This industry consists of establishments engaged in broadcasting radio programs to the public. This includes commercial, religious, and educational stations and establishments primarily engaged in broadcasting and broadcasters that produce radio program materials used by other stations.
In late 2002, this industry consisted of approximately 13,300 radio stations in the United States, including more than 4,800 commercial AM stations, more than 6,100 commercial FM stations, and more than 2,300 noncommercial FM stations. The industry enjoyed increasing advertising revenues during the 1990s, culminating in a record year in 2000. In 2001, weak economic conditions caused revenues to fall for the first time in many years. However, the industry began to recover in 2002, when revenues totaled $19.6 billion. Although the success of radio might seem paradoxical in the age of computers, 99 of every 100 households had a radio, with the average number of radios per household at 5.6. The typical listener tuned in for 3 hours and 20 minutes on average each day. In 2005 there were approximately 10,649 U.S. commercial radio broadcast stations.
Regulatory changes following the passage of the Telecommunications Act of 1996 increased the limit on the number of radio stations one company could own. As a result, there was a sharp increase in the level of merger and acquisition activity resulting in industry consolidation. The largest merger in the history of radio was announced in November 1999 when Clear Channel Communications, which owned the largest number of radio stations in the United States, acquired AMFM Inc. (formerly Chancellor Media Corporation) for $23.5 billion.
The radio station industry is divided into two basic groups, commercial and noncommercial stations. Commercial stations earn their revenues from advertisers who pay for radio advertising time based on listener ratings. Noncommercial stations (also called "educational" or "public" stations) earn revenues from public subscriptions or, in the cases of colleges and religious stations, from the institutions they represent.
Network programs, mainly news, are transmitted to many more radio stations than are owned by the network. Similarly, outside programming, such as pop music's Top 40 countdowns, are produced within the entertainment industry and sold to stations throughout the country.
Many of the large radio stations hire media research firms. The differences between large and small stations are also revealed by their internal organization. Large stations have additional station management and employ promotion and public affairs directors to better understand listener tastes. Small radio stations conduct these services exclusively in-house.
The first radio station in the United States was KDKA in Pittsburgh, which began operating in 1919. The concept of using radio waves to broadcast information and entertainment spread quickly, and by 1922, 570 licensed stations operated in America. With this emerged the idea of networking, by which stations form chains to broadcast programs simultaneously. In 1926 the National Broadcasting Company (NBC) was established with two networks of 24 radio stations under its parent company RCA. By 1928 Columbia Broadcasting Systems (CBS) had established a network of 16 stations.
During the 1920s this industry saw many innovations as stations experimented with power, looking for ways to increase frequency distance and strength, and with acoustics, learning which environments blocked out unwanted background sounds. The 1930s witnessed a large increase in radio listeners. This was due in large part to the fact that it was a source of free entertainment during the Great Depression. As the depression came to a close, World War II would continue to keep the public tuned in, and by 1939, 1,465 stations were licensed in America, with network stations having 90 percent of the audiences.
The early 1940s continued with a slow and steady increase in the number of radio stations operating, and by 1945, 95 percent of all homes in America had a radio. The end of the 1940s saw an emerging interest in television, which took away from radio's audiences.
Television's presence had a negative impact on the radio industry's expectations for growth and the formats of radio programs. Across America many radio-station owners sold their stations; others kept their stations, but sold their large studios intended for staged performances. Radio stations changed their format during the 1950s from presenting story and news programs, which were more graphically presented on television, to mostly music. The 1950s also saw a development that helped radio to retain some level of popularity: the transistor radio—created at Bell Laboratories—allowed radio manufacturers to produce small portable radios, bringing this medium outdoors and into cars.
During the 1950s and into the 1960s, FM radio stations, which were created in the 1940s, appeared with a better, static-free sound quality than existing AM bands. By 1961 FM offered stereo sound as well. These features appealed to audiences of special interest groups, such as classical music fans. By the end of the 1970s there were 2,000 FM radio stations in the United States, but with many of them operating for limited hours and regarded as providing only background music.
During the 1960s the growth in rock and roll recordings and the widespread acceptance of portable radios helped AM stations to continue to flourish. By the end of the 1960s, there were 4,300 AM stations in the United States; of those, roughly half transmitted only during the daytime.
The 1970s and 1980s saw a change from AM to FM stations, as FM stations started to offer programming similar to AM, mainly popular and rock and roll music, and had better sound quality. By the mid-1980s, FM radio had taken over much of AM's audiences and held 70 percent of the nation's radio listeners. AM radio stations reacted to their loss of popularity by offering more news and talk radio...