There won't be a liberal Rush: The economics of conservative media

There's a reason why the airwaves are filled with right-wingers — and it's all about big business

Published December 28, 2013 2:45PM (EST)

Rush Limbaugh                                           (AP/Jeff Chiu)
Rush Limbaugh (AP/Jeff Chiu)

Excerpted from "The Outrage Industry"

When we think about outrage media, we think about the competition between left and right. We see those with whom we agree working to promote worthy ideas that compete with those advanced by the other side. The real competition in the Outrage Industry, though, is for advertising dollars. Each day producers, hosts, and bloggers try to fashion content to draw more viewers, listeners, and readers so that they can at least survive financially, if not prosper. This discussion of business practices within the cable, talk radio, and political blog sectors provides some context for determining why outrage has surged in recent years. The perfect storm may have provided greater opportunity for outrage but entrepreneurs had to find formats and content that would attract advertising revenue, which can only be done by delivering audiences.

We begin with a fundamental problem that all types of individual businesses face: How do you differentiate your product from those that are already in the marketplace? In a competitive world with more supply than demand, which businesses win out? And how are business decisions made about the type and level of outrage that is produced? From product differentiation, we turn to profitability. Developing a product and making money from it are two different things. The financial underpinnings of each of the three sectors are examined in turn.

We also look at brand identity to try to better understand how outrage is marketed. In this context we ask how portable is outrage — can companies build beyond the personalities that define their programs or blogs? Finally, we place the new incivility within the framework of competitive advantage. How and why does outrage, delivered day-in, day-out by host or writer, provide advantages in the marketplace? Given the harshness of outrage talk, are there any limits to what hosts and writers can say? Are there constraints imposed by the market on the language that is used?

Product differentiation

Facing competition, businesses within each sector must find ways of building a loyal clientele and, they hope, expand upon their base. That’s no small challenge. In cable television, product differentiation is abundantly clear: There is MSNBC on the left, Fox News on the right, and CNN in the center. CNN itself has only episodically offered outrage programming but did well with Glenn Beck before he left for Fox and with Lou Dobbs, who railed incessantly against illegal immigration on his financial news program before he abruptly quit the network in 2009. In the evenings when cable news viewing is at its highest, CNN has struggled against Fox and MSNBC.

Fox has dominated in the evening, and the network’s the "O’Reilly Factor" at 8 p.m. and repeated at 11 is the highest rated political show on cable, with its daily showings averaging more than 3 million nightly viewers. Rachel Maddow, who has become the face of MSNBC, draws under a million viewers at the 9:00 slot, many fewer than Fox’s Sean Hannity (more than 2 million viewers a night) at the same time.

From the start, Fox was intended to be a conservative voice, fitting comfortably within parent News Corp’s worldview and that of its head, Rupert Murdoch. MSNBC, however, has gradually transformed itself into a liberal alternative to Fox. General Electric, NBC’s corporate parent at the time, received a cable channel as part of compensation from cable distributors who needed to pay to carry NBC and other GE cable properties. In 1994, GE first used the new cable network slot for America’s Talking, conceived of as a cable alternative to talk radio. When that failed, the corporation looked for alternatives. Said one cable consultant in an interview, “For ten years they have been experimenting with it, throwing things up against the wall and seeing what sticks. MSNBC really had no place else to go but to appeal to liberals.” MSNBC put an exclamation point on its long-term strategy when in the fall of 2010 it unveiled a new corporate slogan, “lean forward.”

In the past few years Fox has turned even further right and MSNBC has tacked more to the left. Glenn Beck, who joined Fox in 2009, was unlike anyone else on cable. Although he is widely criticized for his conspiracy theories and crying on the air in despair about America, he gave Fox’s previously sleepy 5 p.m. time slot impressive ratings until Fox chose not to renew his contract in the summer of 2011. Liberal Alan Colmes was let go from Hannity and Colmes as the show traded its left-right format for a strictly conservative outlook. Meanwhile MSNBC has added more liberal programming, with evening hosts Al Sharpton, Ed Schultz, and Lawrence O’Donnell picking up the departed Keith Olbermann’s belligerence. In discussing Mitt Romney’s campaign during the GOP primaries in 2012, O’Donnell described the Mormon Church as an institution created by a man who “got caught having sex with the maid and explained to his wife that God told him to do it.” It is rhetoric like this that led Bill Clinton to call the network “our version of Fox.”

