Dear investor-person:
I have tremendously good news to share with you.
Our great national nightmare is over.
After 12 years of consolidation that is the universal field theory of why the radio industry is in its current state of woe, the business that for decades was not only delivering better cash flow than just about any business you could find, but was also growing, is set for a renaissance.
I haven't been hitting the tequila; I'm referring to the sudden flood of radio properties - generally excellent properties - that are on the market. With Clear Channel setting free 60 stations and Dan Mason & CBS putting up their 50, immediate reaction from some might be "the radio business must really suck, look at these major players bailing!"
Not so fast.
Finally, the radio industry is experiencing the first phase of its rebirth and that is the return to the transition phase of its business cycle to what amounts to 'circling the wagons and concentrating on the segment of the business that is delivering the best financial results.' Clear Channel and CBS should be proud of the fact that they actually have significant numbers of stations they can operate that are throwing off cash flow. By trimming the fat, these two companies can concentrate on running a number of stations that may be more comfortable for them.
These 110 radio stations up for sale now offer an opportunity for two things to begin occurring: 1) the return of more intelligent operators who one way or another were no longer needed by those companies that were so greedy in 1996-2000 that they grabbed up as many radio properties as they could without a consideration as to whether they could operate them all effectively. They THOUGHT they could...but time has proven them wrong.
And 2) many of the profoundly intelligent general managers, program directors and owners who got out of the radio business because they were forced or just gave up, will now start re-entering a business they have loved for years and who had become sickened by what we all have witnessed - the gutting of a business that lost its way.
Yes, I am giving all you investors out there a BIG early tip now so you can start realigning your portfolios or - even better - if you've got money to lend and you've given up on the industry, now is the time for you to feel inspired.
I can count on all my fingers and toes a partial list of highly qualified radio managers who at this moment could take a cluster of any of these soon-to-be-sold groups and make them profitable, compelling to listen to and maybe most importantly, return the fun to working in the radio business that got skewered by operators who saw an opportunity in the late 90's and 2000's but never had a clue as to the 'secret sauce'.
Me and my compatriots who have been in this business since the good times (pre-1996), completely get what made the business such a great investment then and why it attracted some of our country's most creative minds through the years. The time may be coming when you see the return by these individuals to the business as operators. Smart operators.
Expect those who have been on the sidelines in recent years to begin pulling money together and buying some of these stations. I know because I've spoken with them!
Expect those Clear Channel and CBS stations that will be sold to out-perform under these new owners.
Expect this to be the watershed we've been waiting for. 2009 will be the year of the turnaround.
2009 will prove to be a great year for investment in the radio business.
These new independent owners know more about the terrestrial side of the business than most of their peers who seem to have no clue what to do with this vast new frontier.
They have been cooking up digital solutions that will expand the radio business.
If they haven't been scared away for good; if they haven't given it up through disgust, this infusion of lifeblood into station ownership will be the beginning of a return to pre-consolidation days when men were men and radio ROCKED!
Saturday, August 9, 2008
Friday, July 4, 2008
Indiana Jones & Terrestrial Radio
Interesting title for a blog, eh?
If you're an Indiana Jones fan - or at least have seen one or two of the franchise movies - you know there is always a moment when Indie is faced with being left alone behind a sliding door with spiders or snakes. But, at the last second, he manages to pull out that trusty whip of his and snag it on a branch on the other side of the closing door and he is able to swing himself through to be alive for another day! Hurray!
This happens in the latest Indiana Jones movie as well and it enabled me to visualize what is happening terrestrial radio. The industry is at a significant crossroad and is in severe danger of being left behind a impenetrable door.
I've been researching the radio industry in earnest with my company Bridge Ratings since 2002 and have watched trends from a vantage point few have. Our projects cover everything component of radio listener usage. Over the last six years there were actually moments when radio's pulse increased as if its efforts to postpone or stop listening attrition were beginning to find traction, only to learn in a project 3 or six months later, that what I witnessed was a false revival or it was still-born.
Now with six years 'visibility', and with multiple signposts struggling to show improvement, the industry's efforts may now be too little too late.
What signposts do I pay attention to?
Poor programming decisions, lack of marketing resources, reduction of key management personnel and slowness to adapt to changing technologies; these are all key contributors to terrestrial radio's current malaise and more of these contributors have had as their source the poor decisions and lack of focus at radio's corporate headquarters (a generalization). There remain a handful of broadcast executives who 'get it', but not enough. It's like an V-8engine running on one cylander.
