Radio: How many people did it take to write that Clear Channel memo?

A camel is a horse designed by committee.

Question - How many people does it take to write a John Hogan memo?

Matthew Karnitschnig, a Wall Street Journal blogger, revealed that last Friday’s John Hogan “I-can’t-believe-he-wrote-this” memo was essentially penned by a committee of “experts” dispatched to San Antonio from the Boston headquarters of BainCapital.

According to Karnitschnig, “waves of panic that Clear Channel was in trouble and its $19 billion buyout in jeopardy” spread through BainCapital last week, which triggered them to “dispatch a large team of consultants and other experts to San Antonio to help run the business.”

It was their eleventh-hour attempt to salvage this degenerating deal.

We don’t know the exact number of ghost writers involved – but Karnitschnig learned that “members of the (BainCapital) team even helped draft Hogan’s memo and endorse it.”

I’ll say it again. You can’t make this stuff up.

BainCapital finally determined what’s amiss at Clear Channel. There is no valid leadership in San Antonio. It’s a company of over-privileged siblings that set up an organization of empty suits answering to the golden parachute wearing ex-Jacor frat boys.

When BainCapital opened the books it revealed the enormous sums of money and time wasted with HD Radio conversion – at $100K per station - and the other Clear Channel side projects, many since abandoned, all of which helped give the radio industry its bad name.

But let's not overestimate BainCapital. They don't know the difference between Clear Channel and Rubbermaid or Mr. Coffee.

You can’t move it to Shanghai, Chongqing or Hangzhou and have your voice-tracking done in Bangalore.

Efficiency is one thing. Amputation is another.

You can’t cut something that has nothing left to cut.

Radio has to be revalued.

If radio doesn’t find solutions instead of more problems, all of those radio-is-dead prophets of doom will be proven right.

What’s Clear Channel – thisclose to being terminal - really worth? Somewhere in teens.

Here’s the message to Clear Channel. Bite the bullet now and you’ve bought time to rebuild and recover. Sell off your properties at real multiples and keep only what you can realistically run – or, better still, just get out of the business.

If you continue to delay and deceive –you’ll be history. Remember the American automobile industry in the seventies? That’s what you’re doing to radio right now.

Clear Channel put a styptic pencil to its Wall Street bleeding yesterday. It closed at $29.16 but the downward spiral will continue. There’s no bargain here. Not even close.

Wall Street is wise to radio’s highly inflated prices.

The younger demos working the Street see through the ruse. Ask them. They’re not listening to the radio. Not because it’s obsolete – it’s just not providing their soundtrack. Nor is it the soundtrack to anyone under 40– and I’m being benevolent.

Radio’s fast becoming entertainment for those who can’t afford iPods and other options.

There’s a difference between devalued and revalued. Devalued is what Clear Channel has already done to radio.

You want the BainCapital/Thomas H. Lee deal to die. They’d run Clear Channel like Mitt Romney would run the country.

I hate to say it but it’s not even worth the comic relief to see Mark Mays and John Hogan answering to Bain Capital in the same comportment they had their managers do to them.

Radio: Clear Channel weather - Yesterday - 29 and change

The $17.1 billion acquisition of Harrah’s Entertainment by TPG and Apollo Globe – done.

Alliance Data Systems and Blackstone – undone. SLM, Harmon, United Rentals – un-done.

There’s no assurance of private equity deals reaching closure.

So what soured the Clear Channel buyout deal, you ask?

Where would you like to begin?

*

Cash, where is thy flow?

There’s nothing left over to cut from the operating budget. They’ve done everything but turn the oxygen off.

The competitive advantages Clear Channel touted to Bain/Lee weren’t real – not even close.

The Premiere syndicated division is over-rated. Rush, Dr. Laura, Delilah – they’re all long in the tooth. What can you say about Whoopi’s morning show other than “whoops?”

Clear Channel closed at $29.17 yesterday. And you thought Monday’s $31.42 was bad?

What’s the spread? The Bain/Lee buyout price was $39.20. Now, Clear Channel’s stock value is a sawbuck short.

These aren’t times of risk-taking – and taking on a critically problematical and devalued company like Clear Channel is an imprudent risk.

When number one son Mark Mays, announced the Bain/Lee LBO deal, he told Business Week on November 16, 2006, “ We're ecstatic (about the deal), and it's a great price for our existing shareholders. The buyers have a long-term horizon and are excited about the business and the great cash flow."

Take away the smoke and mirrors and it’s clear that Clear Channel didn’t know how to run radio nor did they hold on to people in that knew how to. It became a second tier micromanaged company.

They played the Wall Street game of stock purchases, dividends, and occasionally selling off cosmetic assets. When the well ran dry they suckered in Bain/Lee.

And what of Clear Channel’s employees and management? They made crap for cash. Their achievements were barely noticed. Clear Channel’s idea of encouragement was to not fire you.

Did you hear the buzz about what happened after that private equity conference ended in New York Yesterday? You’ll love this.

You’re Anthony J. DiNovi, co-president of Thomas H. Lee.

You’re cornered and asked about the probability of the $19.5 billion Clear Channel buyout reaching completion.

Your answer, please?

“No comment.”

Clear Channel criticized David Faber for referencing the quote on CNBC.

DiNovi told Dow Jones that no one should read anything into his “no comment” quote.

Wink, wink, nudge, nudge.

A few days earlier another Lee spokesperson, Scott Sperling, told Bloomberg News that he believed the deal would get done and remained confident the banks would honor their financing commitments.

What a difference a sawbuck makes.

Thomas H. Lee is only half of the Clear Channel deal.

What did a rep from BainCapital say yesterday when asked the same question?

The same answer: “No comment.”

Question - What are the three words that strike terror into the black hearts at the San Antonio Clear Channel headquarters?

Answer - Material adverse conditions.

One of two things will happen. The deal dies or gets reworked with the original prices slashed.

Both parties will end up calling the final outcome a "positive solution," but that'll be more from lawyer fatigue than anything else.

Either way – this deal’s heading south on a hell bound train.

