 Competing For Ears George Beasley’s Naples-based public company owns 44 radio stations and ranks as the 17th-largest radio group in the nation. Facing a proliferation of new technologies, Beasley has seen revenue growth slow over the past several years. In the first quarter, revenue fell 4.6% to $29.4 million and operating income dropped 5.5% to $4.8 million. [Photo: Jason P. Smith] |
But as Beasley’s young family grew quickly, the 29-year-old educator worried about how he’d be able to put five children through college on his $12,000 salary. To supplement his income, Beasley coached sports and sold encyclopedias door to door.
In 1961, he decided a career change was in order. Growing up, Beasley had spent time hanging around radio stations owned by
a cousin and his uncle, Robert Epperson. With Epperson’s help and a $12,000 letter of credit from other family members,
Beasley successfully applied for a permit from the Federal Communications Commission to build a 500-watt, daytime-only AM station in the 2,300-population town of Benson, N.C. In November 1961, his new station, WPYB-AM 1580, went on the air.
Beasley didn’t give up his day job at first. He would spend the first half of each day as a principal at a nearby high school. After the bell rang, he’d head to his radio station and conduct sales meetings. The double duty paid off. Within six months, the tiny station with just five employees was turning a profit.
Five years later, he sold the Benson station for $125,000 and used the proceeds to buy WFMC-AM 730, a 1,000-watt AM station in Goldsboro, N.C., for $115,000. The purchase established the formula that Beasley used over the next four decades to build his radio empire: Find a reasonably priced, underperforming station in a larger market, then tweak the programming and make necessary operational adjustments to get the station in the black.
By 1969, Beasley had become a full-time broadcaster. He acquired stations in Fayetteville, N.C., and Augusta, Ga., and began looking to even larger markets. The business became a family affair. On family vacations, Beasley would pile his wife and kids into the station wagon and head out for new cities to scout potential acquisition targets. When he came to cities where he owned a station, he and the family would “drive the signal” to check out the reach of the radio station and would stop by other stations — including those he didn’t own — to see how business was. Beasley recalls stopping in one South Carolina station in the 1970s and seeing more than 400 pounds of fresh-caught fish on the floor — payment from an advertiser who didn’t have any cash.
 “The challenges we have are in part due to perception,” says company CFO Caroline Beasley. “Radio is seen as traditional, and some advertisers want a new, sexy medium.” [Photo: Jason P. Smith] |
Challenging times
Today, Beasley Broadcast Group, which went public in 2000, owns 44 stations in 11 markets and ranks as the 17th-largest radio group in the nation based on revenue. The company moved its headquarters from Goldsboro, N.C., to Naples in 1988. Beasley isn’t getting paid in seafood, but times are challenging for the company. Revenue growth has slowed for the past several years, and the company’s stock has tumbled from a high of $19.34 in February 2004 to a 52-week low of $3.37 this March. It has settled recently at about $5.
Beasley’s stations face the same problem as the rest of the industry: A proliferation of new technologies — iPods, cell phones, the internet and satellite radio — are competing for consumers’ ears. “Free radio gets funded through advertising, and advertisers, who once had one or two outlets in a small town, the local newspaper or radio, now have an unlimited number of ways to advertise — website, Craigslist or any number of internet ad placements,” says Al Tompkins, a broadcast and online group leader at the Poynter Institute in St. Petersburg.
On a recent episode of “Mad Money” on CNBC, host Jim Cramer encouraged investors to dump terrestrial radio stocks, arguing that the declining advertising revenue and an 80% decline in the average market cap over the last five years signal an industry that is “falling apart.”
The Beasleys aren’t throwing in the towel, however. Caroline Beasley, the company’s CFO, says the Beasley Group is pursuing some new technological innovations of its own. “The challenges we have are in part due to perception. Radio is seen as traditional, and some advertisers want a new, sexy medium. What we’ve done to respond is create multimedia platform packages — packages that provide for advertising on both radio and internet.”
As the internet delivers a slow trickle of cash — Beasley’s radio station websites contributed approximately 1.3%, 1.5% and 3.1% of net revenue in 2005, 2006 and 2007 — many in the radio industry are pinning their hopes on HD digital radio to save the day.
Pioneered by iBiquity Digital Corp., the new technology offers higher quality sound than traditional radio. With HD digital radio, AM stations have FM-quality sound and FM stations have CD-quality sound. The reception is crystal clear, with no audio distortion, and the multicast system allows one FM radio station to offer several digital channels over one frequency.
HD radio also has a wireless data feature that allows text information — such as song titles, artists, weather or traffic alerts — to be broadcast to a receiver’s display screen. It also allows listeners who have special receivers with iPod docks to add songs they like to their iPod playlists with just a push of a button using iTunes. When listeners hear a song they like, they hit a “tag” button that stores information about that tune to the iPod plugged into the dock. The next time their iPod is synced up online with their iTune’s collection, the song will appear and can be purchased.
 Family Frequency: Four Beasley siblings work in the business. Brian Beasley (left) is vice president of operations, and Bruce Beasley is president and COO. [Photo: Jason P. Smith] |
 Radio Days: As vice president and market manager of southwest Florida, Brad Beasley runs three stations in Fort Myers. [Photo: Jason P. Smith] |
| Beasley Broadcast Group
Stock: (Nasdaq-BBGI) CEO: George Beasley, 76 Florida entrance: The company relocated its headquarters to Naples from North Carolina in 1988 after purchasing WRKK-FM in Fort Myers. Outlook: “I’m a happy person. I don’t carry any negative feelings or hurt or resentment. I feel good about people.” Beasley markets: Owns and operates 44 stations in 11 markets and reaches 4.4 million listeners weekly |
|
Market Stations |
|
| Augusta, Ga. | 8 |
| Fayetteville, N.C. |
6 |
| Greenville, N.C. |
6 |
| Las Vegas |
5 |
| Miami |
5 |
| Naples/Fort Myers |
5 |
| Philadelphia |
4 |
| Atlanta |
2 |
| Boston |
1 |
| West Palm Beach |
1 |
| Wilmington, Del. | 1 |
Right now, however, the biggest impediment to the expansion of HD digital radio is the consumer. To get HD radio stations, listeners need an HD radio tuner, and consumers have been slow to adopt the new medium.
Caroline Beasley says automobile manufacturers are the key to HD radio’s success. “We’ve got to get HD receivers in vehicles,” says Beasley. So far, Toyota, Mercedes, Ford, Volvo, BMW, MINI USA, Jaguar and Hyundai already have HD radio receivers in some of their models.
The Beasleys still believe in the future of their medium.
“When television first came out, they said, ‘radio is dead.’ ... Then along came FM radio. They said there would be no more AM — AM would die. AM has continued to survive by niche programming such as sports, news, ethnic programming,” says George Beasley. “I don’t think we can do anything to suppress technology. I can’t say that by the year 2050 radio will be as strong as it is today, but I do believe that radio will be a healthy broadcast medium through the foreseeable future.”