An objective observer to these trends would perceive (almost) that in many cases the industry had given up the fight or is simply resting on its aging laurels. And that wouldn't be far from the facts.
Terrestrial radio can learn at least one thing from Indiana Jones and that is courage. Our fictional hero never seems to give up even in the face of some of the ugliest circumstances placed before him. And while terrestrial radio as a whole has a tougher time reacting to change than our celluloid hero, the industry cannot afford to be left behind that slowly closing door without a whip.
Certainly the radio industry is hobbled by new technologies it simply cannot compete with, but it is being forced to change with the times which is a good thing. It can offer young and old a new blend of media that is better than its version before there were MP3 players, the Internet or satellite radio.
It only requires the old Indie courage. Where will our heroes come from?
If you're an Indiana Jones fan - or at least have seen one or two of the franchise movies - you know there is always a moment when Indie is faced with being left alone behind a sliding door with spiders or snakes. But, at the last second, he manages to pull out that trusty whip of his and snag it on a branch on the other side of the closing door and he is able to swing himself through to be alive for another day! Hurray!
This happens in the latest Indiana Jones movie as well and it enabled me to visualize what is happening terrestrial radio. The industry is at a significant crossroad and is in severe danger of being left behind a impenetrable door.
I've been researching the radio industry in earnest with my company Bridge Ratings since 2002 and have watched trends from a vantage point few have. Our projects cover everything component of radio listener usage. Over the last six years there were actually moments when radio's pulse increased as if its efforts to postpone or stop listening attrition were beginning to find traction, only to learn in a project 3 or six months later, that what I witnessed was a false revival or it was still-born.
Now with six years 'visibility', and with multiple signposts struggling to show improvement, the industry's efforts may now be too little too late.
What signposts do I pay attention to?
- Young listeners' time spent with the medium
- The multiple alternate media listeners of all ages are using over time
- Strategies used by media companies and how they play out
- Stock price of terrestrial radio companies and how that price has been affected by corporate decisions
- Media coverage of terrestrial radio
- Changes in consumer interest in Internet, Satellite and HD Radio
Poor programming decisions, lack of marketing resources, reduction of key management personnel and slowness to adapt to changing technologies; these are all key contributors to terrestrial radio's current malaise and more of these contributors have had as their source the poor decisions and lack of focus at radio's corporate headquarters (a generalization). There remain a handful of broadcast executives who 'get it', but not enough. It's like an V-8engine running on one cylander.
An objective observer to these trends would perceive (almost) that in many cases the industry had given up the fight or is simply resting on its aging laurels. And that wouldn't be far from the facts.
Terrestrial radio can learn at least one thing from Indiana Jones and that is courage. Our fictional hero never seems to give up even in the face of some of the ugliest circumstances placed before him. And while terrestrial radio as a whole has a tougher time reacting to change than our celluloid hero, the industry cannot afford to be left behind that slowly closing door without a whip.
Certainly the radio industry is hobbled by new technologies it simply cannot compete with, but it is being forced to change with the times which is a good thing. It can offer young and old a new blend of media that is better than its version before there were MP3 players, the Internet or satellite radio.
It only requires the old Indie courage. Where will our heroes come from?
Sunday, December 2, 2007
Local, Local, Local
I've been at my new job at ABC radio for about a month now and it's great; I'm really enjoying the fact that as Vice President of ABC Radio Networks' Affiliate Relations department, I can interact with so many radio stations across our grand land.
The lessons I learned through my years of working at Bridge Ratings I brought with me and after a few weeks communicating with a much more diverse group of stations than I ever have before, here's what I've learned:
1. Regardless of market size everyone has the same problems and opportunities.
It wasn't always this way, you know. Before consolidation took our industry by storm, major markets and stations in the top 50 had far different considerations in operating their businesses than did operators in markets 51 and below. Pre-'96, top 50 market stations had operating budgets that included marketing, promotion and research. They also had personnel resources that allowed them to be extremely competitive and allowed them to keep their eyes on the various balls they had to juggle. Major market operators only recently have had to deal with managers overseeing multiple stations. Top 50 stations in those days actually had time to plan and strategize for the future and act upon those strategies. They also have years more experience operating multiple properties than do their big market cousins.
Medium and small market operators have always had to work harder at making their businesses work. They did so with good old fashioned sweat and creativity along with building relationships. They still do it this way today.
