Radio broadcasting industry

Definition: Enterprises that produce and distribute original entertainment, news, and other audio content; create advertisements and secure advertising revenue; and transmit ads, original content, and preexisting content—such as music—by radio
Significance: Radio broadcasts at once drew audiences to advertising and revolutionized entertainment in American households. When television supplanted radio as the nation’s most popular entertainment media, radio nonetheless filled an important niche, offering Top 40 hits interspersed with disc jockey commentary and advertising. Political talk radio brought a new form of news entertainment during the late 1980’s and early 1990’s, and digital satellite radio initiated another shift in the twenty-first century.
The 1920’s brought an enormous change in American entertainment. Suddenly, instead of having to go outside the home and buy expensive tickets to hear live performances of their favorite artists, people could tune in to broadcasts on their radios. Wireless radio broadcasts evolved from wireless telegraph broadcasts and could use two types of signal. Amplitute modulation (AM) signals varied the strength of the radio signal in relationship to the information being sent. Frequency modulation (FM) signals varied the frequency of the signal.

Early Programming

Most early programs were broadcast using AM signals, and many early radios could pick up only AM signals. The first radio broadcast actually took place in 1906, when Reginald Aubrey Fessenden used a wireless telegraph station to broadcast a phonograph being played and a man singing. Lee De Forest took the process one step further, with the invention of the vacuum tube, which increased broadcast strength. He demonstrated its utility in 1910, and the popularity of this hobby grew.
In 1919, the Radio Corporation of America (RCA) was formed, to enable wireless radio communication between Great Britain and the United States. However, it quickly shifted its focus, using the idea of employee David Sarnoff to broadcast entertainment, and this quickly became its chief source of profits. The other big radio broadcaster in this era was Westinghouse.
Early radio listeners had to use headphones to hear a program, and musicians initially gave free live performances on the radio. Advertisers in this era relied on the prominent announcement of their names before programs to spread the word about their products. In 1921, RCA’s Sarnoff created the first linked chain of nationwide stations. In that same year, the American Telephone and Telegraph (AT&T) began selling airtime to advertisers, who were then responsible for the content of their programs. It was this latter development that led to some of the most popular radio programs of the era.
By 1926, RCA and AT&T had merged their radio networks into the National Broadcasting Company (NBC), which had both a blue and a red line (named for the colors of their initial connecting cables). Competition came from William S. Paley’s Columbia Broadcasting System (CBS), and the Golden Age of radio began. Numerous smaller, unlicensed, stations sprang up, and competition was fierce. As competition between stations grew, sponsorship became more important to a program’s survival.
In fact, had not Congress passed the Radio Act of 1927, there might have been an immediate industry crash, as competing signals gave listeners nothing but squelch and static. Most programs centered heavily on advertising, meaning sponsors profited from capturing and captivating listeners. They used music and comedy, interwoven with advertisements to promote their products. However, news, sports programs and special programming (such as presidential addresses) also retained their early popularity.
During the 1930’s, the first soap operas (named because many of their sponsors were soap manufacturers) aired, and targeted advertising allowed marketers to reach out to homemakers who listened to the radio during the day. The actual programs aired in fifteen-minute increments each weekday, and each episode ended in a cliffhanger, so that listeners would tune in again the next day for more of the story (and more exposure to advertising). Products such as Jell-O gelatin and Cream of Wheat cereal became household names because listeners tuned into the programs their manufacturers sponsored.

Estimated Revenue and Expenses for Radio Stations, 2004-2005, in Millions of Dollars