A study by Pew of media coverage in the 2012 presidential election found that MSNBC was sharply more negative toward Mitt Romney in its coverage than was Fox Cable in its coverage of Barack Obama. There were some concerns that when corporate behemoth Comcast purchased NBCUniversal in 2009, it would clip MSNBC’s liberal wings. Whatever the political views of Comcast’s hierarchy, it seems to have done little to inhibit MSNBC. As we discuss below, MSNBC is highly profitable and has grown its audience as it has turned even more to the left.

Similar, Not Different

Although it is easy enough to tell the difference between conservative and liberal talk radio programs or blogs, the product differentiation within each ideological grouping is modest. Talk radio is particularly notable in that the competition is largely conservative versus even more conservative. Almost all the top syndicated shows feature a conservative host. More broadly, tune in any talk radio station in the nation and the likelihood is that you’ll hear a conservative commentator. Since cities of any significant size typically have more than one (non-sports) talk radio station, a conservative program on one station is likely to be competing against one or more conservative commentators running at the same time.

Business School 101 would lead us to expect that any store or vendor would work hard to distinguish its products and services from competitors. Talk radio hosts would probably dispute our characterization of their programs as formulaic, but the basic approach, format, and political point of view of the programs is remarkably similar. Two questions emerge. First, why the dearth of liberal hosts to offer a contrast to conservative talk radio? Second, why is conservative talk radio generating such homogeneous product?

The paucity of liberal talk radio became ever more apparent after the collapse of Air America, an ambitious effort to create a progressive talk radio network. It was a highly visible initiative with well-known personalities such as Al Franken and Janeane Garofalo taking to the airwaves. Air America never attracted an audience, and without an audience there was no reason for advertisers to buy commercial time. When it finally stopped broadcasting in January of 2010, Daily Kos’s Markos Moulitsas mocked its demise, tweeting: “Air America was still really on the air?”

Yet there is some liberal talk radio. Although the nationally syndicated shows are almost all conservative in outlook, liberal talk radio can be found on local stations. Some hosts with liberal views are syndicated (Stephanie Miller, Randi Rhodes, and Ed Schultz, for example), though no one on the liberal side approaches the audience size drawn by the conservative stars. There is also some presence of moderate or non-ideological hosts at the local level.

One basic reason for the modest size of the market for liberal talk is that much of the potential audience listens to other types of radio. Together, African Americans and Hispanics constitute somewhere near 30 percent of the nation’s population, but they constitute a much larger proportion of the nation’s liberal population, and these listeners can choose programming that is specifically targeted toward them. Talk programming is particularly popular among African Americans and there have long been stations catering to that market in urban areas. There are also Spanish-language alternatives that appeal to many Hispanic listeners. The potential audience for liberal talk radio is further reduced by the popularity of National Public Radio (NPR), which is more popular with liberal listeners than with conservatives. NPR rejects the charge that it reports news from a liberal point of view, but conservatives consistently deride NPR as biased. Ratings put the weekly audience for NPR at around 34 million and it is a major force in radio nationwide.

Political scientist William Mayer points to a fundamental difference between conservatives and liberals in their attraction to talk radio. Surveys consistently show that conservatives are much more distrustful of the mainstream media than are liberals. Indeed, conservative hosts on talk radio emphasize this bias as the raison d’être for their programs. This bias is frequently illustrated by hosts who will use coverage of a story in the New York Times or other mainstream outlet as a jumping-off point for conversation. Talk will then focus on why the story must be understood in a different context. In short, conservatives like talk radio because they believe it tells them the truth, while liberals appear to be much more satisfied with the mainstream media and are more likely to conclude that it is accurate in its reporting.

