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!
Showing posts with label consolidation. Show all posts
Showing posts with label consolidation. Show all posts
Saturday, August 9, 2008
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.
Thursday, September 13, 2007
What's Good for the Radio Goose....
Since February's announcement that Sirius satellite radio was interested in acquiring XM, we've seen many twists and turns in Mel Karmazin's effort to convince the FCC and others that a merger is in the best interests of consumers. In Mel's usual style, he has done an expert job of laying out the rationale and presenting it in an intelligent, non-offensive manner.
However, as we near the end of 2007, we seem to be very close to a decision on this event and as I mentioned in an earlier blog, my money now is on the merger getting approved.
The National Association of Broadcasters has done a respectable job of countering satellite radio's rationale in favor of a merger, but the time has come for the NAB to face the "Rule of Consolidation".
The fact is that the NAB has lobbied for consolidation of the radio industry since the early 90's and got permission for radio companies to begin buying up each other in a 1996 act of Congress.
The argument was that not only is consolidation good for the business - it's good for the consumer.
Now, eleven years later, many in our business - even on Wall Street - believe that this wave of consolidation has had negative repercussions on the financial well-being of the radio business.
Again, in the last two years, the major radio companies have been stamping their feet for further consolidation. It seems that owning 8 radio stations in the biggest radio markets wasn't enough. There are those who want to own 10 or more stations in the same market.
Yet when it comes to satellite radio consolidating, the radio industry says "no".
The radio industry is concerned about this proposed merger for many reasons...but none of them are truly onerous.
If the radio industry manages their business properly...
Bridge Ratings has been studying consumers' reaction to the proposed merger since it was announced in February. Over time and 5 studies, current satellite radio subscribers have become less concerned about the impact of such a merger. Potential satellite radio subscribers are confused, but most will delay their decision to subscribe until a decision is made. This is one reason why year-to-year satellite radio subscriber rates have fallen so precipitously in the last year.
The only negative impact the merger has had on the satellite radio companies is that the news of a potential merger has derailed the sector's growth. That's only temporary.
Satellite radio is a niche business and a merger will not automatically make it a broad-based appeal business.
If consolidation was good for the radio goose why isn't it good for the satellite gander?
However, as we near the end of 2007, we seem to be very close to a decision on this event and as I mentioned in an earlier blog, my money now is on the merger getting approved.
The National Association of Broadcasters has done a respectable job of countering satellite radio's rationale in favor of a merger, but the time has come for the NAB to face the "Rule of Consolidation".
The fact is that the NAB has lobbied for consolidation of the radio industry since the early 90's and got permission for radio companies to begin buying up each other in a 1996 act of Congress.
The argument was that not only is consolidation good for the business - it's good for the consumer.
Now, eleven years later, many in our business - even on Wall Street - believe that this wave of consolidation has had negative repercussions on the financial well-being of the radio business.
Again, in the last two years, the major radio companies have been stamping their feet for further consolidation. It seems that owning 8 radio stations in the biggest radio markets wasn't enough. There are those who want to own 10 or more stations in the same market.
Yet when it comes to satellite radio consolidating, the radio industry says "no".
The radio industry is concerned about this proposed merger for many reasons...but none of them are truly onerous.
If the radio industry manages their business properly...
- A merged satellite radio company will not significantly impact its listenership
- A merged satellite radio company will not impact radio's revenues and profits
Bridge Ratings has been studying consumers' reaction to the proposed merger since it was announced in February. Over time and 5 studies, current satellite radio subscribers have become less concerned about the impact of such a merger. Potential satellite radio subscribers are confused, but most will delay their decision to subscribe until a decision is made. This is one reason why year-to-year satellite radio subscriber rates have fallen so precipitously in the last year.
The only negative impact the merger has had on the satellite radio companies is that the news of a potential merger has derailed the sector's growth. That's only temporary.
Satellite radio is a niche business and a merger will not automatically make it a broad-based appeal business.
If consolidation was good for the radio goose why isn't it good for the satellite gander?
Wednesday, June 6, 2007
Radio Ownership: The Minority Gap?
A new report was released this week indicating that women and minorities 'are largely absent from radio station ownership, thanks to a surge in media consolidation'.
