Monday, May 5, 2008

Radio: Inbreds


I can’t stand those inbred radio types.

You know the kind.

They work in radio, talk about nothing except radio, know nothing except how to talk about radio, and they’re always ready and eager to carry the torch for an industry, which is in dire need of reinvention.

They’re so caught up in believing their own outlandish hype that they fail to see beyond the industry’s passé political correctness.

No one will ever doubt their impact on radio. It’s just not the one they expected. They got the masses to turn radio off.

The radio end of NAB 2008 resembled a village blacksmith’s convention in the early 1900s.

Back then, those blacksmiths convinced themselves that the horse would never be replaced as the primary means of transportation.

And those newfangled horseless carriages would never catch on. They were loud, dirty, and slow.

A few years later those same village blacksmiths were trying - unsuccessfully - to shoot out the tires of those horseless carriages as they rode by.

You can’t delay the inevitable. It’s time for the sleazeballs and reprobates to take a hike. Their problem with running radio was not that they kept shooting themselves in the foot. Their problem was that they had too many feet.

Radio needs to be reinvented – now!

The faster you let radio naturally hit rock bottom, the sooner it will recover.

Artificially inflating its value just delays the inevitable.

I feel for those who lost it through their gallant game plans.

One was to put together a company, buy up stray radio stations, and do an IPO. That strategy came to an abrupt halt when those planes crashed into the World Trade Center.

Then you had Clear Channel, which couldn’t pull itself away from the table and gorged on all things media, believing it could control popular culture.

Sumner Redstone felt the same way.

Maybe it looked do-able on paper…but that’s life. Flying high in April; shot down in May.

If their kids didn’t have coupons to clip they’d be asking if you want fries with that shake.
*
It’s true that some radical deals do make sense.

Ted Turner pulled it off better than most in 1986 when he went on his spending spree. He found himself with a $1.3 billion debt after his company purchased MGM’s film library.

The acquisition was more than he could manage so he called the fledging cable TV companies he had deals with and told them he had no choice but to shut down CNN and Superstation WTBS.

Cable needed CNN and TBS – so they rescued Ted by paying him more per subscriber so they could continue broadcasting his channels.
*
Today, through his Turner Enterprises, he owns 15 ranches in Kansas, Montana, Nebraska, New Mexico, Oklahoma, and South Dakota - a total of 1,910,000 acres, which makes him the largest individual landowner in North America.

Turner’s a deal maker. He played old media against then-new media and won.

Radio turned into a deal breaker. It played old media against new and lost.

Stations are not worth their current asking price. Clear Channel and a couple of other chains that are in dire need to divest figure they’ll get better deal by waiting it out? Hah!

It doesn’t work like that. Times have changed. Who’s going to lend money to the usual suspects for a risky venture like radio?

Have you noticed that many of the decision makers in the world of finance are the very people the radio industry chose to disenfranchise. Those 18-24s of ten years ago are the 25-34s of today. Don’t ask them about a favorite station. They don’t listen to radio.

Radio used to be entertainment. Ask someone under 40. To them, radio is enterdrainment.

A friend I’ve known for over thirty years who is still in radio today summed it up this way, “The corporate culture and Wall Street killed radio. The unrealistic promises of the consolidators and investors taking them at their word have been a deadly combination. There were not nearly enough "savings" and "growth" (and I use quotes, since savings translates to slashing workforce and growth means muscling for market share, undercutting competitors and generally doing anything to grow revenue that doesn't involve improving the product or the skills of employees) to counterbalance the enormous amount of debt added to the industry. Add in declining ratings---there's that pesky product issue again!--and a recession and you have a recipe for disaster.”

How many $10 million salaries were paid to those with a ten cent brain?

Here’s what you want to believe.

When radio is valued rationally you’ll see stations trading – and its buyers will be real broadcasters – those that realize that radio’s illusion, immediacy, and localism are its greatest strengths.

They’ll be a combination of radio veterans and new blood that’ll know how to transfuse a troubled industry.

There will be more companies owning fewer radio stations.

It’s time to get the spectators off the field.

Get out of the way so the real radio people can play with the grown-ups again.
-----

34 comments:

Anonymous said...

John, Your best yet. You drove it home. Radio didn't cricially wound itself. Those running it did. Bring radio multiples down to what they should be, get strong operators, a trained sales staff and improved promotion and marketing and radio will show its worth. The technology has not gone out of style. The way the current operators are running it has.

Anonymous said...

Nothing will entice Gen Y to radio - their ears are glued to cell phones and iPods (just ask Jerry Del Colliano). Radio is old-fashioned and the Baby Boomers will start dying-off. None of my kids many friends listens to radio. The Internet, cell phones, iPods, gaming-systems, Pandora, Last.fm, etc have killed radio. Fumbles "Radio Heard Here" speaks to the 1920s, when radio was being developed. "It's Time to Upgrade" speaks to no one.