In very general terms there appears to be a broad personality difference in those who are attracted to conservative talk radio and those who shun it. As Marc Hetherington and Jonathan Weiler write, “The vast audiences of Rush Limbaugh, Sean Hannity, and Michael Savage, espousing deeply emotion- and symbol-laden views of American politics speak to the place in American life of the political style that we believe is best explained by an authoritarian divide.” “Authoritarian” refers to a personality and attitudinal style that believes there is a clear right and wrong. Individuals who embrace this belief are more attracted to aggressive rhetoric in political commentary, which narrates the world in black and white. This Worldview fits contemporary conservative politics more than it does contemporary liberal politics.

Conservative dominance of political opinion radio, then, has both demand-side and supply-side explanations. On the demand side, conservatives’ greater distrust of mainstream media and greater interest in black and white narratives, and the niche talk alternatives for African American and Hispanic audiences help us to understand why conservative audiences might be larger than liberal audiences. Meanwhile, on the supply side, the early success of Rush Limbaugh, spurred executives — prone to build on financially successful models — to develop more programs in this vein. The format is inexpensive. For an individual show, only a modest level of preparation is needed—often nothing more than constructing a brief list of discussion topics — and, thus, staffing needs are minimal. A host may have a sheaf of news clippings and will use them as take-off points. Rush Limbaugh, who could spend lavishly on a staff if he so desired, works in his small, nondescript studio in Palm Beach with a sound engineer, an assistant who transcribes the show, and a staffer he refers to on the air as Bo Snerdley. During the ample commercial breaks Limbaugh searches websites like the Drudge Report for material to use.

Not only is there evidence that edgy conservative talk radio can be profitable but Air America’s demise has suggested that liberal talk radio is a bad investment. Ironically, that may not be the case. Air America may have just been too much too soon — an entire network of liberal programming from scratch — and failed for this reason. On television, MSNBC began with one liberal show, adding new shows tentatively with carefully vetted hosts. Air America was far less cautious from a commercial perspective; the network was founded during George W. Bush’s presidency, driven quite explicitly by a political (rather than economic) goal: to influence the presidential election. Whether or not Air America would have had success if a more judicious approach had been used, its failure has had a chilling effect. Given the rampant preference to replicate commercially successful programming that we described in the previous chapter, it follows that the Air America legacy is likely to prolong the ideological imbalance in the political talk radio arena, a cautionary tale for potential investors.

While new modes of distribution have emerged — one can listen to talk radio streaming, online via mobile devices, on Sirius XM, or by podcast —  the industry still offers the same shows produced in the same fashion. The talk radio format revolves round a host (sometimes two) talking at length, periodically ranting, taking some calls from listeners, and occasionally, talking to a guest over the phone. Almost nothing has changed since the format was first instituted. Although a listener can now go to the website and send in a comment, the new technologies have not led to substantive changes in the content of the programs themselves. The programs are virtually identical in format and similar ideologically. The conservative viewpoints expressed on radio are not particularly diverse. The host and/or writers mine the day’s news, finding an item that will work well as a jumping-off point. The hosts gravitate toward similar perspectives and express them with the hallmarks of the genre. Indeed, financial success is what created the genre. Cable news exhibits considerably more product differentiation. Instead, in a sea of similarly structured conservative content, what differentiates one talk radio show from another is the personality of the host. Some may prefer Glenn Beck’s professorial explanations of history, while others favor Mark Levin’s venom.

The Entrepreneurial Spirit

The political blogosphere is vast, and generalizations about its nature are problematic. Our research examined two important sectors of this universe. First, we monitored the content of the most popular independent political opinion blogs. By “independent,” we mean that they were not part of a larger media organization exerting editorial control over content. As such we did not look at blogs embedded in press entities like the New York Times or the Atlantic. Second, we followed the coverage of the 2010 congressional primaries by state and local political blogs. (We did not include candidate or party blogs.) The analysis here focuses on these two subsets of the blog world.

