Spanish-Language Radio Sizzles
Jack Rattigan had a hunch. Rattigan, the general manager of Davidson Media's WVXX in Norfolk, VA, believed the time was right for Norfolk's first-ever fulltime Spanish language station. So just before sunrise on the last day of February, Rattigan switched the classic rock station to round-the-clock Spanish.
   The hunch paid off. "It's unbelievable how fast this is growing," says Rattigan, who at 76 has been in the broadcast business for more than 50 years. "I've never experienced anything like this."
   WVXX's success with Spanish radio or "Selecta 1050" has been mirrored many times over in scores of cities. The number of Spanish stations has nearly doubled in the last 10 years, from 400 in 1995 to about 750 today. Overall, the Spanish language audience has grown about 37% since 1998 and represents about 9% of all radio listeners.
   The success of Hispanic radio outside the West and Southwest can be traced to the migration of Spanish speaking immigrants to the North and Eastern seaboard, says Felipe Korzenny, professor of advertising and integrated marketing at Florida State University in Tallahassee.
   "Radio is a voice that has many functions in the Hispanic community," Korzenny says. "It has become the town crier, the watering well." Stations serve as a message board for listeners, exchanging information, broadcasting job openings, child care and marital advice, health and finance programs, and information on immigration. "Latin America has a heritage of small town radio stations where radio is the community, and it has been largely replicated in the U.S.," Korzenny says.

   WVXX offers a combination of locally programmed music and personalities along with programming from Bustos Radio Networks in Sacramento. While listeners immediately were attracted to the station's broad playlist, the Norfolk/Hampton Roads area business community quickly embraced the station's new format. Rattigan reports that car dealers, furniture stores and big retailers bought advertising and signed on for sales promotions.
   "Most of the advertising came to us. We haven't had time to get out and sell," says Rattigan, who is hiring staff as quickly as he is able.

Satellite Radio: Too Early For Cigars
Cox Radio President and CEO Bob Neil responded to a March 30 Wall Street Journal article entitled "Battle Stations: Two Upstarts Vie for Dominance in Satellite Radio." Neil pointed out in his "Letter to the Editor," why he believes the hype over the satellite radio is premature.
   "I appreciated the compelling page-one history of the satellite market and the differences between XM and Sirius satellite radio services as they race to capture the satellite audience. But...I fail to see how satellite radio is 'on the verge of reaching a critical mass.'
   Your article accurately describes the industry as 'an embryonic new medium' with XM and Sirius boasting just 4 million subscribers. Indeed, the top three radio stations in New York City alone have a bigger audience than that, at close to 7 million. And when compared with the total universe of nearly 250 million radio listeners, I'd liken the satellite market more to a zygote than to an embryo.
   Satellite radio's financials are even more dismal. XM and Sirius have an impressive combined market cap of $14 billion, notably double that of the top five pure play radio companies -- Cox Radio, Entercom, Citadel, Cumulus and Radio One -- which closed 2004 with a combined market cap of $7.5 billion. But a closer look at the satellite numbers tells a different story. XM and Sirius sport combined revenues of just over $300 million, while the combined revenues of the top five pure play radio companies is $2 billion. Further, the combined free cash flow from the top five pure play radio companies rang in more than $500 million in 2004, while the combined cash flow deficit for XM and Sirius was a staggering $655 million. Remember the dot-com bubble burst?
   The bottom line: Satellite radio's impact on traditional radio is minimal. Its formats appeal to specific tastes, not the mass market; its usage isn't exclusive; and even if satellite radio achieves the success of satellite television, it would still be a niche product reaching less than 10% of the population, vs. traditional radio's 94%.
   So, it looks like the only thing reaching 'critical mass' is satellite radio's losses."