Harker Research - Trendspotter - The Health of Adult Contemporary

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ANSWERS July 2002: The Health of Adult Contemporary

Adult Contemporary is the largest format in the top fifty markets. It accounts for over 11% of reported stations, so we begin our look at the Summer book with AC. One of the first challenges in determining the health of AC is determining how to analyze the format. M-Street and Arbitron distinguish between four flavors of AC, while Radio and Records tracks only two. While both R&R and M-Street make some effort to assign a label to stations, Arbitron allows each station to determine what they are, choosing from three sub formats or choosing "AC." M Street classifies roughly 38% percent of Adult Contemporary stations as just AC. Soft AC is the largest sub-format, with 26% percent of the total. Approximately 23% of Adult Contemporary stations are Hot AC, and the remaining 13% are Modern AC.

As we discussed in part 1 of our look at the Summer book, Katz Media Group bi-annually calculates the average share for each format. The Katz results are widely followed, but are somewhat limited in assessing the health of a format. Stations with larger shares tend to have a greater influence on the apparent strength of a format, so larger share stations in smaller markets have disproportionate impact. The Katz Media Group's "National Format Averages" report for the Spring 2002 book suggests that Mainstream AC has lost appeal. Spring 2001, the average market share for Mainstream AC was 7.1. This Spring, the number was 6.8. While Arbitron's analysis yields slightly different numbers for Mainstream AC-they credit the format with an average share of 7.9 for the Spring 2002 book-their analysis also indicates a decline in the format.

The complexity of analyzing AC can be illustrated by the apparent contradiction between the Katz and Arbitron analyses of Soft AC. Comparing the Katz analysis of Soft AC with that of Arbitron yields dramatically different conclusions. While Katz Media Group calculates the average market share of Soft AC for the Spring book as 5.7; Arbitron's average is only 1.7. This wide difference in share calculations suggests that many Soft AC stations do not consider themselves to be Soft AC and are therefore not included in Arbitron's calculation. In addition to their differing definition of Soft AC, Katz and Arbitron also differ in their conclusions regarding the trend of the format. Katz's research shows growth in Soft AC. Average share increased from 5.3 in Spring 2001 to 5.7 in Spring 2002. However, Arbitron shows a decline in Soft AC with average share decreasing from 1.9 to 1.7 in the same period. With such diametrically opposed findings, it is unclear what the true direction of Soft AC is.

Katz Media Group's and Arbitron's research also differ in their analysis of Hot AC. According to Katz's analysis of this format niche, Hot AC is declining. In Spring 2001, Hot AC had an average share of 6.1. This Spring the number declined slightly to 5.8. In contrast, Arbitron's analysis indicates growth in Hot AC. According to Arbitron's format analysis, Hot AC's average share was 3.9 in Spring 2002, an increase from last Spring's 3.4 average share.

Modern AC's share appears essentially unchanged over this period. Katz's analysis shows a minor share increase from 4.4 in Spring 2001 to 4.5 in Spring 2002. Arbitron's research shows a slight share decline. In Spring 2001 Modern AC's average share was 1.3. This Spring, the number was 1.1.

We at Harker Research take a somewhat different approach to analyzing formats, choosing to look at each station in a format, giving each station equal weight. Our analysis of ratings performance consists of examining market share changes for stations in the top fifty markets. We compare year-to-year changes as well as book-to-book changes because of possible seasonal differences. We track a total of 157 Adult Contemporary stations in the top fifty markets. In distinguishing between the different flavors of Adult Contemporary, we use M-Street's designations.

Because there is some disagreement over the differences between the various versions of AC, combining all ACs into a single category proves to be the most useful measure of the state of the format. The accompanying graph shows the percentage difference between stations that gained or lost share in each book compared to the previous book. A bar that rises above 0% indicates that more stations within the format gained share than lost share. A bar that falls below 0% indicates that more stations lost share. In the Winter 2001 and Spring 2002 books, equal numbers of stations lost and gained market share, so no bar appears.

Over the past seven book-to-book periods, Adult Contemporary has declined three times, gained twice, and held steady twice. As a whole over the period, the format seems to be holding its own, neither steadily growing nor declining. However, looking at the more recent time frame of the last three books, Adult Contemporary stations have not been able to put together a "winning" book. For example, from Spring to Summer 2002, 47% of Adult Contemporary stations lost share and only 43% gained share.

A closer look at the formats within AC suggests that the trend is driven primarily by Soft and Mainstream AC, the two largest sub-formats. Because Mainstream AC and Soft AC comprise almost 65% of the Adult Contemporary format category, their performance has a big impact on the performance of the category as a whole. While Modern AC and Hot AC stations have been growing, the majority of Soft AC and Mainstream AC stations have lost share. In this regard, Arbitron's format analysis appears to better reflect the condition of the format. The following are the key conclusions of our analysis of the four main Adult Contemporary formats for the Summer book.

Soft AC

Soft AC stations tend to be rated higher than Mainstream AC, Hot AC, or Modern AC stations.
When ranked by AQH share, half of the top ten rated Adult Contemporary stations are Soft AC.
Soft AC shares are generally eroding, with more stations losing share since Fall 2000 than gaining share.
61% of Soft AC stations lost share in the Summer book.
The average share loss for Soft AC stations was 14%.

Mainstream AC

On a book-to-book and year-to-year basis, there has been a substantial decline in Mainstream AC share, although fewer stations lost share than Soft AC stations.
55% of Mainstream AC stations lost share from Spring to Summer 2002.
The Summer book is the third book of decreasing share for Mainstream AC.
Double-digit share loss was common for Mainstream AC stations, with losses ranging from 3% to 33%.
The average share loss for Mainstream AC stations was 15%.

Hot AC

The majority of Hot AC stations have had successive book-to-book gains.
From Spring to Summer 2002, 56% of Hot AC stations increased share.
47% of Hot AC stations gained share from Winter to Spring 2002.
The average share increase for Hot AC stations was 14%, with only four stations increasing less than 10%.

Modern AC

Modern AC is also growing, though fewer stations are growing this book as compared to the Spring book.
From Winter to Spring 2002, 55% of Modern AC stations increased in share.
42% of Modern AC stations gained share from Spring to Summer 2002.
The average share increase for Modern AC was 15%.

Next week we will examine the Country format.

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