In terms of creativity the small staff of most political blogs could be a good thing. Lacking a corporate hierarchy and a heavy hand of management, blogs might be expected to demonstrate a variety of formats and an inclination to experiment, and indeed we see this if we look at the blogosphere writ large; but among the most heavily trafficked political blogs, there is less diversity than we might expect. Political blogs have their own personalities, owing largely to the style of writing by the administrators and bloggers. Despite this distinctiveness, there is similarity in the strident tone of the commentary across the blogs we examined in Chapter 2. Both large and small, conservative blogs rely heavily on outrage. Although our data demonstrate that the liberal outrage outlets utilize outrage less often than conservative ones, the liberal blogs are still biting in their mocking of conservatives. Reexamining the blogs from our 2009 content analysis 18 months later (a long time in Internet years) we found that little had changed in terms of their operation. Most still appear to be modest business enterprises. We did notice a bit of change among a few. The liberal blog Orcinus stopped posting in April of 2010. PowerLine, a conservative blog, had stopped taking comments. This simplified the site and certainly reduced ongoing maintenance. The most dramatic change has been in the Huffington Post, which was independent when we first monitored it. In February of 2011, however, it was purchased by AOL. In terms of substantive content, though, the blogs continued to offer the same basic product. The continuing popularity of the blogs we studied in 2009 does not necessarily reflect a superior product as they are advantaged by getting into the business relatively early and establishing a presence. This does not keep competitors out but new entrants have a challenge in breaking through an enormous clutter of websites devoted to politics. Anyone can start writing, using simple software to establish a blog, and join the “pajamadeen.” As Scott Johnson of PowerLine told us, they started with “that free blogger software, so our investment was zero. Our monetary outlay was zero.”

Even though little capital is required to launch a blog, many blog owners would surely like to have access to capital to enhance their asset. For example, most of the blogs we examined could use both “face lifts” to improve their web design and improvement and expansion of their interactive features. But money to pay for improvements must come from within as blogs are unattractive investments for third parties. Potential investors look at the market and see a profusion of competitors, no real barrier to entry to new competitors, and weak advertising revenues. The attrition rate for blogs is exceptionally high, and one study found that close to 60 percent of new blogs are inactive just four months later.

Consequently, blogs are supported by the investment of human capital of their owners. With the exception of those developed as supplements to major publications or for standing organizations, blogs tend to be personal vehicles driven forward by their founders. The writers of the most successful political blogs become personalities in their own right. Everyone who reads conservative Michelle Malkin’s eponymous blog knows that it is a vehicle for her conservative views. Charles Johnson of the oddly named Little Green Footballs is known for both his conservative outlook and his fondness for feuding with other conservatives. Talking Points Memo is liberal Josh Marshall’s outlet. The reward for their labor is certainly not a high salary but, rather, attention and influence. The blogs are vehicles that make successful bloggers political celebrities who receive requests to appear on television, make speeches, and write for other forums.

The income of the top outrage hosts and personalities demonstrates just how lucrative talking about politics can be. At the very top of the business is Rush Limbaugh whose yearly income approaches $60 million. Fifty million dollars of this comes from his syndicated radio show. Glenn Beck has built a remarkable empire in a relatively short period of time and derives his fabulous income from many more platforms than does Limbaugh. Forbes estimated Beck’s annual paycheck prior to his departure from Fox at $32 million. His largest source of income was publishing and his cumulative book sales through Simon and Schuster stood at 3.5 million in 2010. He receives another $10 million annually from Premiere Radio Networks for his daily show and was being paid just $2 million a year from Fox. The Beck website garners $4 million from merchandise sales, his insider newsletter, and advertising. His public appearances net $3 million annually. Snce leaving Fox he’s established TheBlaze TV, a web-based television channel and quickly built an audience of 300,000 subscribers paying $9.95 a month or $99.95 a year. In 2012 Beck contracted with the DISH Network, a satellite broadcaster, which brings him back to television. The deal with DISH marks another innovative step for Beck and some financial analysts predict that Beck will soon be grossing over $100 million annually. Beck is exceptional, but there are others who do well. From research conducted by Newsweek for a ranking of the highest earning political figures, we’ve culled those who are employed by the companies that fall into our outrage classification and make at least $2 million a year.

These, of course, are the top earners, and all is not riches in the world of outrage. There are striking contrasts among the three industries. The cable networks are extraordinarily profitable, easily besting the rate of return that can be typically found in talk radio or in the blogosphere. Fox Cable earns more than half the profits at News Corp, a huge enterprise. Although MSNBC is much smaller, it is highly profitable as well. Cable television benefits from two income streams, advertising and the subscription fees that cable providers must pay to the networks for the privilege of carrying their programming.

