After news broke about the Rush Limbaugh Show getting kicked to the curb by WRKO-AM in Boston, Nielsen radio market #10, I received about a dozen emails asking when I was going to comment. So, here goes.
First, understand the “business of business is business” and the “business of money is money.” And it’s money not a station’s Nielsen ratings that will ultimately determine your success or failure as a personality. For most of us, revenue and ratings are connected. But, that’s not true for everyone.
After Rush Limbaugh stepped over the line with his Sandra Fluke comments a few years ago, his mistake being an old man verbally abusing a young woman, which in our society is never acceptable, liberal bloggers and media sites made note of the dozens and dozens of advertisers who canceled advertising in his show. Somewhat true, in an indirect way. But the real story, almost always left out by liberal bloggers, is most of the advertisers who supposedly canceled never advertised in his show. His show has always been filled with non-traditional, non-mainstream advertisers, advertisers who buy into the Rush Limbaugh brand to focus on his niche ditto head audience. And there’s nothing wrong with this because many ditto heads are affluent. Many have the bucks to buy gold coins in event the economy goes to crap because of Obama and besides they want to “take our country back.” No one is really sure who took the country or where it’s gone, but they want it back! I saw the hand-painted bed sheet hanging from a bridge in Northern Kentucky a few weeks ago. I know they’re serious.
Limbaugh’s Sandra Fluke comments were the cause, indirectly, of the Wall Street Journal Radio Network being shuttered. Because of no placement demands from advertisers, commercials from other radio networks could not be broadcast locally during Limbaugh’s show and some of those other radio networks, like the Wall Street Journal Radio Network, lost – in the weeks immediately after his Fluke comments – almost 40% of its revenue. I am told Fox News Radio lost about the same.
Today, talk radio stations are considered “toxic” or “non-toxic.” If a station broadcasts Limbaugh or other shows like Sean Hannity and Glenn Beck they are deemed “toxic.” If a station does not broadcast those conservative talk shows they are considered “non-toxic.” National advertisers buy, via radio networks and agencies, mostly “non-toxic” stations. When I first heard about this “toxic” and “non-toxic” nonsense I thought it was a joke. But, it wasn’t. And since most news/talk stations broadcast Limbaugh, Hannity, Beck and other programs like Michael Savage’s The Savage Nation, there are few “non-toxic” news/talk stations for advertisers to buy and that’s not good for the format.
Following so far?
But, Limbaugh’s business model, in comparison to most other syndicated talk shows, is somewhat unique and this is where those beating the drum about advertisers canceling commercials on liberal blogs are missing the point.
The Rush Limbaugh Show is fee based, meaning stations pay the show’s syndicator, Premiere Networks, a rights fee based on market size, plus provide barter commercial time to broadcast the program. Limbaugh’s show reserves at least 5 minutes of barter commercial time each hour with stations agreeing to broadcast those network commercials sold by the syndicator.
Mr. Limbaugh, sir. I regret to inform you Indianapolis and Boston no longer desire your services. Maybe if we deflate some footballs people will listen?
Boston’s WRKO-AM is paying around $500,000 each year in rights fees. They also provide approximately 3900 barter commercial minutes annually, which if valued at just $150 per :60 seconds is another $585,000 in cash they’re giving up. And there’s the Rush Limbaugh Morning Update, which tacks on another 780 minutes annually for another $117,000 in commercial time. All in Limbaugh’s show is costing WRKO-AM around $1.2 million dollars annually. Now consider all those advertisers, nationally and locally in the Boston market, that have no placement demands because his show is considered “toxic” and you quickly discover the financial reason WRKO-AM is declaring, “No Mas! No Mas!”
There was a time when Limbaugh’s show could make or break a news/talk station. There were short-sighted stations that foolishly called themselves “Rush Radio.” There was a time when paying Limbaugh’s huge rights fee was the cost of doing business in the news/talk format. But, no more. Not with terrestrial AM radio, its declining revenue environment and his declining ratings.
Minneapolis pays around $300,000. Tampa pays approximately $250,000 in rights fees. WIBC-FM, which also announced they were canceling his program is paying around $150,000 in cash to broadcast his show. He’s got around 600 radio stations. Do the math. Much of the business of the Rush Limbaugh Show is not in advertising revenue from commercials, but in rights fees.
WRKO-AM is owned by Entercom and WIBC-FM is owned by Emmis.
Clear Channel Media + Entertainment iHeart Media produces the Rush Limbaugh Show through its radio network, Premiere Networks. It requires most of its company owned news/talk stations to broadcast the show, pay the rights fee and give up barter commercials. See how the show is less dependent on commercials for survival and more dependent on guaranteed rights fees? There’s little chance Rush’s poor ratings today or tomorrow will change anything, because the money flows from its stations to the network to Limbaugh through a process called (corporate speak) “vertical integration.” Production and distribution is in one tidy package and distribution is all but assured.
Two more markets have canceled Rush and while we’re told “exciting news” on new radio homes is forthcoming, nothing is being said and weeks have gone by for an Indianapolis station to volunteer.
I was quoted in the New York Daily News this week. The article from David Hinckley talks about Limbaugh’s $400 million contract being up in 2016. Hinckley opines in his article, “Given Limbaugh’s prominence, his next deal could say a lot about both his status and the state of conservative talk radio.”
