Wednesday, November 7, 2007

Radio: Is it really that bad or is it worse?

Imagine starting your day listening to the top rated morning show in the market and hearing this promo: Ever think of advertising on (call letters)?.....Now is the time. We have great deals, but they won't last long. Contact (sales manager) today at (phone number)."

A friend brought up the fact that this is the kind of message one would expect from an anxious small suburban AM or on a TV station that runs incessant p.i.’s.

True, radio’s run those RAB “who listens to radio” promos for decades – but this one sounded desperate as in a seven percent drop in revenue from a year ago when you were only expecting one percent max.

Every month that big black cloud returns to blot out the sun and each month it gets larger and stays around longer.

Another friend who buys time – but a whole lot less on radio these days - told me of another shocker. Twenty-five years ago this station averaged $500/spot (worth about a grand in today’s dollars) in morning drive. This station is now on its knees, kissing your shoes and begging for $50/spot (around $25 in today’s figures).

That company’s even begged him for trade deals.

Does this disturb you as much as it disturbs me?

Has it become easier to herd cats than sell radio?

Of course, regarding those RAB figures, I got a piece of the spin, too, and was told by a sales manager that I hadn’t heard the whole story. There were some areas where radio revenue was up as high as nine percent? Nine percent? I had to check that one out so I went to the Radio Advertising Bureau’s web site to read the breakdown the numbers. Look at them for yourself: If you find any good news in there, please let me know.

Do we now agree that deregulation made things harder – not easier – to accomplish?

There’s more. I don’t know how across-the-board this one is – but a market manager I know who’s with Clear Channel was ordered to fire one full-time person at each radio station he oversees and he oversees a lot of stations. And he has to do it now!

At least it’s like the old days in one respect. If you really have to let someone go, you do it before Thanksgiving. It’s fair to the employee and smart for morale. And you carry them through Christmas.

Most of the time radio’s not smart and there is no morale. Last year Clear Channel fired staffers a week before Christmas.

The mass slaughters have begun at Clear Channel stations in Minneapolis, Houston, Detroit, and Youngstown. If it hasn’t happened at a CC cluster near you, stay tuned. It probably will.

With television writers on strike, the networks are forced to add more reality shows to fill their hours. I have an idea for one: Survivor: Clear Channel.

Some industries were never meant to be that large. Radio is one of them. Radio survived and the great stations thrived when there were long range goals placed on a station’s performance. A respectable product created and nurtured by talented people? What a concept.

When the radio industry’s business plan and philosophy were summed up in 12 words: Buy ‘em now and figure out what to do with them later, it was obvious to those not buying the hype that this would be the end result. Radio got big, its problems got bigger.

I’ve been on the talk and interview circuit promoting my book (plug: The Buzzard: Inside the Glory Days of WMMS and Cleveland Rock Radio. The perfect Christmas gift). As expected, there are the usual discussions about old media versus new, but when the conversation turns to radio all ask the same question: Will radio survive? A year ago the word was turnaround. One market manager I talked to this week used the word jumpstart to describe what radio had to do to get back in the game. Usually, jumpstart means there’s no plan in place.

I hate the term old media – but it stuck. That’s the industry standard line and we’ve got to live with it. Newspaper’s considered old media. Television’s considered old media. And radio? It’s not even being considered.

And those predicted fire sales?

One can only begin to imagine the generosity in the early Christmas presents Sam Zell is passing out to those that’ll decide the fate of his plan to go private with his shaky Employee Stock Ownership Plan for the troubled Tribune corp. He needs FCC approval and his Sherman-in-residence at the FCC, Kevin Martin, is always an easy mark – but the jury’s out on whether the other commishes can be conned. If Zell falls short, he’s dead in the water with financing and (sniff) – where there’s smoke there’s fire.

Clear Channel has to close its deal by end of the year or BainCapital and Thomas H. Lee will also fall short and (sniff) – where there’s smoke there’s fire.

Fumbles, hate to break the bad news to you and your fellow hacks at the NAB - but no one’s buying into your Radio 2020. They’re more concerned with radio, 2007.


Anonymous said...

You don't know the half of it. We are giving so many clients bonus spots galore just to fill the time and make it sound like we are sold out and it is fooling no one. I was watching one of those Nature programs on PBS the other night. I used to feel like the lion when I was selling time and confident of our stations' performance. Now I feel like the gazelle.

Anonymous said...

I hope you are right about the fire sales. You have been predicting that for a few months now. If Sam Zell and BainCapital/Thomas Lee don't get their way do think we will begin to see stations being sold at a discounted price range that smaller groups and individuals can afford to buy and run?

Anonymous said...

With 2008 Internet Ad Revenue expected to surpass Radio Ad revenue, do you really think there's much hope for old fashioned terrestrial radio ?

I think not.

Anonymous said...

I cannot wait for the fire sale. How could these companies actually believe they could work those multiples? Greed blinded these companies from reality. There is no Cleveland radio station worth over $10 million and most are worth less. Look at the multiples and look at the operating costs.

Anonymous said...

I hope and pray you are right about the fire sale. There are sooo many talented people on the street.

Peter O'Connell said...

As an old media venue (as you describe it) radio is not only in a greater sales conundrum than it has have been in before, it's in a real programming pickle too.

Not only are the audiences finding their entertainment (including music) in new media, the programmers and air talent are finding jobs, pay checks and hope in new media outlets. There's now a shallower talent pool from which to draw which will make radio's programming challenges even tougher. Unique is what they need, for the most part its not what they've got.

It could change and I hope it does...its a great medium.

Best always,
- Peter

Anonymous said...

Thanks for your insightful comments. Market managers, GMs, sales managers, program directors and anyone else in decision making positions at radio stations should be reading your blog.
You make far more sense than the trades that continue to be cheerleaders for radio but for all the wrong reasons.
I join others in hoping you are right about fire sales and broadcasters getting back into the fold.
It cannot happen fast enough and it must if we want our business to have a glimmer of hope that we can appeal to younger generations.

Anonymous said...

I can see it now. Clear Channel, CBS Radio, Radio One, Salem, Entercom, Greater Media selling their stations on eBay, Craig's List, Filene's Basement, Building 19 and Spags.

I cannot wait.

700WLW said...

anonymous said...

"I can see it now. Clear Channel, CBS Radio, Radio One, Salem, Entercom, Greater Media selling their stations on eBay, Craig's List, Filene's Basement, Building 19 and Spags."

Don't forget the QVC Shopping Network - they can sell their shitty, worthless HD radios along with their stations.