Gloria Steinem led a conference call discussion about the study which is designed to urge the Federal Communications Commission to refrain from further relaxing restrictions on ownership of broadcast stations by large companies.
I'm not a big fan of consolidation - not after what the 1996 move has done to the industry. Consolidation is just one facet of a perfect storm of events that has led the radio industry to its current doldrums.
Based on an analysis Bridge Ratings conducted late last year as part of the 10th anniversary of the 1996 consolidation ruling in Congress, the act of consolidating properties by large companies has not been responsible for the lack of women and minority ownership. It's just not that easy to get funded! The funding process for any individual is grueling and - especially in the current industry revenue growth environment - delivering acceptable performance targets is a difficult task for any interested owner regardless of race or gender.
I don't think women and minorities have necessarily been systematically cut off from media ownership. The public-interest group study released this week thinks they have.
Women own 6% of all full-power commercial radio stations nationwide and racial or ethnic minorities own 7.7%.
And while Ms. Steinem and others - including the two Democratic members of the FCC - would like to see a closer parity in ownership to women and minority population percentages - it just won't happen anytime soon.
Yes, I agree that there should be changes in ownership rules in order to give more individuals the opportunity to own and operate radio stations. Hold ownership rules where they are currently or reduce the number of stations that can be owned, but the women and minority percentages won't change significantly because of it.
When the financing environment changes significantly or special preferences are offered by the financial funding community to women and minorities who prove they are able to operate, only then will this imbalance improve.
Consolidation has little to do with it.
Gloria Steinem led a conference call discussion about the study which is designed to urge the Federal Communications Commission to refrain from further relaxing restrictions on ownership of broadcast stations by large companies.
I'm not a big fan of consolidation - not after what the 1996 move has done to the industry. Consolidation is just one facet of a perfect storm of events that has led the radio industry to its current doldrums.
Based on an analysis Bridge Ratings conducted late last year as part of the 10th anniversary of the 1996 consolidation ruling in Congress, the act of consolidating properties by large companies has not been responsible for the lack of women and minority ownership. It's just not that easy to get funded! The funding process for any individual is grueling and - especially in the current industry revenue growth environment - delivering acceptable performance targets is a difficult task for any interested owner regardless of race or gender.
I don't think women and minorities have necessarily been systematically cut off from media ownership. The public-interest group study released this week thinks they have.
Women own 6% of all full-power commercial radio stations nationwide and racial or ethnic minorities own 7.7%.
And while Ms. Steinem and others - including the two Democratic members of the FCC - would like to see a closer parity in ownership to women and minority population percentages - it just won't happen anytime soon.
Yes, I agree that there should be changes in ownership rules in order to give more individuals the opportunity to own and operate radio stations. Hold ownership rules where they are currently or reduce the number of stations that can be owned, but the women and minority percentages won't change significantly because of it.
When the financing environment changes significantly or special preferences are offered by the financial funding community to women and minorities who prove they are able to operate, only then will this imbalance improve.
Consolidation has little to do with it.
Wednesday, March 28, 2007
CBS Radio: Righting a Sinking Ship
News of Dan Mason being named CEO for CBS Radio came as somewhat of a surprise this week, not so much because I don't think Dan is a good choice - in fact I think he's the best choice. The surprise comes from the wisdom shown by the company's fearless leader Les Moonves. And it's not Les specifically that's so surprising here, it's the fact that it took a TV guy - not a radio guy - to make the first major move at righting a troubled radio industry.
The radio industry has no shortage of brilliant minds. There are plenty on the beach who have suffered the slings and arrows of consolidation. There are many more who have slid into good jobs in related industries such as the Internet and other technology companies. And, yes, there are many still employed by the industry. In fact, the radio industry's 'bench' is so impressive that the consolidators out there have essentially decimated the brain trust that would've led them down the primrose path into a new era, and there are still plenty of good minds in the business.
Why, then, did it take a TV guy to make this kind of decision?
Traditional radio has lost its fighting edge. Consolidation has taken the courage out of the heart of middle and upper management. These are the people who, in the past, would've knocked on their boss's door and been invited in to discuss tough decisions and look to the horizon with senior level management and strike a path that would take their company, their radio station, their industry to a logical next step. There is little of proactive thinking left.