Radio: Lost in Translation

Destination: San Antonio. We’ve turned back the clock to this past Friday, the 25th. Clear Channel Radio CEO John Hogan is tidying up the loose ends of a memo he’s about to send out to his subordinates – just in time to wreck their weekend.

This one heralds the new rules and regulations – effective immediately –for Clear Channel managers.

No one ever went broke trying to underestimate Clear Channel’s knack to screw up the entire radio industry. The proposed LBO with BainCapital and Thomas H. Lee is just the latest in a series to stop their hemorrhaging.

Though Hogan calls his memo a contingency plan it’s not in response to an unforeseen occurrence. The Mays deal with Bain/Lee was put together over a year ago. Since then the Mays clan ran out of rug to sweep their tribulations under and now Bain/Lee’s realizing how dire the deal is.

Hogan’s memo did zilch for Clear Channel stock, which plunged 7 percent since Friday. Bain/Lee did the LBO deal at $39.20. Last night – after doing over twice the average daily volume - CCU finished at $31.42. Backing out of the deal – even at a cost of $500 million – is the lesser of two evils for Bain/Lee and the banks caught up in this debacle.

Let’s consider the bright side of this unfolding disaster. It’s revealing the true valuation of radio properties. That in turn will hasten opportunities for real broadcasters to get back in the game.

The kith and kin at the Clear Channel offices in San Antonio speak in a weird and obscure dialect. They call it Mays as in maze – since its management and employees feel like rats trapped in one.

That’s the raison d'être for the memo’s translation.

From: Hogan, John
Sent: Friday, January 25, 2008 09:31
To: Radio General Managers - All; Radio Business Managers
Cc: Radio EVP's; Radio SVP's ; Radio SVPP; Radio RVP
Subject: First Quarter Contingency Plan

Good Morning,

As you are undoubtedly aware, we are generating less revenue for Q1 than we budgeted and less than what actually ran last year. At the same time, our budgeted expenses for Q1 are up 4%. While there are a number of factors contributing to our revenue shortfall the fact is we are behind on our revenue plan, up over last year on expenses, and as a result we will be well below our budgeted Q1 bcf. As responsible managers, we need to address the shortfall not only by continuing to find ways to increase our revenue but also by implementing cuts on the expense side until revenue production improves.

Translation: The kids are threatening to cut me a new one. The BainCapital/Thomas H. Lee deal is unraveling. What does that say about us if they’re willing to part with $500 million just to get us off of their books?

No one anticipated how challenging Q1 would be for us and while the plans we put in place last Fall made sense then, clearly we are operating in a different environment and thus need an adjustment to our plan.

You’ve heard the saying “from bad to worse?” That’s us.

The following Q1 expense reductions are to be implemented immediately in your market and correctly reflected to San Antonio by having your Market Controller access the Flash website under Reporting Events and complete the form titled "Q1 Contingency Plan". You will need to provide the expenses reduction amounts on the required form at the market level for the items identified below. This needs to be completed by no later than 7 pm ct today.

Hired rhymes with Fired but the latter comes first in the dictionary and we need to be first in something.

If you should have questions regarding the logistics, please contact Jeff Rice or Katie Gingrich and they will help guide you thru the process. The Q1 expense reductions are as follows:

'Q1 Expense Reductions

-all Research monies after 2/1

What we don’t know won’t hurt us.

-all Advertising and Promotion monies after 2/1

We have nothing worth advertising and promoting.

-all New Sales Hire guarantees not already implemented effective immediately (do NOT hire any additional sales people effective immediately)

We have nothing on-air worth selling.

-any New Hires budgeted but not hired effective immediately (do not hire any additional new employees)

Make do with threatening your current employees. There is no reason for us to train new employees to fear for their jobs.

-any/all discretionary monies (i.e. travel, meals and entertainment, etc) for your market. If you can save it, do so

When you take a client to lunch – have them pick up the tab.

Additionally, you are not to replace any departing personnel without specific approval from your EVPO

We can barely make payroll now - and more significantly - the Mays kids already renewed the leases on their Lear jets and limos and we have all those special interest groups payoffs…correct that… payments to deal with.

I completely understand the challenges associated with implementing the above cuts. It will make your job more difficult and have some long term affect (sic) on your overall performance. It goes without saying that leading through these reductions will be challenging. If there were another better alternative, we would not be requiring these reductions be implemented. Unfortunately, there is not another alternative.

Don’t worry about long term. We don’t.

Please contact your EVPO for any questions you have on implementing the reductions. Please recognize that your team will need strong leadership and support while implementing and operating under these expense reductions. Please help them understand the necessity of implementing these cuts and the importance of figuring out how they can operate as effectively as possible in the reduced Q1 expense scenario.

We've mismanaged this company and your employees are going to pay for it. What is there not to understand?

Again, I realize this is a challenging task but I am asking for your help, leadership, and support to implement and then work with the resulting expense plan to the best of your ability. It should go without saying that at the earliest opportunity, that is when revenues begin to stabilize and increase we can reverse the expense reductions.

Let’s face it. Revenues aren’t going to getting better. You’ll be next.

Thank you in advance for communicating the above to your teams and for your Market Controllers completing the information requests on the accompanying website. Please let me know how I can help.

I have a golden parachute and you don’t. If you try to reach me this weekend and I don’t answer – that means I forgot to take my cell phone with me on the golf cart.

John
John Hogan
Pres. & CEO

I have a job and you won’t.

Radio: Wall Street Shuffle

What’s the big deal?

Radio stocks were plummeting long before fears of a recession. At last the radio industry is first in something again – first to be worst.

A couple of weeks back I listed devalued radio stocks. It’s only gotten worse.

That 90 percent-plus club keeps growing: Spanish Broadcasting, Radio One, Emmis, Citadel, Regent. 90-percent. That’s the value they’ve lost.

Let’s take a quick trip to Los Angeles – the number one radio market in America. Even in the worst of times there were always buyers awaiting an opportunity to pick up an FM or two or three in that market. But that was yesterday.

Supply and demand? It’s not even a buyer’s market. No one’s buying.