Mad Men

Ad buys for cable, talk radio, and blogs are determined not only by audience size but also by audience quality. In the eyes of advertisers, not all viewers, listeners, and readers are created equal. Consequently, ad rates differ for each individual radio show, TV program, and blog. As we’ve noted, the perfect storm of technological change and deregulation that provided fuel to the growth of the Outrage Industry also created new channels for advertisers. The oldest joke in advertising — “I waste half of my money advertising, I just don’t know which half” — is now a historical curio, just like the ad agencies on Mad Men.

In the past, half an advertiser’s commercial would be wasted because an expensive 30-second commercial on, say, the NBC Nightly News would be shown to a very large and diverse audience, some of whom had little interest in products that were being marketed. What the perfect storm hath wrought is efficiency. For the advertiser who is interested in a particular demographic (which is most advertising), a smaller niche medium will be more economical.

Marketers would find network news a bad investment for most political books because they would be paying to reach a broad audience for an item of interest to a small audience. But a liberal political blog such as Daily Kos offers an inviting opportunity for a book antagonistic toward Fox News.

The sheer number of options available has driven down the price of advertisements and made competition for ad dollars cutthroat. A common metric known as the CPM (cost per thousand of impressions) provides a basis of comparison of alternative placements across different shows and different media. On cable, MSNBC has a CPM of a little more than $3, Fox is around $4, and CNN is higher at close to $6. By way of comparison, the Weather Channel’s charge is $4.61 and Comedy Central’s is $7.46. The CPM for ESPN, however, is around $15. The disparity reflects the challenge in reaching young males. This demographic watches little television but does tune in to watch sports, and for advertisers selling beer, cars, and action movies, ESPN is worth the premium CPM.

Fox’s relatively modest CPM stands in contrast to its powerhouse image and its ratings superiority over the other cable news networks. “From an ad point of view it’s a crappy demographic,” says cable consultant Rob Davis. “What is an advertiser going to show 50 to 70 year olds? GEICO?” Fox has the oldest audience among the major cable networks, news or otherwise, with an average viewer age of 65. CNN’s daily average is 63 years and MSNBC’s is a relatively spry 59. Advertisers interested in reaching adults are generally aiming at the 25-to 54-year-old demographic, an age group where incomes are rising, needs are expanding as families grow, and retirement and health concerns are not yet paramount. In this regard, the cable news networks are less efficient than ad buys for shows popular with younger audiences. At the 8:00 pm block, 40 percent of the "O’Reilly Factor’s" audience is over 65. MSNBC’s Rachel Maddow has a hip, younger image but even 25 percent of her viewers fall into this category. The ability of the three cable news networks to actually improve their demographics appears limited. Said one advertising executive, “If you’re talking about cable channels that are on 24/7, you’re going to get an older audience.” Retirees and others with lots of time on their hands are clearly the core audience of the cable news networks.

Without a particularly attractive audience, why are the cable news networks the most profitable segment of the Outrage Industry? First, there are some advertisers who do want to reach older consumers (more on this later). Second, the revenue from the networks’ subscription fees charged to TimeWarner, Comcast, and other cable distributors, is an enormous boost. Fox Cable News has the seventh highest charge of all cable networks, receiving .82 cents per month for every cable subscriber. This is a testament to how strongly its viewers prize access to the channel. Third, the production costs for the evening talk shows are modest. Most guests are not paid and staffing needs are not extensive.

Cable’s profitability is but a distant dream for political bloggers. Consider the CPMs. For the premium display ad spot, usually the top right or top left of the opening web page, the rates for even the most highly trafficked blogs are quite low. The controversial and highly visible conservative, Michelle Malkin, lists a premium (optimally placed) ad on her blog at just $1.28 per CPM. Outside the Beltway, a conservative blog with a highly educated audience charges $1.74. Moonbattery, another blog popular with conservatives lists its premium space at $1.14. Moreover, these stated rates are soft. In an interview, ad analyst Brandon Coleman noted that as the last opportunity to purchase advertising for each day approaches, websites have to consider whether they should lower their price so they can sell at least some of their considerable empty inventory of ad space. “Every day, once that day goes by, you’ve lost that inventory that you didn’t sell. You can’t get it back. It’s like empty airline seats.”

