Media & Marketing and Sports Business

WKLU sings new tune to gain competitive edge: Some experts say station's new strategy can't last

March 21, 2005

Bruce the Radio Pirate has left the building. Dr. Demento, Pop and Scratch and "The King Biscuit Flower Hour" are gone, as well.

The hippie-sounding radio personalities and offbeat shows that were WKLUFM 101.9 moved out of the roughly 100-year-old house in Brownsburg five months ago when the station's new owner, staff, music-and business strategy-moved in.

But whether that strategy-to keep the smalltown station sounding small while it brings in big bucks-can work remains to be seen.

And now WKLU has to contend with another player joining its updated-format bandwagon, thanks to former oldies station WGLD-FM 104.5's sudden switch. On March 13, WGLD, whose playlist included only songs from the 1950s, '60s and '70s, switched to a format that plays songs from the 1980s and 1990s, with a few oldies sprinkled in. WKLU plays hits from the 1970s and 1980s.

WKLU was sold in October for $6.2 million by Bruce Quinn, aka Bruce the Radio Pirate, to Russ Oasis, a radio entrepreneur from Miami.

Oasis hired a general manager, Mark Clark, who brought more than a decade of radio experience with industry biggies San Antonio-based Clear Channel Communications and Maryland-based Radio One. The new owner also hired well-known local disc jockey Adam Ritz, formerly at WRZX-FM 103.3. Clark hired a business manager and office support staff.

Clark also brought in a new song collection, dropping Quinn's eclectic mix of deep B-side cuts off albums from the 1960s and 1970s. The station's unconventional programming mix, including Hendricks County high school sports, also disappeared to make room for more music.

To improve the new sound and better cover Marion County, the station plans to move its tower and increase its transmitter's power to 6,000 watts from 3,700 within a couple of months.

And by May, the station will move into a building at 82nd Street and Knue Road it bought for $1 million. The building, formerly owned by Pennsylvania-based Susquehanna Radio Corp., which owns three local stations, will provide more than five times the space and a better-equipped control room.

But even before the move, Clark has already unpacked his new business strategy.

The marketing campaign boasts one break an hour of four 60-second commercials following 13 or 14 songs drawn from a main stream playlist.

While Clark declined to provide detailed advertising pricing, he said his station charges an average of $50 per 60-second slot. He expects annual revenue to hit $1 million. Last year, the station took in $300,000 from commercials priced about $20 per minute.

But with four commercials an hour-96 minutes of ad time a day-some radio industry experts think it'll be difficult for the station to make money.

Clark contends listeners want pure radio-few commercials, no news and no traffic reports.

"It's simple," Clark said. "People want to turn on the radio and hear music. They want to be able to instantly sing along."

The same reasoning may be behind WGLD's recent switch from oldies to the Jack format, a concept that originated in Canada and began hitting the states about a year ago. Jack stations have no disc jockeys and few commercials, and they play songs that repeat less often, although artists can repeat with some regularity.

The Jack format is causing a buzz in the radio industry, according to Amos Brown, director of strategic research at Radio One/Indiana, which owns WTLCAM/FM 106.7, WHHH-FM 96.3 and WYJZ-FM 100.9.

Despite the Jack buzz, Brown did not expect WGLD, the sixth-most-popular station in Indianapolis, to make such a drastic format change.

"I was very surprised," he said. "I saw nothing in their ratings that merited a complete change in format." The station had a 5.5 rating from New York-based Arbitron Co. in the fourth quarter of 2004. WKLU's rating was 2.0, a significant increase over its 0.7-rating before the format change, but still well below that of most local stations.

Brown is not convinced WGLD's owner, Susquehanna, made the switch in reaction to WKLU given WKLU's low ratings and the number of stations playing similar formats. Some oldies stations are struggling, but most seem to figure out how to stay successful, he said.

Jennifer Skjodt, vice president and general manager for WGLD, said the format switch was not a response to WKLU. Oldies stations across the country are dwindling, she said.

"The demographic keeps having birthdays," she said. "The future for the product is not very bright." Also, advertisers do not place a high priority on targeting older listeners, Skjodt said.

But the Indianapolis market is already "very crowded" with stations playing popular songs from the last few decades, Brown said. "I don't see why [Susquehanna] couldn't wait this out."

Clark contends WKLU will benefit from its independent ownership. The Jack format is the corporate attempt to ape what's been successful at such independent stations. In Indianapolis, five media conglomerates, four of which are publicly traded, own 17 of the 24 mostheard stations, making entrepreneurial radio an anomaly.

And those corporate-owned stations run 12 to 15 commercials an hour, making Clark's four commercials an anomaly as well. Clark said it's "unheard of," but media experts said it's a common tactic employed by new stations to attract listeners.

Most stations will go commercial-free or air few commercials after a format change, Brown said.

So how long can WKLU continue with only four minutes of commercials an hour and make money? Clark admitted he does not sell out his advertising inventory in any given 24-hour period.

"I don't see how you can sustain that and make payroll," said Tom Severino, general manager for Indianapolis-based Emmis Communications Corp., which owns four stations here. While Severino said he applauds the low commercial load, "eventually, you've got to run it like a business."

And that's the tricky part for Clark, Brown said.

Once WKLU gains popularity-which Brown, Severino and others agree will happen-more advertisers will want one of the four slots each hour. As demand increases, so will the pressure on WKLU to run more commercials.

WKLU will hit a limit and Clark will have to add commercial units, said Bonnie Surber, associate media director for Roman Brand Group.

"The number of commercials per slot now, I doubt if he'll be able to keep that up," Surber said. "I'm sure the dollars are gonna talk."

Clark insists he can make his model work.

"The key is efficiency, maximizing inventory," he said. "You've got to have an intelligent pricing structure."

Clark, who led a station in Long Island, N.Y., to its first Marconi Award in 49 years and increased revenue 15 percent at Radio One/Indianapolis, said more listeners will simply make his commercial slots more valuable. "Our business model is built on one

commercial break an hour," Clark said.

"That's here to stay."
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