Anonymous said...

John, You had addressed this before. I think you should mention it again. There are a lot of good, talented people working in radio right now. The reason you don't hear about them is that they are stifled from doing anything creative. This 'don't take chances' attitude at radio is destroying it as much as the rest of the mismangement that is going on. From your lips to God's ears. I do hope you are right and I think you are because you are not the only one saying it. We need some credible ownership and they will not buy into radio until the price is right because unlike the current owners the next group will be fiscally responsible and understand the need for the full package from sales to programming. Love this blog and its contributors.

Anonymous said...

John,
You’re on the money. But unfortunately, you’re a voice crying in the wilderness. You sound like friends I knew in the newspaper business 10 years ago. If you want to see the future of radio, look at newspapers. Radio is only about 10 years behind print. Newspapers ruled the media world in the 60s and early 70s. You weren’t a responsible citizen if you didn’t get at least one newspaper. Many households got several.

Then Wall Street got involved in the 80s in a very big way. The same consolidation mindset took over. Cut costs. Gain operating efficiency. But with each round of consolidation, another layer of experience gets wiped away. Recession brings more cuts. Boom times bring profits for shareholders, revenue for new ventures and more capital to fund additional consolidation. And the businesses themselves just get shabbier. The people who work in them come and go with greater frequency. In advertising and circ, people know there are far better opportunities elsewhere. In editorial, people get burned out and exhausted and move on. Institutional knowledge disappears. Mistakes are repeated over and over as new employees don’t know the lessons of those who came before them.

While all this goes on inside, outside the readers drift away. Then come the desperate measures. Joint operating agreements are used to overcome regulatory opposition to greater consolidation. Free newspapers. Total market circulation. Newspaper vendors stand at every train station trying to force their product into the unwilling hands of commuters, just like strip clubs handing out flyers in Vegas. Or they employ armies of drivers to throw papers onto the lawns of angry suburbanites.

Through it all, industry veterans thought their day would come. The failure of the new model would be obvious and the newspapers would fall back into the hands of serious journalists and hard-working business people. And they would breathe new life into them. Never happened. Never will. The investors who own these properties run them leaner and tighter until they die. The brand and the institution is devalued and no advertisers or consumers are willing to help. Without cashflow, without readers, without knowledgeable staff, without the resources to attract talent, without the resources to maintain equipment, these businesses simply die out. It’s the recurring story in print.

Sound like any industry you know? Radio is on that same road. There will be no turning back. Disagree? Then answer me this. Would anyone here advise his son or daughter to pursue a career in radio? Would you tell them to take their six-figure business degree and put it to work in radio?

Of course not. We all know the reality. The patient is dead. It’s just a matter of when the plug will be finally and mercifully pulled.

Anonymous said...

You're dreaming again.

The "real broadcasters" you dream of are rich and happy. They're not coming back.

They've had many opportunities. There are loads of undervalued radio properties on the market now. They're not buying.

Radio stations will never be cheap enough for the "real broadcasters" to buy. That day has passed.

You want to buy a cheap radio station? I have a 5K right outside NYC you can buy for less than a million. Too much? How will you pay salaries, rent, tower fees, electricity, etc.

Buying a radio station isn't the biggest expense. You can get a frequency for free (I did that once), and then you have to run it. The operating costs will kill you. Forget the debt, forget the puchase price. Salaries, benefits, insurance, legal, and engineering. Those costs will outpace deby very quickly.

That's why "real broadcasters" will never buy radio stations.

Anonymous said...

I don't agree and I side with Gorman on this one. He talks about realistic prices. If an FM station were to drop to a price where one could afford to service the debt, hire a staff and motivated management it could be done. Radio is just another medium competiting for one's attention. If you provide the right programming, back it with the right marketing and hire a trained competent sales department and have linkage to the internet I strongly believe it will be able to compete with other medium. I think we have seen radio done so poorly for so long that it has clouded or judgement and increased our pessimism. Just because no one has done it right for the past decade does not mean it cannot be done. I think there are real radio people that would get back into the business. Smart operators will also know how to tap into the younger generation to provide linkage to new media.

Anonymous said...

Anything can be done. It's just that there are far easier and more profitable ventures out there.

The other point I haven't seen addressed is that radio is an industry that relies on cooperation. Sure, competition is important, but there needs to be a critical mass of quality programming to keep people focused on radio.

For a long time, you had a few weaker stations riding the coattails of the strong stations, and people kept tuning in because 75% of what they got was good. Now the percentages are reversed. Most people have a negative experience when they turn on the radio. Want to bet that's going to improve soon? If so, contact your local broker and buy a station. But remember, you're not just betting on your own ability to do it right, you're betting on other people to do it right, too.

