ABSTRACT
Unlike newspapers or television, radio is a fiercely competitive business with little financial margin for error. But buyer errors were not minor—they were fundamental, based on unrealistic expectations of advertising growth and credit supply. Part of the weakness was clearly due to a nationwide loss in confidence by consumers and businesses, which reached a nadir during the Gulf war. People stopped buying new cars, furniture and clothes—items typically advertised on radio. In major markets, some operators claim that, if anything, the advent of Walmart causes retailers to buy their advertising more efficiently, although it's also true that in large markets, Walmart's challenges are greater—land is less abundant, labor is less malleable and the competition is better armed. For the radio station asset market, the consequences were brutal. Credit simply vanished. Banks stopped lending and, in an effort to comply with rules, sought to reduce their highly leveraged loans as a percentage of total portfolios.