While his paycheck may be smaller in the coming years, as long as co-owned stations are forced to pay his rights fee, ditto heads will be happy to know he’ll be around for a while…unless he too yells, “No Mas. No Mas.”
Next: Why isn’t Limbaugh considered an A-List talent at Clear Channel Media + Entertainment iHeart Media?
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Then why did iHeart Media owned WGST in Atlanta give the show to WSB?
First, remember the time. Limbaugh’s show was not showing its listenership decline and this was before the Sandra Fluke controversy. Also, WSB was and is a “serious” news/talk station, while WGST was half-assing it. It was also an opportunity to team Limbaugh with Hannity on the same station, as Hannity was already on WSB. I don’t know. But, I’d also guess WSB offered to pay more $$$ in rights fees. Darryl
And you don’t think your boys from Clear Channel, Tim Dukes and Pat McDonnell, had anything to do with running WGST into the ground? In the 1990’s, it was a top 10 station billing close to $18 million a year. Today, it gets about 0.1 rating. Tim and Pat had a real problem with WGST being on an FM signal in addition to 640AM. Hannity went to WGST first when he went national, and they declined.
A myriad of incompetent morons followed and WGST was turned into a Spanish sports station for about 8 months in 2012 with WSB getting Rush. Aside from being older than dirt, WSB’s schedule is 18 hours of syndicated and/or tape delayed programming.
If KFI, WLW, and WTAM could be programmed successfully, then so could have WGST.
WGST flipped to ESPN Deportes (it subsequently flipped back to conservative talk radio with a token local show in middays) which left the show open for the taking by WSB.
Not that WSB needed Rush… for much of WGST’s time carrying the program, Clark Howard was repeatedly beating Rush in the ratings.
The vertical integration seems to be the result of circular reasoning
Is 👀♥️ (iHeart, see how I did that?) still fooling itself about the inflated value of the Rush brand, even after the underwhelming performance of RushRadio?
How exactly do you make money on the show with vertical integration if you’re essentially taking money out of one pants pocket and putting it in the other?
I think Los Angeles is showing the future of the show. Spin it off to a secondary stick in the cluster and try to skew younger on the big stick. But the format is so beyond its sell by date…
What? You’ve never heard of the old shell game John?
Such shell games like this are why iHeart is now $20B in debt.
Sandra Fluke is toxic
Depending on how you look at it, you may be right.
Sandra Fluke is ancient history.
Heard of that skank lately?
Rush Limbaugh remains the most heard human voice in the history of the world by people willingly voting with their ears despite having to suffer through 30% dreadful commercials.
Is it a coincidence current Limbaugh’s contract, which was signed in 2008, coincides with decline of the whole industry? Not completely but it’s big factor (along with the Great Recession and ghettoization of the audience). These rights fees is what pays the man, not advertising, thus the stations can’t make any money off Limbaugh anymore like they did in the past. If they’re not in the verticle structure, they’re dumping him. When his contract comes up next year, either he takes a massive pay cut or he retires, one or the other unless iheart wishes to follow Limbaugh into oblivion.
One other point to ponder: It would be interesting to compare his ratings in red state markets and blue state markets. Obviously the biggest declines he’s had have been in New York-LA-Chicago axis but one wonders if he still going strong in the Phoenix-Dallas-Houston-Atlanta-Charlotte axis? This will have a lot to do with contract negotiations as well but if he’s losing stations in Indianapolis of all places, it can’t bode well. When polarize the county into Red States and Blue States and within those Blue States happen to be the biggest markets in the country, is that a smart business model?
Reblogged this on Human Mathematics.
This sounds a bit like the people who advertise with Alex Jones.
Darryl, how does Cincinnati’s 55KRC fit into all this? KRC is 100% right-wing talk from 9am through rush (no pun intended) hour and into the evening. I know KRC’s ratings are not a barn burner, but nothing ever changes there so does that mean Cincinnati’s am radio market is an example of what you are talking about?
Maybe he isn’t dead after all. CC blows up Boston area Spanish station to run Rush. 1430 WKOX Everett. Oh, wait. Yes, Rush is dead and the corpse is beginning to smell. CC is just getting more desperate.
WKOX will be running Fox Sports Radio from 1a to 9a daily.
Yes, WKOX is conceding morning drive right off the bat by plugging in FSR’s morning drive offering in place of any syndicated general talk show or the “This Morning with Gordon Deal” newsmagazine.
Even for an endgame, this is simply pathetic. And sad.
As you reported Premiere makes money on the clearances of Rush. I know for a fact those selling the show for Premiere cannot get national advertisers other than ROS schedules like LifeLock; most others are total PI’s. But the real damage is the local stations and sellers including those owned by iHeart or Cumulus who cannot sell the show at all. Recently talked to a station manager from Ft. Meyers – People listen to Rush but the station cannot sell it. I do know a number of stations aren’t charged at all for Savage, Beck and Ingraham. All three announced last year they will focus on other subjects not only politics to hang on affiliates.
As seen in Boston and Indianapolis stations aren’t willing to pay Rush’s fee’s because they can’t sell it death might come sooner than later.
It will be interesting to see what the upcoming national elections will do to increase conservative talk ratings. Although mid-terms didn’t show any bump.
Lou,
Thanks for the thoughts. I will add, however, you can’t program a radio station for one month every two or four years. As shown in the ratings in the last two elections, the lift is now very nominal and gets less with each passing cycle.
Stay well.
Darryl