Unexpectedly Intriguing!
June 20, 2005

Previously, Political Calculations analyzed Air America Radio's business outlook, noting that the network's ability to remain a viable ongoing concern has not yet been firmly established. Not much has changed for the left-leaning radio network in the nearly two months since my original back-of-the-envelope analysis, although what has changed does not bode well for Air America.

First, Air America's ratings have continued to slip, although not substantially since the last ratings period. More notably however is a trend becoming evident in established conservative-leaning talk radio stations, whose ratings have also declined in the most recent recording period (both trends are noted on Brian Mulroney's blog, The Radio Equalizer). This development may be an indication that the talk format in radio broadcasting may be becoming less attractive from an industry perspective.

What's more interesting is that new competition for the liberal politics-oriented listener may be developing. Industry giant Clear Channel has recently begun introducing a progressive talk format to one of its stations in Ohio. After first using a publicity stunt to introduce the new format in Akron, Clear Channel has now begun expanding its programming. The new station format does not use Air America's programming at all, so it will be interesting to follow how well it performs going forward.

On the plus side of Air America's ledger is that the network has begun broadcasting in Chicago again. Station WAIT-AM has changed its call letters to WCPT-AM (for "Chicago's Progressive Talk"). No ratings are yet available for the station at this writing.

Overall, Air America Radio's position within the Business Strategy Matrix is relatively unchanged, growing slightly weaker in both Industry Attractiveness and Enterprise Strength:

BSM: Air America Radio

The Business Strategy Matrix continues to suggest that Air America's leadership should pursue a phased withdrawal from its marketplace, seeking to achieve the following goals in the interim:

  1. Preserving or boosting its cash flow.
  2. Making an opportunistic sale of the business.
  3. Increasing the business' strengths.

The great unknown continues to be whether Air America Radio is able to support its operations solely through its operational revenue or if it is still dependent upon investment capital to cover its operating costs.


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