Monday, October 6, 2008

Radio: Worth less or worthless?


I don’t believe most in radio realize how close to extinction the medium is.

When talking media extinction, radio tries to drag everyone else into the tar pit.
Here’s how radio’s trying to save its day with Radio Heard Here and HD Radio.

Here’s the newspaper pitch.

You tell me who has the best campaign.

Still, all the promotion and marketing campaigns mean nothing if there’s no substance beneath the hype.

And how about that? The only site they can do their future fossil fuel pitch effectively is on line.

You’ve probably heard about WOAM and WPMJ, that AM-FM combo in Peoria, Ill. going dark.

The AM was a local 1,000 watter with a local morning show and a canned adult standards format for the rest of the day.

The FM was one of those rimshot class A’s, actually licensed to Chillicothe, Ill. – about twenty miles to the north of Peoria. It carried Citadel’s True Oldies format off the bird.

The owners, Kelly Communications, were considered local folk, even with their Longboat Key, Fla. business address. They were the only independently owned and operated stations in the market.

Its silence merited a news item on one of the local TV stations.

It’s nothing new and nothing particularly unusual. Radio stations have gone dark before – even in the best of times.

But this is different. You know it and I know it.
*
Radio’s Greater Fool Theory had already played itself out years ago.

In spite of the last great dumb deal when Disney cunningly dumped ABC Radio on Citadel, it was obvious three to four years ago that radio was rapidly losing ground with both ratings and revenue and this wasn’t going to be just a transitory occurrence.

That Citadel deal was sprinkled with the added infamy of being done the same week that Disney acquired Pixar from Steve Jobs.

We may not know the name of the first radio chain to go into receivership but we know it won’t be the last.

The louder these chains deny they’re sinking, the closer they are to insolvency.

Their lenders don’t want to be owners and operators. They know they're worth less today than they were yesterday and could be worthless tomorrow.

Like other near-extinct species, the old guard in radio couldn’t adapt to the changing environment. It’s not radio that’s totally over, it’s just over and out for those that ran this industry like it was still 1999.

How many radio companies are not trading for under a buck? Westwood One’s stock is worth a stick of gum and it’s beginning to look like Salem hasn’t a prayer.

CBS Radio put 50 stations on the block, claiming they’d have deals in place in thirty days. That was – what? – sixty six days ago and counting?

How about those equity players that assumed they’d have their radio fortunes in place and planned to be cashed out by now?

Instead of leafing through their Abercrombie & Kent catalog for an elite destination to winter in, they’re finding themselves in the same boat as those incensed bourgeois looking for someone to blame for the financial meltdown.

They assumed they’d enjoy the thrill of victory, now they have to get used to the agony of defeat.

Can you imagine when some of these deals end up in the courts?

Your Honor, I believed everything in the radio industry was on the level.

Sing it Kenny, "You got to know when to hold ‘em, know when to fold ‘em / Know when to walk away and know when to run /You never count your money when you’re sittin’ at the table /There’ll be time enough for countin’ when the dealin’s done."

You think it’s rough selling a house in this economic climate? Try selling a radio station!

Housing’s fate is from predatory lending. Radio’s is predatory borrowing.

To some it’s a meltdown, to others who had their money stashed in places other than Wall Street, it’s the real correction. There is money out there. Smart money. The kind that detects a product’s real worth.

Then there’s supply and demand. Nothing’s selling if no one’s asking.
----

23 comments:

Anonymous said...

I wonder, how many more "Strubles" there are waiting in radio's desperate wings? Struble was counting on radio's desperate situation, but he wan't counting on radio's meltdown.

Anonymous said...

Wow that print ad was really something, and that radio ad, totally lame. What were they thinking? I'm totally sorry fot the Shitadel employees (I was one, once) who are going to get shafted, big time. Any bets on when their bankrupcy will be filed?

Anonymous said...

There are certainly enough candidates for the first chain to go into receivership. Citadel is an obvious choice but none of the publics are doing well and some of the privates like Greater Media may find themselves short of available dollars.