Shannon West said...

You totally nailed it! Especially within the format/genre that I mostly work. The Smooth Jazz format was killed by inbreeding, cliqueishness, and exclusion. The people who hold all the power have been working together for 20 years. Several have known each other since high school! As they took over and were able to shove everyone else off they were able to totally eliminate the talent pool that could generate, debate, and elaborate on continual new ideas that are necessary for growth and evolution. Therefore there has been none, and all the compelling and interesting elements of the format and the music were gradually phased out. So those of you reading this are shrugging and saying "who cares about smooth jazz, it's dead" Well..inbreeding is what killed it. There is still some really accessible, commercial, and exciting music out there but nobody will hear it because 5 guys don't want it heard.

I'm with the two Anonys above..I was laid off from one of the big radio corps last summer. I was also laid off once pre-consolidation. When I was laid off then it was like having my heart ripped out. When I was laid off recently it was just "oops, lost a p/t job, gotta get another one, any field will do." I ended up in Home Decorating, which is more creative.

Pocket-Radio said...

The industry is in the toilet and the corporate manglers are in survival mode. That means more cuts to protect short term profits and their quarterly bonus check. And more voice tracking is the trend. It’s a tough market! I’d expect commissions paid to reps will be cut and agency business will be done via the internet eliminating the reps altogether. Technology and internet have changed everything forever. So far the only answer the corporate manglers have come up with is running in circles and continuing to make cuts.. Hey Moe, Hey Larry, hey Joe... LOL

Anonymous said...

I listen to mostly internet radio at work and iPod/podcasts when out and about and at home. I would listen to a radio station is if provided me either the information or music I like. I have no problem listening to the radio and I have a couple of them at home and in my cars. These days except for NPR and occasionally a good turned bad Triple A station I do not listen to terrestrial radio. Give me something I like and I will. I am not in the radio business and 38 years old.

Anonymous said...

As a radio listener and not an employer I would like to believe what John Gorman says is true. I would listen to more radio or should I say radio other than just NPR if I had some greater variety in music formats and more choices in news-talk and at least one commercial talk station without a conservative ajenda.

PocketRadio said...

"Pocket-Radio said..."

I've seen your ass logged into radio-info...

Busted said...

Lookin like the head of the NAB Radio Heard Here thing is calling you out..link at AllAccess

There is a clear call for increased innovation in content and more support for new technology. I find it disconcerting that many of those who call for technology innovation from the industry also attack virtually any new technology introduced. Any technology investor will tell you that the road to adoption is full of bumps. There is a reason the books on this subject bear titles like Inside the Tornado.


The fact that it is difficult to develop and market new technology is no reason to stop developing it. Every effort that brings new thinking to the radio industry should be celebrated and every innovator supported. Standing still is not an acceptable strategy for this industry, and this brings me to my comments on the marketing campaign.

OUCH!!!!

Anonymous said...

If commercial radio provided good programming I would listen. Radio is still the most convenient way to listen to content because it is readily available. I also think that when Wi-fi becomes standard terrestrial radio will eventually have to compete with exclusive internet radio stations. The only reason I don't listen to commercial radio is because there is nothing of interest for me in my city. The only radio I currently listen to is NPR.

jan said...

If nothing else you have all the pro-radio-as-it-is-today bloggers and consultants up in arms. They won't mention you by name but they sure in hell are responding to your comments. The losers are being called out and they don't know where to hide. Their rhetoric is old, dated and unbelievable.

Anonymous said...

I thought it was interesting that even NPR is having trouble making money. I read where they'll be laying off staff soon because of a budget deficite.

There is no such thing as a "realistic price" for anything. Take a look at gas prices. How realistic is that? Home prices. Taxes. The idea that radio can turn back the hands of time regardless of everything else is crazy talk. If you're waiting for a "realistic price" or someone to give you a top rated, high powered radio station for free, you're going to be waiting a long time.

People want something for nothing. They want radio without commercials, they want to trade music for free, they want free internet. No one wants to pay. That makes it tough when you're looking for a job. Hey, it's easy to find work, just hard to get someone to pay you for doing it. And it will get a lot worse before it gets better.

Anonymous said...

(From All Access)

"Times being what they are, THE CONCLAVE has scheduled a "Life After Radio" session that will address ways to assure success beyond the dial..."

Anonymous said...

I find it odd, amusing and predictable that the Conclave which is backed by many of the people that destroyed radio would do this. The Conclave is made up of those consultants, operators and others that help destroy radio as we knew it.

Anonymous said...

"The Conclave is made up of those consultants, operators and others that help destroy radio as we knew it."

