So Over It: Radio Kills Radio Star

BOSTON ( TheStreet) -- Next month, CBS Radio ( CBS) will silence its rock station in Boston, WBCN, after 41 years. "The Rock of Boston" will be relegated to online-only status.

How is WBCN rocking through its impending demise? By sticking with the same joke-jock-in-the-morning, Red Hot Chili Peppers-thrice-an-hour format that made it expendable in the first place.

Those who mourn WBCN aren't shedding tears over lost blocks of tepid '90s rock, but a lost local connection. That void is driving listeners away from stations nationwide and forcing radio companies to squeeze every dollar out of their fading product. Commercial radio isn't just dying: It's starving itself to death.

"There's less local news, less local DJs and more format changes than in the past," says Wells Fargo ( WFC) analyst Marci Ryvicker, who expects radio revenue to drop 13% this year.

Radio companies like Radio One ( ROIA), Citadel Broadcasting ( CTDB), Cumulus Media ( CMLS), Salem Communications ( SALM) and Entercom Communications ( ETM) have seen their stocks become cheaper than a pack of gum this year. It doesn't help that these companies are saddled with debt from buying back stock and making compulsive acquisitions, Ryvicker says.

There's similar static on satellite radio, where deals with General Motors ( GRM) and BMW to install receivers in new cars have failed to boost Sirius XM Radio ( SIRI) shares above $1. The company lost $62 million in the first quarter and its subscription fee is about to jump by almost $2 a month thanks to a music royalties ruling in Congress. Worse yet, Sirius's iPhone application was unseated as the top-selling music app in iTunes by Pandora, the free music service.

"We originally thought it was a subscription business and did that for all of three weeks before we realized that it had to be an advertiser-supported free service," says Tim Westergren, co-founder of Pandora Media. "Consumers expect radio to be free, and that's not a habit we want to spend our time trying to change."

Pandora plays music customized to individual listeners' preferences. If you like a song, it will recommend others with similar rhythm, harmony and melody patterns you might also enjoy. If you hate a song, it will factor that in its next suggestion.

For those chastened by increasingly homogenous music radio, Pandora offers unmatched variety. Despite forcing Pandora to limit free listening to 40 hours a month, a deal reached this month with the recording industry cut the site's royalty costs and allowed it to avoid mandatory subscriptions.

Online outlets are tuning out standard and satellite radio by making a listener's seven or so hourly visits appealing to advertisers looking to target specific audiences. Their services are also available for free on the hottest gadgets: Apple's ( AAPL) iPhone, Research In Motion's ( RIMM) BlackBerry and Google's ( GOOG) Android phone, which plugs into car stereos quite nicely.

Westergren has expressed interest in pursuing local advertising dollars and localized content, which his cash-strapped conventional competitors have turned a deaf ear to for years.

"The question is do they get back to investing in local product?" Ryvicker says. "Whoever survives probably will."

-- Reported by Jason Notte in Boston. Feedback can be sent to jason.notte@thestreet.com.
Jason Notte is a reporter for TheStreet.com. His writing has appeared in The New York Times, The Huffington Post, Esquire.com, Time Out New York, The Boston Herald, The Boston Phoenix, Metro newspaper and the Colorado Springs Independent.

If you liked this article you might like

Cisco, Warren Buffett and Apple, McDonald's - 5 Things You Must Know

Cisco, Warren Buffett and Apple, McDonald's - 5 Things You Must Know

Maybe This Is Not Really About Inflation -- Market Recon

Maybe This Is Not Really About Inflation -- Market Recon

CBS-Viacom Saga Presses On

CBS-Viacom Saga Presses On

How Disney's Deal for Fox Could Drive a Whole New Wave of Media M&A

How Disney's Deal for Fox Could Drive a Whole New Wave of Media M&A

Lions Gate Shares Pop as Vice Chair Discusses Possible Acquirers

Lions Gate Shares Pop as Vice Chair Discusses Possible Acquirers