I feel sorry for their employees but have no pity on those that ran the stations into the ground.

Hopefully, the Mel Karmazanization of radio is over.

Sick of your S----! said...

Gorman you are so goddamned full of it. So a few small AMs and 80 90 FMs go under. BFD. You yourself said there were too many radio stations. Most of the dead stations will be your lovely independently owned and operated stations. Meantime, our radio chains will live and prosper since we are the only ones that can see ourselves out of this mess that was created not by us but by subprime.

Don't be so effing quick to blame radio for the world's problems. It is people like you slamming the NAB, Fred Jacobs and others who are doing their best to see radio through the rough times that deserve to be called on the carpet.

Eff you and your cohorts trying to blame corporate America and the radio chains for your problems. As far as I'm concerned I hope every small market AM and FM goes out of business. This is 2008 not 1958. Only the strong survive. GO to hell, Gorman.

Anonymous said...

I'm a veteran of both the newspaper and radio ad business. And all you need to do is look at newspapers to understand radio's future. Newspapers lost classifieds to the web. But what about our great content? They screamed. That's what brings readers to the ads. But price won out.

They lost auto, supermarket and retail to mass mailers and free total circ. products. They tried to defend their territory by saying they brought customers in with their content, whereas fliers wind up in the trash. We all know it's true. We all heave our junk mail unopened into the recycle bin every day. But how many people heave the newspaper without reading at least some of it? Almost no one. Yet newspapers lost the battle on price, not content.

Now radio (and TV too) are caught in the same Hobson's choice. You can't attract listeners without quality content. But you can't pay for quality content and still compete on price. The previous poster is right, in part. The chains, because they can leverage their mediocre content, have a decided edge over the locals. But the game only lasts so long. This may be the recession that eliminates the newspaper chains once and for all. And radio will not be far behind. Yes, as the previous poster says, the groups are stronger as a result of their efficiencies. But only compared to the independents. Not compared to all the other advertising outlets that are out there. That's what will ultimately kill them, too.

Anonymous said...

Sick of your S----! said...

"Gorman you are so goddamned full of it. Don't be so effing quick to blame radio for the world's problems. It is people like you slamming the NAB, Fred Jacobs and others who are doing their best to see radio through the rough times that deserve to be called on the carpet. GO to hell, Gorman."

LMFAO! Fuck you, buddy! Ha! Ha! Gorman hit a nerve!

Booble said...

"It is people like you slamming the NAB, Fred Jacobs and others who are doing their best to see radio through the rough times that deserve to be called on the carpet."

Fred Jacobs is a scheming shill for HD Radio - he removes any comments about HD Radio that don't fit his agenda.

Anonymous said...

John, I met you in Fairlawn a few weeks back. Like the prior poster I worked in both radio and print. You brought up a point at your appearance that I hope you elaborate on in a future blog. You suggested that like-minded and troubled media should work together instead of trying to put each other out of business. You suggested newspapers and radio combining forces for projects with cross promotion and content benefitting both parties and a convergence on the internet.

Media worked best when you had more independent owners and operators. The art was in the dealmaking and follow through. Once companies like Viacom and Clear Channel tried to own everything, it failed.

There is a lesson to be learned.

Anonymous said...

Broadcasters! Come out, come out, wherever you are. Smell that smoke. There are some deals waiting to be done. The price will be right.

detroit diesel said...

fred jacobs is a shill for rent. he also uses the name john gorman in vain because he calls him on it.

Anonymous said...

I think the end result will be more owners that specialize in the market sizes they can handle best. It is no secret why smaller and mid size markets performed better than large ones. The managers understood the market better but the chains could not handle the bulk of owning all of those stations from large markets to small. More owners, more specialty. Hmmmmm. More like it was before deregulation ruined the radio business?

Friends ipod with commercials said...

"You can't attract listeners without quality content. But you can't pay for quality content and still compete on price"

I spent over 20 years in radio, with stops in tv and print too.
The above statement really hits home. I remember a time when radio was fun for listeners, entertaining, and provided reliable information.