Instead, many middle and senior level radio executives have been emasculated. Their reason for being there has been eliminated or severely reduced in many cases. How do I know this? After more than 25 years programming and managing radio stations in mostly major markets, in recent years I have had the privilege of consulting programmers and general managers who, since 2000 have had their job descriptions changed - not necessarily on paper - but rather in real-world experience. Each week I spend several hours discussing management challenges, personnel issues, strategic and tactical solutions and discussions on 'how to manage up'. Their frustrations come from being highly paid, becoming ineffective managers who used to have autonomy over their stations and who could run their own businesses and deal with the fall-out depending on whether they failed or succeeded. These days every decision is second-guessed and because there is so many stations to manage, their management style has become one of defense. They miss the days when they could plan, plot and be proactive with their teams.
As consolidation's black shadow crept over our industry and settled deep within its joints, more and more top-down management style became the preferred centralized system of controlling so many stations. An arthritic management style became the norm. Clear Channel wrote the book on this subject. During my years with CBS, all of us general managers knew we were a fortunate lot because we actually had senior management who trusted us and gave us the resources we needed to win and run successful businesses. Many thanks to Nancy Widmann, CBS Radio President pre-consolidation, and Dan Mason, CBS Radio President immediately post-consolidation. Dan ran a different ship than Nancy, but his style still focused on fiscal responsibility and earned autonomy at the station level.
After Dan, there was Mel, then Joel and the rest is history.
It took a TV guy, Les Moonves, in one grandiose decision, put CBS radio, if not the entire radio industry back on track. It's because perhaps the TV guy is used to making bold decisions. TV is a different business than radio in many ways often because decisions about programming and people are made with the courage of making a bet on tomorrow, of seeing the positive side of trusting people and of giving good people the chance to prove themselves. Sometimes those decisions end up being wrong, but more often than not, those decisions generate exceptional results.
So, my hat's off to Les. I met him a few years ago at a CBS Radio managers' meeting. He struck me then - as he does now - as a bold decision maker who wasn't intimidated by the job; someone who had the courage to make bold decisions. He also had a supportive Mel Karmazin and then Sumner Redstone to give him room to make those decisions.
Courage. Faith. Confidence. This is why it took a TV guy to right a sinking ship. Many of us are optimistic about our industry for the first time in many years. We look forward to seeing how this plays out.
The radio industry has no shortage of brilliant minds. There are plenty on the beach who have suffered the slings and arrows of consolidation. There are many more who have slid into good jobs in related industries such as the Internet and other technology companies. And, yes, there are many still employed by the industry. In fact, the radio industry's 'bench' is so impressive that the consolidators out there have essentially decimated the brain trust that would've led them down the primrose path into a new era, and there are still plenty of good minds in the business.
Why, then, did it take a TV guy to make this kind of decision?
Traditional radio has lost its fighting edge. Consolidation has taken the courage out of the heart of middle and upper management. These are the people who, in the past, would've knocked on their boss's door and been invited in to discuss tough decisions and look to the horizon with senior level management and strike a path that would take their company, their radio station, their industry to a logical next step. There is little of proactive thinking left.
Instead, many middle and senior level radio executives have been emasculated. Their reason for being there has been eliminated or severely reduced in many cases. How do I know this? After more than 25 years programming and managing radio stations in mostly major markets, in recent years I have had the privilege of consulting programmers and general managers who, since 2000 have had their job descriptions changed - not necessarily on paper - but rather in real-world experience. Each week I spend several hours discussing management challenges, personnel issues, strategic and tactical solutions and discussions on 'how to manage up'. Their frustrations come from being highly paid, becoming ineffective managers who used to have autonomy over their stations and who could run their own businesses and deal with the fall-out depending on whether they failed or succeeded. These days every decision is second-guessed and because there is so many stations to manage, their management style has become one of defense. They miss the days when they could plan, plot and be proactive with their teams.