You have two major chains – Radio One and Emmis – and neither one’s getting as much as a nibble for the troubled FM properties they’re trying to unload.
So do you take them off the market and try to make another go of ‘em with new formats, which you can't really afford to change or market – or do you hang a sign on ‘em reading, “New! Lower Price?” That’s the one you put up before “Priced to sell” and “Fire sale.”

This is the first time I’ve heard excuses being made for the Los Angeles radio market. My favorite? There are too many stations in that city. That used to be the last-ditch line you’d use to define Rust Belt markets.

Could it be that there are no greater fools remaining - as in there are always greater fools willing to pay even more than you did for a property you paid too much for?

How about those leveraged buyouts? Will BainCapital and Thomas H. Lee determine that they’re better off paying the $500 million break-up fee to back out of the Clear Channel LBO deal? Breaking up may not be that hard to do.

Remember, they’re doing it for the children. Lowry’s children.

Here’s the choice. Stay the course while Clear Channel continues to plummet? The deal, which was supposed to close last year, is now targeted for February or March. What’ll their value be by then? Will Bain and Lee’s backing banks risk it or cut their losses. I’d say flip a coin except that it’s a heads I win, tales you lose deal. There are few things worse than to have a vested interest in a dysfunctional corporation.

Bain/Lee offered $39.30. As I write this Clear Channel’s down to $32.14. Ask yourself - what would (BainCapital founder) Mitt Romney do?

It’s a shame when facts keep getting in the way.

I got an advance on what the number one song will be on Clear Channel’s corporate playlist. It’s a remake of Prince’s "1999." They changed the lyrics to “…we’re gonna party like its 1929.”

And did you hear the one about the Cumulus and its go-private deal? The gelded bulls at Merril-Lynch lost $8.6 billion and have problems far more pressing than a radio deal gone sour – especially when those that set up the deal are no longer with the company. We’re talking – what - a five dollar drop since the deal was set? The deal's clouding up.

There’s buyer’s remorse and there’s buyer’s morose. With Cumulus it’s one and the same.
*
I understand the bad blood started when everyone in the room claimed to have the superior intellect.

And if you need proof that there’s a glut of too many radio stations – drop by the FCC offices where they held an auction for 14 AM radio stations in various markets and no one showed.

We already know of a few deals where clusters in smaller markets sold for less than their original purchase price. There’ll be more.

We also know that there are creative, resourceful managers and talent waiting to get back in when the proper pragmatic deals are done. Other smart managers and talent that still have jobs are laying low and pretending to being good soldiers as they await the inevitable.

When radio is restored it’ll be different and will require the skills of linking old media with new – and that means far more than just a stream encircled by lowest common denominator features.
*
Years ago Bob Sillerman told me that thriving businesses have fun, make money, and having fun making money. He’s right.

You know the problem is the crisis stage when pro-radio trades begin expressing commiseration for all involved and offer optimism that a judicious resolution to the calamity will be found.

Just and rational. Those words haven’t been uttered in radio since the Telecom Bill was passed in 1996.

The math is simple. The values have to be realistic for radio to be profitable again.

Going down?

Radio: Anti-social networking

I read that headline on Tuesday’s Inside Radio, too: Forget Facebook and MySpace. Radio jumps on the social networking craze.

It went on to list an unaccredited – but carefully worded – prediction that radio station social network sites could – emphasis on could – become a solid revenue source. Solid as opposed to what, I ask.

Rule of thumb. When a prophecy is passive and unaccredited - delete it.

The article – first of three – went on to tell how over a dozen Clear Channel websites already employ social networking – actually a social network component. If we are to believe Clear Channel’s statistics - its social networking beta test resulted in over 150,000 registered users since its launch last April – and its users uploaded more than 300,000 photos. Only one station, Z-100/New York, was mentioned. Clear Channel didn’t provide the markets or calls of the other participating stations.

It also revealed that a number of non-Clear Channel stations have produced their own social networking sites – like the Cumulus-owned 99X in Atlanta.

But didn’t they change format a few days ago?

According to Inside Radio, users can interact with one another and with personalities in chat rooms. Can’t wait to see how one interacts with a voice tracker.

Inside Radio doled out a lot of minutiae but few facts.
*
Let’s move quickly to the office of Clear Channel/New York on-line programming czarette Zena Burns. She was quoted in Inside Radio (which is owned by Clear Channel, did’ja know?) saying, “Terrestrial radio is all about community. It’s what our iPods don’t have.”
*
Guess she never heard the line, “What’s on your iPod?”

Burns was a former editor of Teen People.com, which folded.
*
I read a statistic that a third of iPod users are between the ages of 6 and 10 – but I digress.
*
The Inside Radio piece continued to explain and define what a social network sites are as if they were just invented yesterday.

And what, pray tell, do they say gives a radio station’s social network an edge? It’s local!

Could someone please translate to San Antonio it’s radio that needs to be local – not social networks.