2. Medium and small market operators are more aware of the importance of reflecting the local audience.
While this has been a staple of broadcast operations for-ever, somewhere along the line major market radio pushed it to the back burner. Now, I'm generalizing here because there are some major market operators who have not only remembered this important element of serving the public interest, they use their major market resources to make a difference in their towns and cities.
Local radio has always been compelling. The genericizing of American radio which has been pushed along by companies with such huge footprints as Clear Channel have literally taken the spine out of these stations which no longer sound like their communities. These stations provide impetus for all listeners - not just Gen-X, Y and Z - to seek alternative entertainment by virtue of the obvious lack of interest in their local communities.
3. Major market management drink their own kool-aid.
These people are so impressed with their climb to the top many have forgotten their roots. I was visiting a small market operator a couple of weeks back and I was taken by his continued passion and optimism for our business.
On the other hand, not a phone call I have with major market managers doesn't include a doomsday outlook. Small market operators don't fear Internet and satellite radio like their big market brethren. Perhaps there is some legitimacy to this perspective since there seems to be wider consumer acceptance of these technologies in the larger markets, yet I have spoken with some major market management who understand that it is NOT Internet radio and it is NOT satellite radio that has caused terrestrial radio's ills.
My view of the radio landscape is undergoing some adjustment simply because I am now exposed to a broader perspective and I love that. In fact, this broader perspective has allowed me to share some of the small and medium market wisdom with the big boys who seem to react positively to a fresh perspective.
I look forward to being exposed to the inclinations of all of the broadcasters I come in contact with these days and sharing them with each other in a way that perhaps has never been done before.
After all the things I learned through the consulting work I've done through my Bridge Ratings experience, I didn't have the ability to share with the industry the insight of so many others.
The insight seems to be helping gain perspective which we can all use from time to time.
The lessons I learned through my years of working at Bridge Ratings I brought with me and after a few weeks communicating with a much more diverse group of stations than I ever have before, here's what I've learned:
1. Regardless of market size everyone has the same problems and opportunities.
It wasn't always this way, you know. Before consolidation took our industry by storm, major markets and stations in the top 50 had far different considerations in operating their businesses than did operators in markets 51 and below. Pre-'96, top 50 market stations had operating budgets that included marketing, promotion and research. They also had personnel resources that allowed them to be extremely competitive and allowed them to keep their eyes on the various balls they had to juggle. Major market operators only recently have had to deal with managers overseeing multiple stations. Top 50 stations in those days actually had time to plan and strategize for the future and act upon those strategies. They also have years more experience operating multiple properties than do their big market cousins.
Medium and small market operators have always had to work harder at making their businesses work. They did so with good old fashioned sweat and creativity along with building relationships. They still do it this way today.
2. Medium and small market operators are more aware of the importance of reflecting the local audience.
While this has been a staple of broadcast operations for-ever, somewhere along the line major market radio pushed it to the back burner. Now, I'm generalizing here because there are some major market operators who have not only remembered this important element of serving the public interest, they use their major market resources to make a difference in their towns and cities.
Local radio has always been compelling. The genericizing of American radio which has been pushed along by companies with such huge footprints as Clear Channel have literally taken the spine out of these stations which no longer sound like their communities. These stations provide impetus for all listeners - not just Gen-X, Y and Z - to seek alternative entertainment by virtue of the obvious lack of interest in their local communities.
3. Major market management drink their own kool-aid.
These people are so impressed with their climb to the top many have forgotten their roots. I was visiting a small market operator a couple of weeks back and I was taken by his continued passion and optimism for our business.
On the other hand, not a phone call I have with major market managers doesn't include a doomsday outlook. Small market operators don't fear Internet and satellite radio like their big market brethren. Perhaps there is some legitimacy to this perspective since there seems to be wider consumer acceptance of these technologies in the larger markets, yet I have spoken with some major market management who understand that it is NOT Internet radio and it is NOT satellite radio that has caused terrestrial radio's ills.
My view of the radio landscape is undergoing some adjustment simply because I am now exposed to a broader perspective and I love that. In fact, this broader perspective has allowed me to share some of the small and medium market wisdom with the big boys who seem to react positively to a fresh perspective.
I look forward to being exposed to the inclinations of all of the broadcasters I come in contact with these days and sharing them with each other in a way that perhaps has never been done before.
After all the things I learned through the consulting work I've done through my Bridge Ratings experience, I didn't have the ability to share with the industry the insight of so many others.
The insight seems to be helping gain perspective which we can all use from time to time.
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