I don’t know about you, when the world is melting down, tv and internet are my first choices,while radio is dead last Radio has become, "multiplied jukeboxes" and "syndicated format agenda repeaters."

Seeing the future of digital, some believe HD is the future of radio. HD comes with technical baggage and stations have opted for more jukeboxes, and syndicated format agenda repeaters won't be far behind?

Quality content is missing from radio.

Anonymous said...

RADIO is already extinct with this most under 35. What is left for music formats? Rock does not perform unless it is classic. Only the pop princess hot ACs have any life remaining. Right wing talkers appeal primarily to angry young males whose life peaked in high school. Radio has a pretty grim future and it would take a miracle to bring those who left radio back to it.

Anonymous said...

Radio licenses are worth less and you could be right about them eventually being worthless.

Show me a business plan that proves radio is still a viable business.

All I read about is the continued downturn in advertising. Hardly a growth business.

Anonymous said...

How many PDs even have the time to listen to their own stations given the multitude of duties they must perform. I hear v.t. breaks minus call letters galore on almost every music station. I hear schedule and print playlists on almost every music station. I hear out of date spots and promos. When no one is watching the store it will get robbed. In radio's case it is being robbed of its listeners to other medium.

Anonymous said...

Booble Struble - are your reading any of these comments? Oh, that's right - you only read Ramsey's and Del Coliano's blogs!

Anonymous said...

Kelly ran those stations like a fast food franchise. I think he thought he could capitalize on the True Oldies in Chicago except that the signal on WPMJ (rumored to be a Scott Shannon suggestion) was so-so in Peoria. Floresent lights, cement buildings, bridges were signal blockers. The AM was okay unless you drove by a house with a dishwasher on.

Calling those stations local is a stretch. Kelly's Longboat Key address is for tax purposes.

Jim Cramer IV said...

Beasley 2.02
Citadel .52
Cox 9.04
Cumulis 3.27
Emmis .70
Entercom 3.05
Radio One 1.24
Regency .61
Saga 4.54
Salem 1.11
WW1 .41
...AND THIS WAS A GOOD DAY!!!!!!!

Jim Cramer IV said...

Clear Channel Media Holdings - 10.00

Anonymous said...

The radio-newspaper receiver is priceless. Where did you find that?

I agree w/that earlier poster that like-minded and conditioned old media should work together, compare notes and see if there are ways they can apply what they have in a joint internet project.

Anonymous said...

I don't think I'd even want to pay 5x cash flow for a facility that, five to seven years from now, I couldn't unload for even 2x a cashflow amount that was considerably smaller.

danni said...

Common sense tells us that when internet access is available in automobiles, offering the audience a universe of esthetic choice and every kind of information (even local traffic and news) ON DEMAND, terrestrial radio will be defacto dead. No matter how it is reinvented, the only audience left will be the ones who are unable to afford anything better. How many advertisers are interested in reaching potential customers with LITTLE OR NO DISPOSABLE INCOME? The people who own terestrial are dinosaurs. Their thinking is jurassic and (metaphorically speaking) they are possessed of huge, unmanagable bodies and very tiny brains.

Anonymous said...

Interesting point of view John.

98% of Canadians still listen to radio each week. While it may be undeniable in the US that the listenership is down, it isn't in Canada. The stations program locally still.

Newspapers are taking it up the wazoo here the same though - down 25% in the last 5 years. So local radio programming seems to be working here.

On another note... How did a media that is so powerful and able to drive business growth, get smoked by newspaper advertising sales?

How come newspaper advertising is bigger than radio and TV advertising combined? Does it work better? Is it more cost effective? We know the answer is no. So how did this happen?

I agree that the old guard in radio are technically behind. "That infernal internet thing is gonna go away by crackee..." No it isn't. Getting them to invest in building out internet infrastructure won't happen soon. And they don't get how fast that game changes so there are risks for sure.

However, I keep putting new businesses with a good message on air and they grow. It's like clockwork. As long as that's happening, the revenue is still there to pay for good talent and original programming.