Radio was the original social network. Back in the fifties and sixties when Tommy dedicated a song to Debbie on top 40 radio – that was social networking. As music got more defined with FM radio – those listening to the same niche formats experienced social networking.
*
I’m not trying to discourage fresh thought and innovation but it would be nice to return to reality for the moment.
*
Maybe it’s just me. But if you’re trying to combine social networking with radio – why are your playlists hopelessly out of sync with popular culture?
*
I also read that piece in Inside Radio this morning (I’m giving them way too much free press) on the CBS-owned Last.fm site. Quincy Smith, who runs its interactive division said, “Radio and Last.fm talk a lot.” That means CBS Radio is using Last.fm data to discover new artists. In the old days – pre-Telecom – we hired skilled programmers and music directors that understood the culture because they were part of it. Now, you’re just eavesdropping. You may collect data on what’s being listened to – but do you know why it’s being listened to? And if you have to ask what Last.fm is – you’re not qualified to be in music radio and should leave the building immediately.
*
12 to 34’s are not listening to the radio. I repeat – 12 to 34’s are not listening to the radio. How do you expect to get them through a radio as a portal to your social network when it’s not part of their lifestyle?
*
Another question, if I may.
*
How are you going to sell your social network to advertisers? Better, still - who’s going to sell it? NTR is such a pain.
*
When you’re talking mix and match – old and new media – there’s a misalignment of critical metrics. What’s your pitch when the metrics don’t match up? And speaking of metrics – we don’t even have a standardized version of metric measurement.
*
This recalls the ancient history days of radio ratings services: Arbitron (then Audio Research Bureau), Hooper, and Birch. Someone’s had to really screw up big time to give validity to another.
*
Whatever the case, the media buyer wants to connect its clients with people.
*
A successful social network provides advertisers the opportunity to talk with – not just to people. There’s a difference.
*
Here’s the problem-o. There’s no clear-cut method to identify and measure the difference….yet. Pull that one off and you will get advertisers following your lead. Easier said that done, of course.
*
A radio station social network web site? How behind the times is that? Can you change their mind? What happens if you actually get enough respondents and all of them complain how bogus your playlist is? You’ll have un-sold your radio stations due to your clueless programming and marketing.
*
Those I talk to in the social network development circles got a chuckle from the Inside Radio piece, because radio is so, so, so out of touch with popular culture.
*
I don’t mean to rub it in because, chances are, you had nothing to do with this decision but do you realize that for the cost of a half-dozen HD radio studio conversions, your radio chain could’ve bought Facebook a few years back? That head-start could’ve provided you with the knowledge you need to program to today’s cyber savvy.
*
It’s true that the uncool can always become cool again. But what are the odds of radio pulling it off?
*
I’m more concerned with the answer to this two-part question: What’s on your iPod and did it have anything to do with hearing the song on the radio? Start there.

Radio: Karmatic retribution

Mike Trivisonno is a radio personality in Cleveland. He owns afternoon drive.

A few years back I did a satirical piece for a local paper on WTAM – the station he’s on. In it, I made mention of someone (not Trivisonno) fabricating an interview with a national political candidate. The actual interview was real but done in another market with different host and edited to create the semblance that it was done locally. He was outed by a sloppy edit.

I ended the commentary noting that WTAM’s signal reached 38 states and lamented that Trivisonno’s show offered an embarrassing image of Cleveland to its out-of-town listeners.

It was supposed to be a joke but he took it personally and lambasted me on the air.

Since then, he’s continued to slam me for my occasional disparaging remarks about his employer in this blog and in interviews.

By now you know from my shameless mentions that I have a book titled The Buzzard. It’s my memoir about working with a championship team. If you haven’t read it yet and you’re a fan of radio or marketing and motivation, I think you’ll like it. Did I mention that it’s in its second printing?

To promote the book I relied on traditional (old) media – radio, television, and print to get the word out - with interviews and promotions timed to maximize appearances and book signings. I couldn’t have done it without them.

I’m not saying new media was secondary. It wasn’t. My most successful appearances had traditional media connected to new media. When I was on a radio or TV station that archived the interview or when a newspaper or magazine article was also on-line – often with additional material, the adjacent appearances were the best attended.

There should be a sign in every traditional media organization that reads collaborate or die.

I received a warm welcome at and was on every Clear Channel station, including WTAM, to promote my book.

When Trivisonno learned of my interviews on WTAM and other Clear Channel stations he called me a hypocrite. His beef: I’m promoting my book on stations owned by a company I’ve slammed on many occasions.

The reality is that I’m most likely one of the best friends to anyone working the front lines at Clear Channel. I miss good, creative radio as much as they do.

Last week, Ed Ferenc, who was news director for WMMS from the mid seventies to the mid nineties, was spotted by Trivisonno while doing business at WTAM and brought him in the studio as an impromptu on-air guest. When you get two radio people in the same room, the topic always turns to what went wrong with the business. Their conclusion was the same as mine - or anyone else that knows how this business should be run.

I often wonder why the hacki di tutti hacki running the joint into the ground from San Antonio are never replaced – and then I realize that they’re not replaced because no one knows what they do. In their opinion, the golden parachute club at Clear Channel is all about having a job, which is good, as opposed to having to actually work, which is bad.

How else do you explain that the solution to their financial problems is always the same – downsize.

They’ve cut the operation to the bone, sucked out the marrow, and actually believe they can sell what’s left of the product.

What other business lets go its best salespeople because they’re too successful? They’re replaced by untrained novices who find every way possible to talk their way out of a sale.

That’s what put the old Cleveland mafia out of business. Those guys loved to talk and talk. The problem was that they talked themselves into the crowbar motel.

The success of my book is proof that radio, television, and newspapers still work. They created a buzz and motivated listeners and readers to come to signings and appearances and, most importantly, to buy books.

Radio can still sell when given the opportunity to be creative.

Few decisions are made in the radio industry that are carefully thought out beyond the present moment.

There’s radio’s real problem. Decisions made from desperation are almost always are certain to fail.

*

A radio station’s real worth is not the physical plant. It’s people.

Efficiency is not about running a company with fewer bodies. It’s about having the best people and allowing them to utilizing their talents and creativity to the fullest. That’s what the successful dot coms are about. That’s what most radio chains are not.

Whatever happened to mentoring?

Old media will survive only if it marries itself to new media and understands the profitability of the great convergence.

The rules may be changing but the laws of physics remain the same.

Thomas Paine said it back in the 18th Century – Lead, follow or get out of the way.

Radio: Stop him before he lies again!

Being in this business as long as I have you witness and encounter some…well let’s say interesting events.
*
I won’t tell you who – that’s not essential to the story. There was a famous rock star. In fact, he still is. He’s a talented and ingenious songwriter and performer. Like others in his profession during the 70s and 80s, excess of drink and drugs was a given.
*
His manager, recognizing his quandary, hired someone to protect him from himself.
*
In advance of his client using a bathroom, his hired guardian would do reconnaissance and check under the sink, behind the toilet, and anywhere else one could hide drugs.
*
This person wasn’t all over him like a dog. Most of the time I wasn't even aware of his presence.

I witnessed one incident where the rock star reached over to grab a quick sip from someone else’s drink. His guardian appeared and calmly took the glass from his hand. If I wasn't looking in his direction – I would've missed it.

