Peering Into Radio’s Magic 8-Ball

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As a kid, I remember being amused and perhaps a little fascinated by the “Magic 8-Ball”. You may recall the over-sized sphere — black with the number “8” in a white circle — was supposed to be able to answer questions about the future. For me, the answer that appeared most often in the window was: “Ask again later”.

So what does Radio’s “Magic 8-Ball” reveal?

Will Radio survive the economic doldrums that continue to stifle revenues? Yes.

Will some major Radio companies not make the cut? Yes.

Will increased health care expenses force most companies to reduce the number of employees? Yes.

Several years ago, the group for which I managed a cluster of stations provided an extremely generous health care plan. There was no employee contribution; all expenses were covered by the company save a $10 per-visit co-pay.

We saw our health care costs escalate 20% per year, and it was only a matter of time until the company would have no longer been able to absorb the increases. The acquisition of the stations by a large conglomerate resolved that issue (although the quality of the new company’s health care plan was a disappointment to employees).

The new government-mandated health care system will be phased in over the next several years. However, premiums are projected to increase dramatically as insurers are required to accept individuals with preexisting conditions. Since the federal government will cap the amount of premium increases allowed, most insurance companies will likely be squeezed out of business within 2-3 years. The end result will be government-run health care insurance (a.k.a. “single payer”).

Radio’s revenues have suffered greatly over the past two years. Only now are some operators starting to see a reduction of losses…some even are enjoying increases. A Magic 8-Ball is not required to determine that the advent of skyrocketing insurance premiums is a factor that will further hamper Radio’s recovery (as well as most other business).

Will government continue to seize more control over the nation’s private sector? Ask again later.

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