Television Brings Changes

Radio’s enormous popularity was not to endure. Toward the end of the war, a new broadcast medium, combining sound with live actors, moved into American living rooms: the television. Advertisers, quick to see the benefits of showing viewers pictures of their products, hurried to pour money into this new broadcast format, leaving radio sorely depleted by the early 1950’s.
As advertising dollars flowed elsewhere, radio broadcasters scrambled to capture and retain audiences. Seeing their economic base abandoning them for television, radio broadcast corporations looked for something unique to draw people back. Ironically, these radio stations were often losing listeners to their own “children,” as many local television stations were initially funded by radio stations.
From the beginning, public debate about the value of programming centered on advertisements, which were accused of being corrupting and demeaning. However, when advertisers withdrew their dollars, radio began to flounder. When it became apparent that television’s popularity was not mere novelty, radio broadcasters began reinventing the medium.
Whereas, in their heyday, radio stations had presented everything from music shows to soap operas and children’s programming, they now had to find a new focus. Television had effectively stolen the stars and audiences that made these programs work. Instead, radio discovered it could attract audiences with format programming. Although music programs (such as The Grand Ole Opry, which broadcast country music starting in 1925) had always been a part of radio, they now became its heart. Music stations bloomed, each offering a different musical genre aimed at a different demographic group.
Radio stations played popular music shows, hosted by disc jockeys (DJs) who gained their own followings. Early pioneers such as Martin Block and Al Jarvis had hosted Make Believe Ballroom, creating the concept of the DJ. During the early 1950’s, those DJs became central to radio’s continued success. During the 1950’s and 1960’s, the DJ sustained radio. Rock DJs, such as Alan Freed and Wolfman Jack (Robert Weston Smith) gave music commentary along with the songs they played, and their voices attracted listeners as much as their program content.
Music shows had another draw for radio corporations. Although programs with stars and casts were expensive to maintain, music programming with a single DJ was comparatively inexpensive, and fewer advertising dollars were needed to generate a profit. Local radio largely replaced the nationwide networks, as radios strove to maintain local audiences.
Where AM had previously been the preferred broadcast signal, FM began slowly growing in importance. Stations with a Top 40 format found the most success, playing the same popular songs from the given genre. AM signals broadcast farthest in the evening, which made that time radio’s peak listening time. However, FM radio stations focused on mornings and commute times, when people either did not have access to a television or had no time to watch it.

Regulatory Changes

Another factor preserving radio at this time was pioneered by the American Broadcasting Company (ABC), which split into four networks, allowing it to affiliate with four stations in one area, rather than just one. The company could then profit from all four stations in the area, instead of just one.
During the 1970’s, FM evolved into an almost solely musical format, while AM shifted its attention to “talk” radio. The local programming that had proliferated during the 1950’s gave way to stations that played the same songs and aired the same programs. Public radio, which offered more educational and unbiased content, gained some popularity, as it more closely resembled the old-time radio shows from the golden era of radio.
The same DJs who helped save radio were also widely condemned for pandering to the unintelligent. They often catered to a youthful audience, keeping their content light and concentrating largely on playing popular music. However, in all reality, few DJs had much freedom of expression. Most of them were managed strictly by their program directors, who controlled most of the content. DJs were just the on-air personalities fronting for the songs chosen by someone higher up.
Radio’s other “villains,” the advertisers, could dominate only a certain proportion of the airwaves until the Federal Communications Commission (FCC), in 1981, lifted the commercial load restrictions that had controlled how much advertising programming a station could carry.
Talk radio also grew in popularity, often drawing audiences to listen to extremely political content. Until 1987, the Fairness Doctrine dictated that radio stations had to give both sides in any political side equal airtime, which led to them shying away from many political topics. However, the Fairness Doctrine was repealed in 1987.
As the 1990’s began, listeners had a new reason to tune into commercial radio, as hosts such as Don Imus, Rush Limbaugh, and Howard Stern took formidable stands on political issues, ranted against and mocked those who disagreed, and invited famous guests to appear on their programs. Most important, however, talk radio invited listeners to call in with their perspectives. Thus, the average American could call and air an opinion on the radio. Its interactive nature inspired higher ratings, drawing new advertising dollars. It stayed on the air as its sponsors really made the stations profitable, and sponsors stuck with the talk-show hosts, who clearly drew listeners.
Newly formed satellite radio stations offered digital programming that mimicked the music and talk content of analog stations but without the commercials. Instead, listeners paid fees directly to satellite providers to receive the same stations nationwide, most of them commercial free. Although commercial stations still needed advertising dollars to succeed, the new digital channels were listener funded.
Thus, after an early heyday of only around thirty years, radio found itself eclipsed by television during the 1950’s, forcing it to redefine itself as a source of Top 40 music hits. Talk radio grew in popularity during the late 1980’s and early 1990’s, when the Fairness Doctrine was repealed and stations could air biased political commentary without acknowledging the other side of the debate. Finally, digital satellite radio entered into competition with commercial radio, bringing still more changes to the industry, as advertisers struggled to find a niche within the new medium.