This was back in the eighties. Today, this rock star is still performing, occasionally touring, and more concerned about getting enough fiber in his diet than trying to score blow or booze.

I'm proposing we hire a guardian to protect Merchant of Doom Peter “Sgt. Bilk-o” Ferrara from himself. The poor guy needs it. He’s not only doing permanent damage to his own reputation, he’s damaging an entire industry.

His HD Radio Alliance leaked a rumor that Steve Jobs approved the manufacturing of an Apple iPod boom box that would include an HD Radio.

Earlier this week at the MacWorld convo, Steve Jobs let it be known that Apple will not be involved in any technologies that are geographically limited. I don’t know if Jobs’ remark had anything to do with Bilk-o’s poorly planted white lie– but, it’s obvious that when Jobs does put radio into the mix – it will be the kind you receive from the Internet.

So what does the HD Radio Alliance do? Announce a quasi-deal with Microsoft. You’ll read all about it on the pro-HD radio sites today.
*
Yes, Microsoft. They’ve been a ragbag for the past decade. When they controlled everything, they were pricks to their patrons. They’re still sitting on top of the heap – but their exclusivity is eroding.

What comes to mind when you think of Microsoft these days? Poor customer service? Vista? Erratic performing programs? The blue screen of death?

When Microsoft released Vista - there was little expectation or need for it.

How about Sync? Even I had high hopes for that one. Now, early adopters are complaining that its performance falls short.

Memo to Bilk-o: PR firms can get you press. That doesn’t mean it will translate to sales. Get used to it. HD Radio is not going to happen.

Think Apple and innovation, creativity, and a company that invents products that debut as wants and become needs comes to mind.

Since HD Radio was launched, Apple's released numerous models of iPods and iPhones, which sell in the multi-millions – and have become part of the culture – while the mere mention of HD Radio to clerks at retailers Bilk-o claims they’re sold in look at you quizzically and ask if you mean HD TV.

How long will be perpetrate a dead product even he doesn't believe in?

There's drug trafficking, fencing, hijacking, shylocking, gambling, prostitution, extortion – all serving the desire for fast financial gain. Can we add HD Radio peddling to that list?

Repuation is a funny thing, Bilk-o. It’s built from little things like a house is made brick-by-brick. Over time, a name and face get coupled with words and action. In time, that man’s life is bordered by an imposing edifice, good, bad, or indifferent that can never be altered.

Bilk-o, you’re in need of an intervention. Too bad nobody cares enough to set one up for you.

Radio (2020) Nowhere!

Denial.

Take General Motors chairman Rick Wagoner’s comments at the North American International Auto Show in Detroit yesterday.

Following a juggling act – I can’t make these things up – Wagoner, only a couple of decades late, cautioned the crowd on the necessity to find alternative fuel sources. He even quoted the U.S. Department of Energy’s prediction that the need for more energy will increase by 70 percent by 2040.

Showing how fuel-efficient GM has become, he showed off their new Hummer model. This one runs on ethanol.

Just to make sure the audience got the message, GM’s North American marketing chief Mark LaNeve added, “You know we have come full circle when we roll out a Hummer that’s fuel efficient.”

Let’s stop right here.

It’s nice that GM’s “invented” a fuel-efficient Hummer. Just answer these three questions please.

First – Please define fuel-efficient. Is it fuel-efficient just because it doesn’t run on gas?

Second - How many miles to a gallon of ethanol does this hybrid Hummer get anyway?

Third - How does one fills its tank when less than one percent of the 188,000 gas stations in the U.S. pump ethanol?

Minor details.

It’s like HD Radio. If no one is buying how can it sell? If no one’s listening how can it be heard?

GM's shut down assembly plants and phased out between 20 and 30-thousand jobs and renegotiated its health care and slash retirement benefits.

Remember how Detroit snickered when Honda and Toyota introduced their tiny, boxy cars to the U.S. market?

(Anyone in any business should read David Halberstam’s The Reckoning.)

It reminds one of the two I’s in our world – Internet and iPod. If radio doesn’t meet to your satisfaction, there’s always something ready to take its place.

Want a parallel to the U.S. radio industry? Just look at Detroit.

Now, let’s travel 2,400 miles west to San Francisco.

*

This morning, at the annual MacWorld Conference and Expo, Apple CEO Steve Jobs will address the gathering. You’ll see it on all the news channels and networks tonight.

It should be as upbeat at the Moscone Center as it is grim at the decaying Cobo.

Apple uses its annual MacWorld convo to introduce its latest consumer goodies. Last year, one of the products unveiled was the iPhone.

This time Steve Jobs is expected to debut a mini-Mac, a new PC to rival Sony’s Vaio, iPhone and iPod software upgrades, and announce deals with movie studios and TV networks to distribute content through iTunes.

Roughly 450 other manufacturers – including Belkin, eMedia Music, H&R Block, Skype and Ricoh will introduce new products to interface with Apple products.

Even Microsoft will be launching its new Office 2008 for Macs, which will allow consumers to create and share compatible documents between Macs and PCs.

I haven't heard of any plant closings, layoffs or benefit slashing at Apple or any other new media company.

That’s growth - American-style.

And what’s radio up to?

David “Fumbles’ Rehr and the boys at the National Association of Broadcasters and his equally accomplished buddy Peter “Sgt. Bilk-o” Ferrara at the HD Radio Alliance announced that they will be launching their – try not to laugh – Radio 2020 Initiative in March.

They claim the Radio 2020 campaign will not embrace fancy slogans – no one could come up with any – or catchy jingles – probably because this past year’s HD Radio Alliance campaign dried up their creative well – though some may disagree using the word creative in the same sentence as HD radio.

*

The marketing flacks at the NAB insist that this will not be another in a series of their six-month rah-rah-sis-boom-bah campaigns that die due to lack of interest.

Those sissies spend more time telling you what they won’t do than what they will.

*
They’re even claiming that the Radio 2020 campaign may grate on for years. They stopped short of saying “all the way to 2020” to avoid snide laughter.
*

The NAB and the HD Radio Alliance. Whenever you have Fumbles and Bilk-o teaming up you’ll get no bangs, just whimpers.

