whitney Houston, Chicago, and Christopher Cross) since Fall of 2009. It also reports an increase in the number of Blacks who listen to Pop Contemporary Hits (Ke$ha, Lady Gaga, Bruno Mars, Pink, Black Eyed Peas). But this is far from a death-knell for black radio. Radio stations targeting mainstream audiences have diversified their playlists, but black-oriented radio stations have not.

Those African-Americans that listen to both black-oriented stations and mainstream stations are signaling a desire for more diverse content. Their behavior indicates an impulse to seek out contexts that communicate—as Pepper Miller of the Hunter-Miller group describes it—“a universal situation … living parallel to mainstream” rather than isolated in a silo with no mass appeal relevance. This does not require black-oriented stations to change formats completely. But what it does require is learning a lot more about black listeners who are less loyal to Urban AC formats, and addressing some of their programming needs. If Inner City doesn’t do it, someone else will, and it is starting to look more and more like that may very well be the scenario.