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.
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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