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Some radio stations raise ad revenue via airtime for programs that promote a product or service

September 23, 2007|By Laura Smitherman | Laura Smitherman,Sun reporter

Turn the radio dial these days and hear show host Troy Duran talking up buying opportunities in stocks of little-known companies that mine gold, uranium and more obscure minerals like molybdenum. Or hear Bob and David Hanson on another program saying that now is the time to buy that vacation home or investment property.

But Duran is not an investment professional, and the Hansons aren't impartial experts. Their shows are paid advertisements.

Increasingly, this is the sound of talk radio.

As radio stations confront stagnant advertising revenue, many sell blocks of time to stockbrokers, doctors, lawyers, mortgage brokers and other entrepreneurs who produce their own gabfests intended to promote a product or service. It's a departure from the traditional format in which talk jocks are paid to draw listeners to the station, which sells time for commercial breaks.

Media observers say these shows are a sign of the times in a commercial-saturated world, akin to infomercials proliferating on television, and print advertising that pervades almost every public space. In recent years, radio insiders say they have seen an uptick in providers of financial services and mortgage brokers buying time, especially during the housing market boom.

The people behind the programs say they are an effective and inexpensive way to advertise; hosting your own radio show costs as little as a few hundred dollars an hour. They note that shows must carry disclaimers at the beginning and end, explaining who paid for the program. And some show hosts say the advice they give on the air serves an educational purpose.

But consumer advocates contend that listeners may not understand that the programs are an advertising pitch, or think that they are getting unbiased advice. The shows blur the lines between independent talk shows and ads, critics say, and disclaimers might not be heard by the casual listener tuning in for a short commute or break. While advocates call for more oversight, the federal government has rarely intervened.

Moreover, the shows can create potential pitfalls for radio stations giving up control of the airwaves.

In Baltimore, Ferris Baker Watts Inc. stockbroker Brian J. Kelly recently pulled the show he paid to put on Baltimore's WBIS at 1190 AM after regulators barred him from the securities profession this summer. Regulators concluded Kelly bilked a client who invested money with him after hearing his radio program. He has denied the allegations.

"You don't really know what you've tuned into. That's the problem with radio," said Linda Sherry, director of national priorities at Consumer Action, a nonprofit advocacy group.

Station owners disagree.

Claims about products or services are "signs easily recognized by consumers" that they are listening to a sponsored show and not editorial content from the station, said James Weitzman of Nations Radio LLC, which owns WBIS.

Among shows paying to be on the Baltimore-area airwaves are:

Financial advice programs, such as Smart Money with Gil Kuta, another Ferris broker who gives investment opinions and takes calls from listeners. His show airs on WCBM, the Baltimore station at 680 AM, and WMAL at 630 AM out of Washington.

You Auto Know with Dave Serio, an automotive repair shop owner who answers questions about car troubles and recommends area shops, on WCBM and Frederick's WFMD at 930 AM.

Shows about real estate and home loans, including The Mortgage Lender with John Katsafanas, who is on WCBM.

Health and diet shows such as the Res-Q Health Line about a line of vitamins and supplements, also on WCBM. The product maker N3 Oceanic Inc. has built a multimillion-dollar business, primarily by airing radio infomercials across the country.

Duran's show that touts stocks and the Hansons' show, The One Percent Mortgage Solution, about a low-payment loan option, both air on WBIS. The Hansons are also on WAGE at 1200 AM out of Loudoun County, Va.

Some stations, including WBAL at 1090 AM, the top-rated station for talk radio in Baltimore, avoid sponsored shows selling a product or service. WBAL typically pays its radio personalities and their shows are financed by selling commercial time. It only sells a few hard-to-fill time slots to certain kinds of shows, such as churches airing their Sunday programs.

"We're not doing that kind of stuff," said Edward C. Kiernan, WBAL's general manager. "We've had many people come to us with real estate and business shows, and we decided not to be in that business. You're basically turning the radio station over to someone else, and you kind of don't know what's going to happen."

Radio stations "sort of hold their nose and take the revenue," said Frank Saxe, senior editor of the trade journal Inside Radio. "For a radio guy, it's kind of like nails on the chalkboard."

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