*

Even when you kick these clowns to the curb the curb kicks ‘em back.

*

One of the new slogans their minions plan to sandbag you with is their new “Radio Ready” symbol - a pathetic imitation of “Intel Inside.”

I keep saying it over and over. I couldn’t make these stories up if I tried.

They plan to use "Radio Ready" to promote any appliance that uses a radio - if they can find one.

*

Maybe they’ll come up with some catchy little notes to accompany it until the RIAA demands royalties for its use.

*

Sgt. Bilk-o, no matter how many times you try to plant a rumor about Apple manufacturing a product with an HD Radio embedded – forget it! Repeat after me, Bilk-o. It’s not going to happen. It’s not going to happen.

*

Is there a doctor in the house? Bilk-o needs a new scrip for truth serum.

*

In his world it’s all about being seen at the right places and talking the talk others want to hear, which is not necessarily the truth.

*

If Bilk-o shilled for GM instead of the HD Radio Alliance and was confronted with the fact that less than one percent of gas stations in the U.S. sell ethanol, he would’ve made some fictitious claim about GM setting up distribution deals with Exxon, BP, Shell, and Mobil - and that they’d all be selling ethanol by Christmas.

There are more Radio 2020 campaigns in the works but I won’t bore you with their idiosyncrasies and peccadilloes other than to say that’s what happens when organizations believe their own hype.

*

Think of the backlash the NAB and HD Radio Alliance will get from this pitiable campaign. Allow me change that word to hacklash.

*

So, what does Radio 2020 have the most in common with? The auto show in Detroit or Steve Jobs’ iOrgy in San Francisco?

Put another way. Whose event would you prefer being hitched up to?

Radio: Gossip Churl

How about all that misinformation about HD Radio that was funneled out to the masses this past weekend?

You know, the one about Steve Jobs’ Apple manufacturing an HD Radio/iPod hybrid boom box? It was hot news for a nanosecond on the pro-HD Radio trades and web sites. I could’ve mentioned in last Thursday’s blog, but chose to ignore it.

I felt HD Radio Alliance head Peter “Sgt. Bilk-o” Ferrara’s plea to the FCC that if the XM-Sirius merger goes through that all satellite receivers should include an HD Radio was enough humor for the weekend.

Pro-HD Radio evangelists proclaimed this well-placed scam to be a sign that Steve Jobs was endorsing HD Radio.

In reality, it was fabricated nonsense that reeked from the foul rat odor of the falsehoods and deceit we’ve come to recognize from Bilk-o and his fraudulent HD Radio Alliance.

Sad, isn’t it? That was the best rumor he could peddle in front of the Consumer Electronics Show this year? A 13-year old girl could’ve done better job at selling this gossip.

Did Bilk-o really believe that anyone would fall for a tale this incongruous?

The HD Radio/iPod boom box amalgamation was leaked to iLounge.com, an independent site of dedicated to presenting the latest news and gossip of all things iPod.

When iLounge added the anecdote on-line – as it does with all tittle-tattle, the HD Radio Alliance leaked the fictitious story again – for a second time – to the trades, which printed the mendacity as….well, judge yourself with this piece from Radio Ink: http://www.radioink.com/HeadlineEntry.asp?hid=140565&pt=todaysnews .

I can’t fault any pro-radio trade or site to pounce on any story that speaks optimistically of the radio industry these days. Here’s where it goes sour. The accomplices that peddled this story around to the trades embellished it with re-telling the tale of “tagging” – a way to one- stop shop at the iTunes store - and name dropped Clear Channel, CBS Radio, Cumulus, Cox, Entercom, and Greater Media as chains that are in the process of encoding their HD Radio stations to perform such miracles.

Bilk-o, read the Book of Jobs. Steve’s selling iPods and iPhones – not HD Radio. He, like consumers everywhere, couldn’t care less about your product.

Question: Who’s listening to HD Radio?

Answer- Absolutely no one!

Follow this illusory line and tell me what it means: If Apple does indeed introduce a tagging-capable product at Macworld, it won't be its first venture into the boombox arena: It introduced the Hi-Fi iPod boombox early last year. But, like the iPod itself, that boombox did not include a radio. JBL, Alpine, and Polk Audio are all set to introduce tagging-capable HD receivers soon. One has something to do with the other?

The HD Radio Alliance must assume that by the time MacWorld ‘08 – Apple’s annual debutante ball for new products – begins (January 14 – 18) the rumor will be deemed fact and when it doesn’t happen, it will provide the HD Radio Alliance the chance to steal the line used when a sports team chokes in the finals, “maybe next year.”

Here’s another dilemma. HD Radio is killing its host – terrestrial radio.

Media Monitors, which logs radio spots, revealed its number one radio advertiser of 2007 – The HD Radio Alliance.

Let’s tackle the two problems here.

First - They were non-revenue ads. They made no money. All they did was eat inventory.

Second – Put yourself in this place. Say, you’re selling against radio. There’s a buy on the table and it’s up for grabs. One medium gets it all. What would you do?

How about saying that radio’s number one client in ‘07 was HD Radio; receiving a total 1,451,036 announcements on participating stations radio nationwide, which included all the major radio chains?

Add that the intent of this campaign was to convince consumers to buy HD Radio units.

So how many HD Radio units were sold to consumers in 2006? Real figures, please.

Do we see six figures?

Do we see five figures?

How about four?

Next question – How effectual is radio if it can’t move product for its number one client?

Radio, you’ve been scammed by the HD Radio Alliance – again!

You’ve been put in a position to sell a product that no one wants or cares about because it doesn’t work. If you thought FM HD was an embarrassment, please let me introduce you the fiasco known as AM HD Radio.

The gaming/geek cable channel G4 is covering the Consumer Electronics Show in Vegas this week. Let’s see how well HD Radio is received this year. Will they even spend one second on HD Radio coverage this year? If they do, it’ll be one second more than they did last year.

For the real world, the CES is where manufacturers drop their new wares. Those that engender consumer interest will have a chance to go to market. New products met with tepid response are scrap heaped.

