Sunday, December 7, 2008
Radio: Two losers join forces.
There’s no greater recipe for disaster than two floundering companies joining forces.
CBS Radio meet LAUNCHcast.
Let’s start with this question. What does the future hold for CBS Radio?
Earlier this year it put 50 of its 140 stations up for sale. But after the deadline for bids passed, CBS Radio said "only kidding" and said it wasn’t in any hurry to sell them after all.
A week later, CBS went on a downsizing rage, blowing out heritage morning shows and mass-firing on-air talent.
Now, let’s look at LAUNCHcast, one of the oldest names in streaming audio.
Its parent company, Launch Media was founded in 1994 by former Capitol Records executive Dave Goldberg and Robert Roback, a former securities attorney.
LAUNCHcast allows users to create their own stations or playlists of songs. But its had a life-long identity crisis.
In June, 2001, during the end of the dot-com mania days, Yahoo purchased Launch Media in a $12 million deal. Goldberg stayed on as CEO and Roback as President.
Nothing happened. LAUNCHcast remained LAUNCHcast – as identity-challenged as ever.
Now, let’s fast-forward to early 2007. Goldberg and Roback quit Launch Media and despite Yahoo’s claims to the contrary, rumors ran rampant that LAUNCHcast was up for grabs.
Yahoo closed its subscription-based music service in February and announced a partnership with Rhapsody that allows users to stream full-length songs in search results in September.
Its latest modification occurred just last month when Yahoo announced that LAUNCHcast would discontinue its four-bucks-a-month premium service, which streams music without spots, in higher quality audio.
The financially distressed Yahoo now claims they’re letting LAUNCHcast go because of “unfavorable Internet royalty rates.”
Could Yahoo’s dumping LAUNCHcast on to CBS Radio have everything to do with the fact that Microsoft CEO Steve Ballmer will acquire Yahoo once its dead weight becomes someone else’s problem?
What jumps out at me is that the last time I checked, LAUNCHcast’s audience plunge 43 percent to an estimated 2.9 million listeners in the U.S. – and, as of this very moment, still can’t be heard on Safari and Firefox browsers.
That, according to CBS Radio, will change once they take control of LAUNCHcast in February ’09. It still doesn't solve their massive listener loss.
Before we go any further with CBS Radio’s alliance with new media, shall we review their old media terrestrial radio track record post-1996 deregulation?
Though it’s considered sport at 1515 Broadway, you can’t blame everything that went wrong at CBS Radio on Joel Hollander.
We’ve witnessed myriads of missteps and blatant train wreck formats before and after his New York minute at the helm.
In just one week, CBS Radio fired its entire airstaff at one station and for the fifth time in five years changed its rock format by moving its “alternative hits” HD Radio side channel and making that the new format. Things have to be pretty grim when you raid HD Radio for a terrestrial format.
There’s WXRK in New York where, over this past week, sniper fire resulted in one casualty and a handful of demotions.
It’s true that Hollander dumped its New York-based alternative rock format for its foolhardy Free FM before it changed back to alternative, with a playlist that sounds more suited for the Los Angeles market. And they wonder why they're locked in a 1.7-1.8 Abritron share?
Then again this is a company that actually believed that the musical tastes of Detroit and Philadelphia were identical. What was that line? “Both cities – same lunch-bucket market?”
In Chicago, they fired Ed Volkman and Joe Bohannon after hosting WBBM-FM’s morning drive for twenty years. Problem? They were making too much money according to CBS Radio.
In Minneapolis, there was another massacre, which took the jobs of an estimated dozen or more.
CBS Radio also pulled the plug on its syndicated morning show, Opie & Anthony, from two of its rock stations. It seems like only yesterday that they were being hailed for their “triumphant return.”
Is it true that CBS Radio has fired over 700 employees in less than a year’s time – and admit that they’ve only begun to whack?
Now, compare those casualties to the much larger Viacom. They announced 850 job cuts but theirs are spread across its many divisions, including Paramount Studios and MTV Networks.
Did you read the CBS spin in Crain’s New York Business?
Let me quote the unnamed CBS spokeswoman who said, “We’ve been moving more toward the cluster approach. We’re working closer together and sharing resources across the stations.”
I’ll bet the CBS Radio sales departments loved hearing that motivating statement.
And you thought John Hogan had the trademark locked for “less is more?”
From January to September this year your revenues are down ten percent - to $1.2 billion and your operating income is down almost double that – a whopping nineteen percent to $420 million.
I’d say CBS Radio lost its buzz – but maybe it never really had one.
Sure, WFAN, WXRK, KROQ and a handful of others received critical acclaim when Mel brought them on-board when he sold Infinity to Viacom, which had acquired CBS.
But over the next few years neglect claimed radio piece by piece. Just like a body ravaged by an incurable disease – the toes, the feet, the knees, the legs, the fingers, the hands, the arms, the heart – and finally life. The rot spread from station to station to station.
Let’s get back to this CBS Radio-LAUNCHcast deal for a moment.
Here’s how Yahoo’s explaining the deal to its users.
It’s no secret that CBS wants to stick it to Mel Karmazin and Sirius XM and looking to the Internet to fulfill its fantasy.
In the past year, they cut the AOL Radio alliance and bought the somewhat Pandora Radio-like Last.FM, which it planned to promote through CBS. So far, its highest profile was on their short-lived Swingtown TV series by creating a special ‘70s music channel featuring the music played on and inspired by the series.
It’s not how much you own but how you run what you have. Since its terrestrial radio’s been run into the ground can we expect the same from CBS Radio when it comes to new media?
Garbage is garbage no matter how you package and deliver it.
That’s not to say that CBS doesn’t have some great radio stations, talented performers, and top-notch management. They probably just haven’t gotten around to firing them yet.
You are correct to say that according to comscoreArbitron’s September ’08 ratings, CBS Radio is in first place with a 2,212,700 cume and an average quarter hour of 200,104. Clear Channel is second with a 1,381,430 cume and a 105, 415 quarter hour. Way down in fifth place is LAUNCHcast with a 1,035,307 cume and a 121,467 person quarter hour.
Come February, those LAUNCHcast numbers will become part of CBS Radio’s cume and AQH- giving it, in a blue sky world, a weekly cume of 3 million-plus.
Let’s stop here for a moment to qualify these numbers. Arbitron’s on-line survey division, comscoreArbitron, sample approximately 200,000 persons who’ve had cookies planed on their computers – and the results are extrapolated – but – and it’s a big but – the only streaming audio stations that are included in the survey are paying a fee to Arbitron to be included. There are many stations that aren’t integrated into the survey because they did not pay for the inclusion. That number easily runs into an unrecorded 100 million-plus time spent listening.
That gives new meaning to term margin of error.
Here’s another question for CBS Radio. Considering the “fact” that it has an almost 1.4 million cume - how much revenue are you really generating from your streaming audio ventures? Just asking.
It’s time for a reality check. CBS Radio has taken to playing the victim while blaming others for the problems it originally created.
I dislike that phrase, "I'd rather be lucky than good." The trouble with luck is that it eventually it runs out. You can only get away with selling iceboxes to Eskimos forever for so long, you know.