As consolidation's black shadow crept over our industry and settled deep within its joints, more and more top-down management style became the preferred centralized system of controlling so many stations. An arthritic management style became the norm. Clear Channel wrote the book on this subject. During my years with CBS, all of us general managers knew we were a fortunate lot because we actually had senior management who trusted us and gave us the resources we needed to win and run successful businesses. Many thanks to Nancy Widmann, CBS Radio President pre-consolidation, and Dan Mason, CBS Radio President immediately post-consolidation. Dan ran a different ship than Nancy, but his style still focused on fiscal responsibility and earned autonomy at the station level.
After Dan, there was Mel, then Joel and the rest is history.
It took a TV guy, Les Moonves, in one grandiose decision, put CBS radio, if not the entire radio industry back on track. It's because perhaps the TV guy is used to making bold decisions. TV is a different business than radio in many ways often because decisions about programming and people are made with the courage of making a bet on tomorrow, of seeing the positive side of trusting people and of giving good people the chance to prove themselves. Sometimes those decisions end up being wrong, but more often than not, those decisions generate exceptional results.
So, my hat's off to Les. I met him a few years ago at a CBS Radio managers' meeting. He struck me then - as he does now - as a bold decision maker who wasn't intimidated by the job; someone who had the courage to make bold decisions. He also had a supportive Mel Karmazin and then Sumner Redstone to give him room to make those decisions.
Courage. Faith. Confidence. This is why it took a TV guy to right a sinking ship. Many of us are optimistic about our industry for the first time in many years. We look forward to seeing how this plays out.
Monday, February 12, 2007
What's Wrong with This Picture?
Have you ever been apprehensive about some piece of information that you assumed was true but hadn't any statistic to confirm it? The fine folks at Inside Radio revealed such a stat during the RAB festivities in Dallas last week.
Many radio industry observers, including myself, have drawn conclusions about the consolidation of the radio business that point to the "C" word being responsible for much of the industry's problems of late. Whether you are a sales person at a radio station or a management expert, one of the arguably key issues facing the industry is the lack of focus that comes with one manager overseeing multiple stations, staffs or budgets.
As I pointed out in a recent missive here, the problem of too much on one's plate could be at the root of the listener death in Sacramento where a station's promotion staff approved what became a deadly promotion that involved the consumption of gallons of water by its listeners all in the name of winning an electronic gaming system. Had the general manager been more aware of what was going on 'down the hall', I believe this promotion would never have made it to air. The GM (and perhaps other managers) just had too much to keep track of.
Now we know just how prevalent is this issue of consolidated management and staff. Inside Radio reports through their analysis that there is one General Sales Manager in our business handling 13 radio stations. Another's doing 12 and another 11. Four GSM's handle 10 stations, 11 oversee 9. 34 have eight stations, 48 have 7 stations.
129 General Sales Managers handle 6 stations, 198 have 5, 325 have four, 509 have 3 and 1359 GSM's have two stations. Interestingly, there are still 2477 GSM's out there that still handle just one station. There are 3921 situations out there where the GM is also the GSM!
All of this to say that pulling back the covers to reveal to the light of day these statistics brings a certain soberness to this whole discussion about whether multiple stations under one manager is truly the most effective way of bringing the radio business out of its doldrums.
According to these stats, of the approximately 10,000 commercial radio stations in the U.S., only 25% are managed by one general sales manager. You do the math: that means that 75% of the country's commercial radio stations either have one GSM overseeing multiple properties or the GM, serving also as the GSM, has other issues on his/her plate.
Operational efficiency (and bottom line improvement) is at the heart of why this development occurred. Perhaps it has helped with the bottom line - at least from a personnel cost perspective - but do you think it has done much for efficiency?
Part of my job involves speaking with many members of station management on a weekly basis. Most of those I speak with tell me they are not being more efficient and there is frustration that these managers can't be more efficient that they just can't be proactive.
I doubt we'll see a change in this strategy on a mass scale any time soon. Along with efficiency problems with station management, consolidation has also brought with it higher purchase multiples and higher debt on one side and Wall Street analysts on the other both squeezing the ability of the radio business to operate effectively. This pressure will likely prevent most broadcast companies from returning to yesteryear's station management structures. They simply can't afford to.
One can only hope that more wisdom enlightens our industry's leaders and a solution to this madness can be found.