I take that back. You’ll never see them again unless it’s HD Radio, which has come back from the dead more times than Dracula.

So why perpetrate the myth?

HD Radio, which doesn’t work, is further hampered by a costly chip, which keeps its retail price high. The chip won’t get cheaper unless HD Radio goes into mass production. But it won’t because there is no demand for HD Radio. Come to think of it – isn’t that the definition of terminal?

You can’t predict the future – you can only create it and Bilk-o, this is the hackarama you’ve done for iBiquity and the radio industry.

In addition to those million-plus free spots radio ran, stations are also required to pay royalties to iBiquity and costs paid by manufacturers of HD Radio units are passed along to stations that buy them.

When I explain this deal to those not in the radio business I’m always asked the same question.

Isn’t that like digging the grave you’re going to be buried in?

---------

Rare WMMS Bruce Springsteen/Southside Johnny jam footage at: http://www.buzzardbook.wordpress.com

Radio: We have met the enemy and he is us!

It’s a business that fires its sales staff for being too successful in favor of inexperienced account executives that’ll work for less commission. Relationships are so overrated.

So what if they’ve never sold radio before – or even know much about it? What’s there to know? We have time and we have to sell it. Details get in the way.

Maybe that explains what I heard the week before Christmas on a Clear Channel-owned classic rock station in a nearby market during afternoon drive.

Every spot in the set I heard – minus one – was for a strip club. Sleazeball strip joints. The one exception? A bar promoting a wet T-shirt night.

For the station’s sake, I hope the business was cash up-front.

I pity the poor sales guy. He probably blew his meager commission on lap dances.

The annual Executive Summary from Borrell Associates show 2008 local on-line advertising up by 48 percent, putting it at $12.6 billion with much of it coming from local search and on-line video spots.

The report also says 2008 will present a challenge for old media - radio, TV and cable to newspapers –most which have their time-buy sales staffs also pitching non-traditional revenue on-line ads.

Radio is a business that terminates relationships with its top ratings and revenue air personalities in favor of non-local syndication or voice-tracking.

Yesterday, Radio Daily News.com readers voted “the fired and laid-off employees of Clear Channel, CBS Radio, Citadel, Emmis, Cumulus and other large, medium and small market radio stations who have devoted their immense talents to broadcasting,” its 2008 Radio Persons of the Year award.

Immediately following Radio Daily News publisher Larry Shannon’s announcement word came down from Clear Channel that Valerie Smaldone, the top-rated and best-known air personality at WLTW-FM was off the station after twenty-four year run.

Reason?

She couldn’t come to terms with a new multi-year contract offered by Clear Channel.

Translation: she wouldn’t take a pay cut.

Valarie’s the third full-time veteran WLTW announcer to vacate the premises in the past six months. Do you detect a pattern here?

WLTW slipped from first to third in the New York Arbitron. Where do you think they’ll place a year from today?

Who said Clear Channel discarded its “less is more” campaign. They have far less employees today than they did six months ago.

You’re a better man than I, Gunga Din. Too bad you rhyme with has been.

Some companies worry about a brain drain while Clear Channel routinely practices brain dumping.

Let’s do a reality check.

These broadcast chains lost over 50% of their value in one year.

Citadel - Jan. 2, 2007 - $9.96; Dec. 31, 2007 - $2.06. (Wall St. viewed it as a positive that Disney unloaded ABC Radio – not the other way around. The same week Disney dumped radio, it bought Pixar from – there’s that name again - Steve Jobs.)

Emmis – Jan. 2 - $8.24; Dec. 31 - $3.85.

Entercom - Jan. 2 - $28.18; Dec. 31 - $13.69.

Radio One - Jan. 2 - $6.75; Dec. 31 - $2.34.

Spanish Broadcasting System - Jan. 2 - $4.11; Dec. 31 - $1.85.

Westwood One - Jan. 2 - $7.06; Dec. 31 - $1.99.

Salem just missed the 50% loss club by a prayer: Jan. 2 - $11.95; Dec. 31 - $6.59.

CBS fell $31.18 to $27.25. (True, there’s writer’s strike and the Katy Couric gaffe – but putting one in Joel Hollander’s back may have effectively tackled, at least temporarily, the downward spiral at the radio division.)

Clear Channel, which wanted to privatize by year end – but couldn’t - is down $35.54 to $34.52 – a price artificially inflated by the $39.90 offering price by BainCapital and Thomas H. Lee. There’s a deal that’s close to turning into a cut and run. If Bain and Lee cut their losses and back out of that deal – Clear Channel will be in free fall.

Theirs isn’t the only deal that could implode. The Merrill Lynch bull, already gelded by the credit and mortgage collapse, is taking a second look at the privatization deal they concocted with Cumulus. When they announced it in July, Cumulus was at $11.75. Last night it closed at $7.25.

Pump it and dump it? Radio’s been pumped and dumped to death. It forgot how to draw listeners and sell products for its clients.

Radio can’t just impugn the economy. Sales were bad when the economy was healthier. I know of many long-time radio clients that stopped advertising because they were not getting response from being 10th place in an endless spot set.

Then there’s production – where creative producers that could craft masterpieces for local clients – were fired and replaced by automatons that delivered tonnage and nothing more.

A few years from now we’ll look back at this time as radio’s golden age for rampant buffoonery.

I read an article in the Wall Street Journal’s weekend edition on Facebook. Here’s the condensed version: Three years ago Paul Thiel invested in an unknown social networking site, Facebook. Thiel’s venture capital company put a half million – that’s next-to-nothing in their world. Later, he invested a bit more. Its creators retained autonomy. Today, the value of Facebook increased over fifty times and the site now has over 59 million users.

Think about it. A radio chain could’ve made that very same $500,000+ investment for its future.

Math test: It takes roughly that amount to upgrade how many terrestrial stations to HD Radio? And there’s no future in that con where a dollar chases a dime.

Realize this. Radio was the original social network. Its diversity of formats brought like-minded people together and has been doing so since its inception. Whether it was sports, talk, or requests and dedications, radio was a provider of convergence. It could’ve easily built upon its inimitable position with the Internet.

