Wednesday, April 11, 2007

Happy Birthday, Telecom Bill

With all those distrations from the Mitt Romney-created BainCapital attempting to unload worthless Clear Channel properties to the sunset ride and obliteration of that stiff in a Stetson known as Don Imus, we must not forget to wish a Happy 10th Birthday greeting to the 1997 Telecommunications Bill.

It seems like only yesterday when former President Bill Clinton signed you into law.

True, you were the much-needed rewrite of dated rules governing the communications industry and you followed the obligatory public hearings on how the bill would address new technology.

No problem there.

What you didn't get were comparable public hearings on your radio industry revisions - and with good reason. Those were tacked on as a ‘midnight rider” by Senator Bob Dole, under the influence of lobbyists employed by the National Association of Broadcasters, while you sailed through Congress.

That happened back when the NAB joked that they were armed enough lobbyists to provide gifts and junkets for every single member of Congress. It was hard to keep track of who was where with all the purported fact finding trips to distant lands that were passed out and paid for by the NAB.

Just to be certain that the Democrats were on the same page at the radio deregulation craving Republicans – Vernon Jordan, wearing his presidential advisor fedora, whispered in Clinton’s ear, “This is a good thing, Bill. Tell our boys in Congress that it has your seal of approval.” Vernon needed the deal done since he was also on the Chancellor Media board. That’s the same Chancellor, which later renamed itself AMFM and through another deal, brought in Hicks, Muse, Tate & Furst to merge it with Clear Channel.

The next time you see Vernon; ask him when he cashed in his chips.

The radio revision seeds were sown in the mid-1980s when the NAB worked another former president, Ronald Reagan, to embark on a course to free broadcasters from the shackles of ownership regulations.

Reagan, whose career started in radio at WHO-AM in Des Moines (now owned by Clear Channel), was an easy mark for the NAB boys. The pitch was that a single company should be able to own and programming multiple stations in any market.

It went like this. By having fewer owners per market, the existing ones would create formats that would complement one other. They’d offer listeners highly defined formats since they would no longer have to deal with that pesky problem of competition from multiple owners.

They should’ve called it privatized socialism.

Clear Channel ended up owning everything or so it seemed in most markets. And in those ten years a sizeable slice of format diversity and localism on radio vanished.

There were two distinct forces at work in radio consolidation -- those who wanted to control as much of the medium as possible and those that wanted to cash in. The latter followed the Greater Fool Theory, accepting the premise that there'd always be someone foolish enough to pay even more than they did for product they overpaid for. The former cashed in by selling their stations for massive profits - more than 30 times cash-flow in some cases - have been living la Vida loca.

A couple of buyers were in such a rush to acquire and close deals that they neglected to read the fine print on whether or not the stations they were buying owned or leased the transmitter site land. As a result, some stations got stuck with the previous owner as their leasing agent.

Those buying in had a business plan that read “buy ‘em now and figure out what to do with ‘em later.” You have to give credit the smart ones at the top who are preparing their golden parachutes to jump before the radio industry implodes.

Some believe radio’s woes are a form of karmatic retribution. Its decade of arrogance drove listeners and clients away in droves with tight music play lists controlled by influence peddlers, heavy commercial loads, and a reduction of local programming. They believed you would have to listen to radio no matter what they did to it.

Here’s math the radio industry propagandists want you to believe. There are roughly 100 million terrestrial radio receivers in America, an average four per household.

That doesn’t mean they’re turned on.

Radio was the original interactive media long before that idiom was part of our lingua franca. Radio was the entertainment. It had personality and provided news, information, music, and served as your own personal soundtrack. Your favorite radio station was part of your social identity. Its formats lived in real time and being live and local was its utmost advantage.

There are two intertwined factors here. Produce an inferior product and few will use it. The audience loss translates to a revenue loss. It’s too expensive to buy media with a diminishing return, especially when it’s no longer serves as the first destination for news, information, and entertainment.

Radio ad revenues are down from a year ago at this time and those numbers are down from the year before. Are you detecting a pattern here?

The radio industry was never meant to be that large.

Old media are losing ad dollars that are migrating to the Internet. Television and print are beginning to get it by learning effective ways to marry their old with the new while, in this past decade, radio remains firmly wedged in its denial mode.

New technology isn’t putting radio out of business. Radio is putting itself out of business.

Instead of listening to their regional sales managers and programmers who are on the front lines, it continues to put all of its trust with the corporate mentality of their hacks at the helm.

Most radio chieftains fail to understand human nature. Everything has an expiration date. The longer you go without something you once had, the less you miss it. You adapt. You change. You find alternatives.

Since radio is considered a risky investment on Wall Street, the industry is placing its bets on HD Radio, claiming it has doubled and tripled the number of stations they own.

Forget the propaganda – just give me real numbers.

How many HD radios have been sold? Seriously.

I visited three Radio Shacks. The first two never had stock while the third had one in back that was re-boxed when they couldn’t get it to work.

The clerk at Wal-Mart didn’t have a clue and tried in vain to correct me, “You mean HD TV?”

The only piece of business the radio industry has done to improve its bottom line is to sell off many of the stations bought during the gold rush frenzy that followed the Telecom Bill signing.

The shame of it all. Thanks in part to the 1996 Telecommunications Bill along with the few - but all too visible sleazeballs and reprobates (you know who you are )- that give the radio industry a bad name, investing in radio’s future is like buying a vehicle from a shady used car lot. Always check under the hood.

There is a probable upside to this decade of mismanagement. As companies are forced to shed the excess properties they were in no condition to control, we will see a homecoming of creative and innovative radio people that know how to marry old media with new – and eradicate the paralysis-by-analysis programming and marketing and uncreative accounting that has crippled our business for the past decade.

Happy Birthday, Telcom Bill.


John said...

Your point of learning to live without radio is true enoguh for me. Once an AVID radio listener I now listen for 10 minutes in the morning while in the bathroom. Then if I'm heading to or from downtown during rush hour I'll check out a traffic report which I know happens on the add a minute or two there.
I do listen to baseball, football and basketball when the TV isn't handy. Other than that, I do not miss it one bit. Podcasts and iPod stored music keep my drives very entertaining.

cmatthews said...

LOVE the blog!

I learned how to do radio right from you, Denny, Rav, Howitt, Norm N Nite, Mitch and more.

I take all I learned and try to work it into the talk station I now program in Toledo.

Hello to Ravenna!

Chuck Matthews

Anonymous said...

I did not know the story about Bob Dole. Why didn't anyone else mention it in all the articles written about the Telecommunications Bill? This is the first Iheard of Dole's involvement. But like you said. Everyone is guilty including the Democrats.

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