Many radio industry observers, including myself, have drawn conclusions about the consolidation of the radio business that point to the "C" word being responsible for much of the industry's problems of late. Whether you are a sales person at a radio station or a management expert, one of the arguably key issues facing the industry is the lack of focus that comes with one manager overseeing multiple stations, staffs or budgets.
As I pointed out in a recent missive here, the problem of too much on one's plate could be at the root of the listener death in Sacramento where a station's promotion staff approved what became a deadly promotion that involved the consumption of gallons of water by its listeners all in the name of winning an electronic gaming system. Had the general manager been more aware of what was going on 'down the hall', I believe this promotion would never have made it to air. The GM (and perhaps other managers) just had too much to keep track of.
Now we know just how prevalent is this issue of consolidated management and staff. Inside Radio reports through their analysis that there is one General Sales Manager in our business handling 13 radio stations. Another's doing 12 and another 11. Four GSM's handle 10 stations, 11 oversee 9. 34 have eight stations, 48 have 7 stations.
129 General Sales Managers handle 6 stations, 198 have 5, 325 have four, 509 have 3 and 1359 GSM's have two stations. Interestingly, there are still 2477 GSM's out there that still handle just one station. There are 3921 situations out there where the GM is also the GSM!
All of this to say that pulling back the covers to reveal to the light of day these statistics brings a certain soberness to this whole discussion about whether multiple stations under one manager is truly the most effective way of bringing the radio business out of its doldrums.
According to these stats, of the approximately 10,000 commercial radio stations in the U.S., only 25% are managed by one general sales manager. You do the math: that means that 75% of the country's commercial radio stations either have one GSM overseeing multiple properties or the GM, serving also as the GSM, has other issues on his/her plate.
Operational efficiency (and bottom line improvement) is at the heart of why this development occurred. Perhaps it has helped with the bottom line - at least from a personnel cost perspective - but do you think it has done much for efficiency?
Part of my job involves speaking with many members of station management on a weekly basis. Most of those I speak with tell me they are not being more efficient and there is frustration that these managers can't be more efficient that they just can't be proactive.
I doubt we'll see a change in this strategy on a mass scale any time soon. Along with efficiency problems with station management, consolidation has also brought with it higher purchase multiples and higher debt on one side and Wall Street analysts on the other both squeezing the ability of the radio business to operate effectively. This pressure will likely prevent most broadcast companies from returning to yesteryear's station management structures. They simply can't afford to.
One can only hope that more wisdom enlightens our industry's leaders and a solution to this madness can be found.
Friday, January 26, 2007
The "End" of Innocence
The time has unfortunately come in our industry where one event defines a tipping point that has been coming for some time. I speak, of course, of the radio contest incident at KDND-FM, Sacramento in which a listener lost her life after consuming nearly two gallons of water competing to win a computer game.
Enough has been written about what happened and debate has been swirling as to what the lawsuit and any potential FCC action may bring. With this unfortunate situation comes clarification of what's wrong with the radio industry.
Fingers have pointed at consolidation as one of the principal reasons the radio industry is in its current state. Much has been said about how combining radio assets in a given market in order to save money has eliminated many hard-working, creative and effective people from management to on-air personalities, traffic directors and support staff. From my perspective having spoken with managers on a daily basis since consolidation (1996), there has been this undercurrent of concern expressed to me about deteriorating effective performance by station managers.
Where once one manager oversaw one station's operations (General Manager), one Program Director creatively built one station's programming, one Sales Manager oversaw one sales department, the late 90's saw a proliferation of multiple stations or staffs falling under one manager. It has been expressed to me on numerous occasions as far back as 1999 that this type of structure was a defensive approach to management, i.e. too much was going on within the radio stations for management to effectively keep their finger on the pulse, to effectively plan ahead and lay the groundwork for smooth operations and excellent communication.
In order to accommodate this demand for one's time, managers delegated responsibilities. After all, there were only 18 hours in a workday and not enough time to pay attention to the minutiae that often makes these businesses work.