That's why Gorman is wrong when he talks about "real broadcasters" returning and fixing radio. They are simply in no position to fix anything. And never will be.

Anonymous said...

Regarding last "anonymous" comment. I believe Gorman distances himself from the Conclave. The names you usually read that are involved in the Conclave are the same as those who support the NAB, HD Radio and the other scam artists that have ruined radio. I will bet that when radio station prices drop the buyers will not be of that ilk.

Pocket-Radio said...

Pocket-Radio Said:
Not to be confused with Pocketradio

Here’s Radios problem, it’s dam repetitive. But to get ratings programmers must play the hits and play them often. (Repetitive) The very thing that delivers numbers is what listeners dislike the most. So radio is stuck running in circles like a scared little mouse, looking for a way to get out. Call it the curly shuffle. Hey Moe, Hey Larry, Hey Joe.. Yuck, Yuck, Yuck, Yuck.

And so far the pros only have one answer to their problems. continue to cut, deliver profits and collect a bonus check.

Anonymous said...

conclave? your yanking my chain right? they got rita cosby keynoting this year. turn the lights off in the minneapple the conclave is so over. they could kick start that monkey if they had the guts to hire gorman to keynote and burn the house down. lot of people would pay to see that one but it aint gonna happen people

Joe Friday said...

I am glad someone brought up the Conclave and the scam that it is. It started out as a upper midwest R&R type party/convo thrown by an independent record promotion company (and you know how 'honest' they are). It attracted some of the sleazier radio consultants and other indpendent record promoters. Look up the definition of scam in the dictionary. You will see the Conclave. One look at the list of people putting this event on will tell you all you need to know. Need I say more? Judge it by the people that DON'T go and are not associated with it.

Anonymous said...

"I will bet that when radio station prices drop the buyers will not be of that ilk."

They also won't be the people Gorman is hoping for.

The people who will buy radio are bottom feeders. They have the money and the energy to do it and finance it. These people will make the current owners look like Mother Theresa. They will use and abuse radio in far worse ways than anyone could imagine. They don't understand the concept of "public trust" or "public service." They are starting to buy a number of troubled companies already. They are venture capitalists, far worse than Sillerman or Bass.

Anonymous said...

"if they had the guts to hire gorman to keynote and burn the house down."

How about this: If the companiners like Gorman had guts and money, they'd start their own conclave. But it would end up being a bunch of haters, complaining to each other about how bad things are, and how great they were. How useful would that be?

Anonymous said...

"The very thing that delivers numbers is what listeners dislike the most."

Who do you think "the numbers" are? They are listeners.

Listeners like repetition and prove it every day. They live for it. They take the same route to work, they associate with the same people, they listen to the same stations, wear the same kinds of clothes, and post the same tired lines on the same blog sites.

Anonymous said...

I disagree with a lot of the pessimism I am reading here. There are far better industries for the vcs to invest in than radio. It will go back to specialized people that know how to make money from radio and how to reallign it to maximize its potential. Think of the Internet driving radio not the other way around. Regarding the Conclave. It is what you say it is. It serves no purpose other than to line the pockets of those putting it together. Name me one post-Conclave "idea" that ever worked.

Anonymous said...

"It will go back to specialized people that know how to make money from radio and how to reallign it to maximize its potential."

Like who? Name one person who has the money and inclination to get back in the game.

Those people are either dead or retired. Anyone left doesn't have the money it takes to do the work.

It's really simple: If they can't afford the current prices to buy stations, then they won't be able to afford the capital and personnel expenses it will take to do what you want.

"pocket-radio" not to be confused with pocketradio said...

Pocket-Radio Said

"Listeners like repetition and prove it every day. They live for it"
The 18-34's don't! Without a doubt the internet is the future of radio. People are still using wired or wireless devices for entertainment but what’s changing is the delivery method and device. The original jukebox is old fashion and out of dated that
18-34's don't like. The next must have gadget is wireless internet access in your car! I’d guess within 10 years, ever car will have it and competition will force prices down. Cheap internet access will be everyplace including in vehicles. Prices for cell phone services will be driven down. You’ll even have cell service from the internet. This is another wireless device that holds mp3’s and acts like radio.

I know this is hard for the radio-inbreeds to believe, but you'll even get all your weather, traffic, and emergency broadcasts right on your cell phone. And maybe major sports programs too. probably free!.. Cell phones are moving beyond just making calls..
Prepare for the future.
Taylor said:

You blew it up! you murders you finally did it! dam you all to hell.

Carl said...

Mr. Gorman, I salute you. Excellent in all regards. I think radio can live again, but only when the house of cards collapses, and bulldozers clear the landscape for, as you say, REAL RADIO PEOPLE, to build something viable and worth listening to. Corporate grim reapers beware; the end is near, and the mirror is shining on YOU.

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