With few exceptions radio was divided into two camps.

One assumed the Internet to be “the CB Radio of the nineties” (an exact quote from a top ten market manager in response to an observation I made regarding the emergent value of the web).

The other viewed the Internet as competition and felt it was radio’s duty to snuff it out.

There were several discussions I had seven, eight years ago with prominent radio people that couldn’t buy a clue regarding web-based social networking. When I suggested partnering with one, I was met with polite nods and smiles while their eyes glazed over.

Where would radio be today had it actively - not passively - utilized the Internet seven, eight, nine years ago?

The current radio-driven propaganda about the industry learning how to generate added revenue from the Internet is just that.

There are moves that must be made now to insure radio’s future. One is apparent: Invest in and marry the Internet. That doesn’t mean getting bailed out by Google or other on-line services for ad revenue. The Internet can be radio’s best friend for years to come. If ignored or used passively, it will be radio’s worst enemy. It’s that black and white.

Radio also has to learn – or relearn - how to program, market, and sell time in this brave new world. Marketing basics start with customer satisfaction, customer retention, knowing segmentation, building on brand loyalty, and providing clients with ROI.

Show me a naysayer and I’ll show you someone who fears change.

Radio deals aren’t in collapse solely because of the credit crunch. Once the fire sales begin, appraisals will become pragmatic – and when that occurs they’ll be smart money investing in radio, knowing that the medium can be revitalized. That will, in turn, draw the creative and innovative staff to revise the medium.

Maybe it will take Paul Thiel or others like him.

One thing is certain. You’ll be able to spot the real broadcasters. They’ll be the ones not wearing the clown noses.

Radio: You don’t want HD Radio’s Bilk-o in your foxhole.

You can’t make this stuff up.

How would you like it if one you believed to be a business partner did an about face and supported the very thing your industry is fighting against?

Memo to terrestrial radio: iBiquity and the HD Radio Alliance just double-crossed you.

The dynamic duo closed their dismal year by firing off a letter to the FCC on December 20 urging that if the merger between XM and Sirius satellite radio companies is approved – HD Radios must be included in all satellite receivers.

Riiiiight!

*

That means when terrestrial radio promotes HD Radio it’ll be pushing satellite radio, too.

iBiquity’s management and legal team also managed to meet with some lower-level FCC staffers just before the Christmas break in an attempt to grease...er… plead their case.

Poor NAB boss Fumbles. He doesn’t even have juice to meet with the entry level types at the Commission. He’ll always be a mouse studying to be a rat.

Does it astound you as much as it does me that at the NAB convention last September –enemy numero uno was still XM and Sirius – and that proposed merger had to be stopped at all costs?
Unlike Fumbles’ NAB, which vehemently opposes the merger, iBiquity and the HD Radio Alliance - that purportedly serves terrestrial radio owners – evidently does not.

Should the merger be approved iBiquity wants to obstruct the company from any exclusive arrangements with suppliers, retailers, and car makers. They claim that not doing so would provide the merged company a major advantage over HD Radio.

Peter “Sgt. Bilk-o” Ferrara and his HD Radio Alliance troop already know that their product roll-out ought to be rolled-up and tossed away – but there’s too much money at stake for those in the deal to leave on the table even though HD Radio’s outcome is fated.

After stealing the stove – he’d come back for the smoke.

iBiquity argues in that a “combined XM-Sirius could be in a better position to hamper their ability to introduce HD Radio technology into the marketplace.”

Introduce?

Let me read to you a portion of a press release from HD Radio Alliance issued on April 10, 2006: “In response to a surge in consumer demand for HD Digital Radio™ receivers, three major retailers now plan to offer HD Digital Radios in their stores nationwide beginning this month and have announced sweeping marketing and education campaigns to support new customers…..”

Seventeen months later and you’re still introducing your product?

How many products has Steve Jobs announced during the same time frame?

I have to add include this line from that April ’06 press release – just to rub it in – where it described HD Radio as “…what promises to be the biggest trend in consumer entertainment since the advent of FM radio.”

So, let’s say that in iBiquity’s blue sky universe users could choose from both satellite and HD Radio.

No one will argue that when you can pick up and listen to a terrestrial radio station that the quality is close to and competitive with satellite radio. But have you ever listened to the sound of HD Radio side channels?

It’s somewhere between AM and present-day FM. That is, when you can receive them.

XM has exclusive deals with GM, Honda, and Nissan, and Audiovox’s Terk Electronics distribution, which also distributes Sirius satellite antennas.

Sirius has exclusives with Ford, BMW, and Mercedes Benz automakers, retail outlet Radio Shack, and Direct Electronics, which also distributes premium sound systems and vehicle security.

In response to the latest laughable HD Radio demand, XM and Sirius responded in a joint statement saying, “This is evident from the strong support our merger has received from a broad array of businesses and organizations. iBiquity’s own filing highlights satellite radio’s competition with HD radio,” and calling iBiquity’s latest scheme, “…nothing more than a self-interested attempt to use the regulatory process to promote HD radio’s market share in this highly competitive landscape.”

You know, I could’ve sworn that the HD Radio Alliance claimed that a number of retail locations – including the top retailer in America – sold HD Radios.

Bilk-o‘s not what one would call a details guy. He disregards facts. Here’s another one. Most dealerships that offer exclusivity to one system also sell after-market satellite radios of its competitor. A friend who’s a Honda dealer pushes XM and contractually required to do so. But the same dealership also sells after-market Sirius units for customers that prefer their offerings.

*

I’m certain car dealers would find shelf space for HD Radios, too. That is, if anyone would buy ‘em.

Bilk-o can’t come to grips with the fact that more ahooga horns were sold for cars last year than HD Radios.

I'll give him credit for one thing. He's made iBiquity and HD Radio’s technical hi-jinks incessant radio industry blog fodder for the past year.

We'll pay very close attention to next week’s Consumer Electronics Show in Vegas to witness the response HD Radio receives there.

In a world of silk purses, HD Radio is a sow’s ear.