This is at the heart of what happened in Sacramento. General Managers used to participate in weekly promotion meetings, if only to be aware of what the station was up to and to provide guidance in the event there were any questions about legal or ethical issues related to promotions or contests. With consolidation these promotion meeting appearances by GM's began to disappear. If the GM was interested enough, he/she would have notes about the meeting submitted to him afterwards and if the station was fortunate, he would actually read them.
I know programmers, sales managers and general managers today who submit weekly or monthly reports to their bosses and believe their reports are never read. There just isn't time.
And in Sacramento, the lack of General Management involvement with the promotion department has exposed how one person can only do so much. Entercom owns six Sacramento stations. Entercom Sacramento GM David Lichtman likely was not involved enough to be aware of KDND's "Wee for a Wii" promotion. In all likelihood his non-involvement was rooted in his time management. From what I know, Mr. Lichtman is a good man and has been a good executive for Entercom. He just couldn't be everywhere he needed to be.
And while they may not be as significant on the surface as his missed opportunity to stop this promotion before it started, it is quite possible that Lichtman's involvement with 6 stations caused other important decisions, strategies or personnel issues to fall through the cracks.
This single event has brought to the forefront a significant symptom of what's wrong with the radio business whose managers used to be proactive, where general managers would see the future and plan for it - not only react to the here and now. Where sales managers would spend time with their staff and train to excel. Where program directors would have time to consider ways to improve programming and stay ahead of their listeners.
The implications of consolidation become more clear each day, but nothing crystallizes how consolidation has contributed to distraction of management more than what happened at KDND-FM, "The End", in Sacramento.
The industry can learn from this event. But will it?
Enough has been written about what happened and debate has been swirling as to what the lawsuit and any potential FCC action may bring. With this unfortunate situation comes clarification of what's wrong with the radio industry.
Fingers have pointed at consolidation as one of the principal reasons the radio industry is in its current state. Much has been said about how combining radio assets in a given market in order to save money has eliminated many hard-working, creative and effective people from management to on-air personalities, traffic directors and support staff. From my perspective having spoken with managers on a daily basis since consolidation (1996), there has been this undercurrent of concern expressed to me about deteriorating effective performance by station managers.
Where once one manager oversaw one station's operations (General Manager), one Program Director creatively built one station's programming, one Sales Manager oversaw one sales department, the late 90's saw a proliferation of multiple stations or staffs falling under one manager. It has been expressed to me on numerous occasions as far back as 1999 that this type of structure was a defensive approach to management, i.e. too much was going on within the radio stations for management to effectively keep their finger on the pulse, to effectively plan ahead and lay the groundwork for smooth operations and excellent communication.
In order to accommodate this demand for one's time, managers delegated responsibilities. After all, there were only 18 hours in a workday and not enough time to pay attention to the minutiae that often makes these businesses work.
This is at the heart of what happened in Sacramento. General Managers used to participate in weekly promotion meetings, if only to be aware of what the station was up to and to provide guidance in the event there were any questions about legal or ethical issues related to promotions or contests. With consolidation these promotion meeting appearances by GM's began to disappear. If the GM was interested enough, he/she would have notes about the meeting submitted to him afterwards and if the station was fortunate, he would actually read them.
I know programmers, sales managers and general managers today who submit weekly or monthly reports to their bosses and believe their reports are never read. There just isn't time.
And in Sacramento, the lack of General Management involvement with the promotion department has exposed how one person can only do so much. Entercom owns six Sacramento stations. Entercom Sacramento GM David Lichtman likely was not involved enough to be aware of KDND's "Wee for a Wii" promotion. In all likelihood his non-involvement was rooted in his time management. From what I know, Mr. Lichtman is a good man and has been a good executive for Entercom. He just couldn't be everywhere he needed to be.
And while they may not be as significant on the surface as his missed opportunity to stop this promotion before it started, it is quite possible that Lichtman's involvement with 6 stations caused other important decisions, strategies or personnel issues to fall through the cracks.
This single event has brought to the forefront a significant symptom of what's wrong with the radio business whose managers used to be proactive, where general managers would see the future and plan for it - not only react to the here and now. Where sales managers would spend time with their staff and train to excel. Where program directors would have time to consider ways to improve programming and stay ahead of their listeners.