Even a cursory glimpse at most political blogs shows plenty of empty seats. The number of ads that run down the left or right side tends to be small, and consumer goods are conspicuous by their absence. Even the most widely visited political blog sites have sparse advertising. A peek at Crooks and Liars (liberal) showed an ad for La Quinta hotels but little else. At the conservative Ace of Spades, a display ad for HP computers sat in the middle of the lead post. Wonkette has 5 million page views a month but struggles to attract advertisers; the lack of ads would lead one to believe it was a rather obscure website rather than one of the most popular political blogs. “We’re all fighting for the same shrinking pool of advertisers,” one editor told us.

CPM rates aside, in terms of demographics the audience quality for the top blogs is far superior to that of cable news viewers. The low CPM for Michelle Malkin cited above belies an audience that advertisers should find attractive. Fully 75 percent of her readers have a college degree and 66 percent have an annual income of more than $75,000. The primary reason that advertising is so cheap on political blogs is that there are just so many of them. Since the vast majority of blogs are personal vehicles for their writer-owners, they can survive with a little bit of advertising revenue to supplement the discounted or even free labor that generates the content. The writer-owner who cares little about making a profit drives down the CPMs for all in the industry. With so few barriers to entry, new supply easily supplants those who tire of the game and quit. Perversely, political blogs also suffer financially because they attract people who have serious interests in politics. One advertising executive noted, “[You] go to a blog wanting to know what it’s saying about Obama. You likely block out any advertisements that are there....You’re not going there to buy things. It’s harder for me as an advertiser to penetrate your mind space.” This view is supported by research, which shows that on news sites the “click rate” on display ads is very small. As we’ll discuss, the nature of the content can also scare away advertisers worried about irritating consumers who regard blogs on the other side of the political fence to be offensive.

To make matters worse for blogs, the growing popularity of social networking sites is placing additional pressure on CPMs. Facebook and other social networking sites soak up a considerable amount of all online display advertising. The result is downward pressure on prices. Says Advertising Age, “it’s supply simply outstripping demand.” This low demand ultimately works to support outrage. An editor and publisher of one of the top liberal blogs described the situation as follows:

We’re competing for the same ads that are on popular political blogs that are in political and policy publications, things that are in liberal and alternative media like Mother Jones or Alternet. . . . They are ads for things like CSPAN, or PBS documentaries, or political books. The ad market has never been very robust for political media in this country. It’s a strange thing because the audience is pretty big for political media and tends to be better educated, employed at higher levels, and has more consumer dollars to throw around, but there is a kind of long tradition of political media in America being constantly under funded. Look at the Nation. The Nation has been around for I think a century or so and they are literally begging people for money right now. So, to survive in that climate, we try to be a little more entertainment-based. We’re not putting out 10,000 word dry foreign policy articles on partitioning Iraq or whatever (although we’ll make fun of those!), but we’re still reaching that audience and that audience has not been appreciated nearly enough by advertisers or marketing companies. Maybe it’s because they’re smarter — maybe they’re not as likely to be fooled by sports drinks or something.

And so even blogs that are heavily trafficked find themselves searching for “click bait.” One conservative blog editor called anything on Sarah Palin the equivalent of political pornography and described trying to stay away from compromising what they want to say politically by populating the site with low-hanging fruit. “Why do you think Huffington Post has so many photos of celebrities in bikinis?” he asked.

Excerpted from “The Outrage Industry: Political Opinion Media and the New Incivility” by Jeffrey M. Barry and Sarah Sobieraj. Copyright © 2013, Oxford University Press. All rights reserved.

By Jeffrey M. Berry

Jeffrey M. Berry is John Richard Skuse Professor of Political Science at Tufts University. He's on Twitter at @JeffreyMBerry.

MORE FROM Jeffrey M. Berry

By Sarah Sobieraj

Sarah Sobieraj is Associate Professor of Sociology at Tufts University. She's on Twitter at @sobieraj.

MORE FROM Sarah Sobieraj