Number Crunching

One of Helen Little’s first jobs in radio was to hustle ads for a black-owned radio station in Durham, N.C. And one of the first leads she pursued took her to one of that city’s most popular black-owned restaurants. It seemed like an easy sale until Little began discussing the listener demographics of her urban-formatted station.

“I don’t want the people who listen to your station in my restaurant,” the African American owner told her. “I don’t want black people in here.”

Little is now director of urban programming for Chancellor’s national chain of stations. But she’s never forgotten that day in Durham because it illustrates the image problems she says even successful minority-owned or targeted radio stations have to deal with on a daily basis.

“It’s not limited to national advertising. It’s not limited to racism,” Little says. “It’s a question of perception. A perception of people. A perception about buying patterns. A perception of income. And it’s a perception about reality.”

In January, the Federal Communications Commission weighed in on that subject, releasing a 150-page report that concluded that advertisers regularly discriminate against minority broadcasters and stations that have large African American or Latino audiences. Among the report’s findings was anecdotal evidence that 91% of the minority broadcasters questioned had encountered dictates on the part of ad buyers not to buy time on their stations. Moreover, nearly two-thirds of the ads purchased on their stations were discounted, reducing revenues by an average of 63%.

In the wake of that report, the White House announced a five-step plan to combat discriminatory advertising practices, and the American Advertising Federation convened a panel to explore ways to “enhance cultural diversity within the marketplace.” As part of that mission, the federation panel in June asked 550 organizations to provide information about minorities in their advertising and marketing divisions and to describe ongoing diversity initiatives in their organizations.

“It spurred, I think, a really productive debate,” FCC Chairman William E. Kennard says of January’s report. “The advertising community has come forward and they’ve listened. And they’ve stepped up to the plate to try to solve the problems. It’s an issue that’s certainly not going to be resolved overnight, but people are starting to focus on it.”

However, not everyone agrees there’s a problem. In the preliminary draft of a recent study by Audrey B. Davidson and Barry Haworth entitled “Discrimination and Minority Ownership in Radio Broadcasting,” the University of Louisville economics professors say they found no evidence of discrimination in the radio industry, at least discrimination that would be detected by a revenue handicap for minority-owned stations. In fact, the professors say, they found evidence suggesting that minority ownership may actually be an advantage, not a handicap.

Using the same data the FCC study employed and holding station characteristics constant, Davidson and Haworth determined that minority-owned stations earn more revenue overall and generate more money per share point than majority-owned stations.

Meanwhile, minority-formatted FM stations--that is, Spanish-language or urban-music stations that tend to draw minority listeners--earn, on average, 18% more per year than general-formatted stations, the professors say.

To reach that conclusion, they ran the raw numbers through a complicated mathematical equation that factored in ratings, the power of FM signals versus AM signals and several other variables.

Taking such factors into account is vitally important in measuring the relative strengths of competing stations, says radio analyst Allen Klein of Media Research Graphics Inc. in Encino. The average age of a station’s audience, where listeners live, listening patterns and even the aggressiveness of the station’s sales staff also are likely to have more of an effect on a station’s bottom line than just ratings alone. That’s because some listeners are not as attractive to advertisers as others, for reasons that have nothing to do with race.

But revenue does affect a station’s on-air programming, and those stations that aren’t getting their fair share are likely to suffer. According to Brian K. Knox, vice president and managing director for the Urban Dimensions division of Katz Communications Inc., a New York-based rep firm, unjust advertising practices can hurt a station in several ways. They inhibit stations from hiring the best salespeople, for example, and place an arbitrary cap on a station’s billing potential. And that revenue cap leads to a cap on salaries, making it more difficult for stations to retain popular on-air talent.

“This is not just about funneling dollars to minority-owned radio and minority-formatted radio,” the FCC’s Kennard says. “It’s about making sure that minority consumers get access to the information about products and services that they want to buy. And also getting better quality radio. If the stations that serve them get a bigger share of the advertising dollars, they can do better quality programming.”

Certainly the audience is there. The number of Spanish-language radio stations has more than doubled since 1986, to more than 520, while the buying power of the U.S. Latino market, which is estimated at more than $330 billion, is now greater than all but 13 countries. The buying power of the African American community, meanwhile, is put at $470 billion, while black radio’s programming options have expanded to include 12 principal formats, from soul and urban contemporary to house rap and R&B.;

“The demographics that we’re picking up right now are really verifying how powerful these audiences are,” says Wally Snyder, president and chief executive of the American Advertising Federation. “I don’t think whether or not the FCC study is statistically sound or whether it is appropriate to the findings is really the answer here. The question really is: How do we best reach these audiences?

“There’s an economic issue and there’s a fairness issue. But there’s not really much role for government there. It has to be a free-market solution.”

“This has been the struggle going back a number of years. This is nothing new,” radio consultant Jim Maddox told last month’s R&R; convention. “Spanish radio is facing the same thing. These things won’t open up on their own. You have to make some kind of concentrated effort.”

Change of Address (Again): Much-traveled talk-show host Alfredo Najera is on the move again and is expected to settle in at Spanish-language news/talk station KWKW-AM (1330) on Monday. In May, barely five months after joining the morning team at talk station KTNQ-AM (1020), Najera was let go. It was the second time in less than three years he was dismissed by the station, and in between he had a short but volatile stay at KKHJ-AM (930), during which time community complaints over the graphic content of his adult-relationship show led the National Hispanic Media Coalition to call for the station’s broadcast license.

Najera, who was once among the most successful Spanish-language talk-show hosts in L.A., is expected to work alone at KWKW, which figures to be a better fit for him than his gig at KTNQ gig, where he shared air time with as many as five other morning personalities.

“It was basically a teamwork and synergy thing,” KTNQ’s David Gleason said in explaining Najera’s release. He’s been replaced by Isa Flores, who moved to the morning show from KTNQ’s afternoon news slot.