The implications of consolidation become more clear each day, but nothing crystallizes how consolidation has contributed to distraction of management more than what happened at KDND-FM, "The End", in Sacramento.
The industry can learn from this event. But will it?
Saturday, December 16, 2006
Radio's 12-24 dilemma - Taking Less to Get More
It's always interesting to follow the trades in our business, especially when the stories are old news. I'm referring to the headlines this week about the Arbitron "fly-in" in which was discussed the fact that the radio industry has ignored the 12-24 year old audience to the point that the very future of the business is at stake because traditional radio has offered this generation nothing for over ten years. This isn't new news!
It should be no secret that the answer lies in top lines, bottom lines and senior management's ability to once again prove their short-sightedness and place the almight dollar ahead of their own future.
Yet, I can't really blame them. The real blame sits with advertising agencies and radio clients who have been brainwashed to believe that 12-24 year olds don't have disposable income. Maybe they understand that this age group has tons of money ready to spend on everything from movies and music to clothing and electronics; these buyers of radio time have simply following the "lemming law" and inadvertantly led the radio industry down a path of self-destruction.
While running radio stations for CBS not so long ago, I recall the frustration we had walking out of buyers' offices when they had explained that this younger generation wasn't their core target for some of the radio clients they represent, yet they had no problem spending money on youth cable networks such as MTV to promote movies, for example. The buyers just couldn't see the same relationship radio had with this active consumer group and so they wouldn't buy radio.
So, over the years, management at traditional radio followed the money and did not develop programming and personalities that would compel this generation of 12-24 year olds to stay glued to their radios like previous generations. Their rationale was, " if we can't get buyer support in 12-24's, we'll go where the money is: the 25-54 family reunion demo." Obviously, radio is a business and businesses need to make profit. But radio's always been in the business of making money and for some reason the industry has ignored the concept that it needs to develop future audiences.
Consolidation led to ownership concentration which led to the concept of cost savings and the dream of leveraging audiences on multiple stations for increased revenue. In other words, greed blinded an industry that couldn't see it had a future. Wall Street forced traditional radio to focus so much on this quarter, this month - even this week's sales, that it forgot its future.
In the words of humorist Kin Hubbard, "the hardest thing is to take less when you can get more," and traditional radio hasn't worked hard enough to take less.
Our research has shown this age group, in general, doesn't feel like there's any compelling reason to listen to terrestrial radio.Other researchers have flown this flag, yet the radio industry has just ignored these warnings. Why?!
It should be no secret that the answer lies in top lines, bottom lines and senior management's ability to once again prove their short-sightedness and place the almight dollar ahead of their own future.
Yet, I can't really blame them. The real blame sits with advertising agencies and radio clients who have been brainwashed to believe that 12-24 year olds don't have disposable income. Maybe they understand that this age group has tons of money ready to spend on everything from movies and music to clothing and electronics; these buyers of radio time have simply following the "lemming law" and inadvertantly led the radio industry down a path of self-destruction.
While running radio stations for CBS not so long ago, I recall the frustration we had walking out of buyers' offices when they had explained that this younger generation wasn't their core target for some of the radio clients they represent, yet they had no problem spending money on youth cable networks such as MTV to promote movies, for example. The buyers just couldn't see the same relationship radio had with this active consumer group and so they wouldn't buy radio.
So, over the years, management at traditional radio followed the money and did not develop programming and personalities that would compel this generation of 12-24 year olds to stay glued to their radios like previous generations. Their rationale was, " if we can't get buyer support in 12-24's, we'll go where the money is: the 25-54 family reunion demo." Obviously, radio is a business and businesses need to make profit. But radio's always been in the business of making money and for some reason the industry has ignored the concept that it needs to develop future audiences.
Consolidation led to ownership concentration which led to the concept of cost savings and the dream of leveraging audiences on multiple stations for increased revenue. In other words, greed blinded an industry that couldn't see it had a future. Wall Street forced traditional radio to focus so much on this quarter, this month - even this week's sales, that it forgot its future.
In the words of humorist Kin Hubbard, "the hardest thing is to take less when you can get more," and traditional radio hasn't worked hard enough to take less.
Subscribe to:
Posts (Atom)
