Tuesday, April 21, 2009

Radio: The NAB - if it wasn't for bad luck....

It was bad enough when CNBC ran a brief piece titled Clear Channel or Static Interference on CNBC’s Street Signs where host Erin Burnett asked a direct question – “Is the Clear Channel deal going blow up or not?” to the usually unflappable Thomas H. Lee co-President Scott Sperling, whose reply channeled Porky Pig on a b-b-b-bad day.

It wasn’t exactly the positive spin the radio industry was counting on from Clear Channel as a lead-in to the NAB show.

Sperling’s appearance was to also serve as a morale boost for the beleaguered Clear Channel market managers who were summoned to San Antonio for their latest herd thinning orders.

It only got worse when CC radio head John Hogan released the most unconvincing, conniving press release, which all other disingenuous press releases will be measured against for the foreseeable future. It declared that Clear Channel born again of fresh new initiatives that would show its commitment to the wants and needs of their cities of license.

Hogan even sent a rewrite of this terribly-written press release in letter form to Rep. Henry Waxman (D-CA), the Chairman of the Energy and Commerce Committee, which you can read here. 

It did nothing other than humiliate the entire radio industry.  When the company with the most number of stations commits a faux pas of that scale, what message does it send to everyone from the ad community to the government on the way it conducts business?

Can you imagine a conversation between Hogan and Fumbles?

Fumbles:  Oh, you speak bullshit too!  Hogan: It's like a second language to me.

Tribune Chairman and CEO Sam Zell conveyed more discomfiture when he told Bloomberg TV that his leveraged $8.2 billion deal to buy that company, including its radio and TV assets, was “a mistake.” His quote, “If you bought something and it'snow worth a great deal less, you made a mistake and I'm more than willing to say I made a  mistake.”  He could’ve been speaking of the “buy now, figure out what to do with them later” business plan the radio industry followed post-deregulation.

At least Zell sidekick Randy Michaels’ reputation as king of all tosspots is secure.  He’s now done to newspapers what he already did to radio and TV.

Want more?  There’s plenty.  The Scranton Standard-Speaker reported last Friday that Citadel’s WARM-AM, licensed to that city, had gone silent two days earlier – and its corporate Chief Operating Officer Judy Ellis, knew nothing about it.  Quoteth Ms. Ellis, “You would have to call those at the station in Scranton.”

They did – but itsgeneral manager Bill Palmeri didn’t respond to calls and e-mails to his office on Wednesday and Thursday.

Citadel – where accountability is optional, at best.

The Standard-Speaker also contacted the FCC.  “They have 10 days to (officially) notify us that they’ve gone silent and, after 30 days, they would need our authorization,” said FCC spokesman David Fiske. “They’ve got to come to us with facts and they have not said that they’re going out of business.” 

A notice on WARM’s web site stated that the station was off the air for “unexpected transmitter maintenance” but the web site was temporarily removed following the Standard-Speaker story. 

The paper deserves credit for finding the one person in Scranton who knew what Citadel didn’t about its own radio station. Meet the Saturday host of a barter show, Polka Weekend, Sam Liguori.    Sayeth he, “Unless someone with a lot of money buys the license, WARM will say dark.” 

On Friday evening, Scranton’s WNEP-TV reported that WARM had shut down “a few weeks ago” and that employees at the station were told, “it was too expensive to repair the transmitter.”   If that’s the case, Citadel is negligent in its reporting to the FCC. 

Before its transmitter died, WARM was carrying the Citadel-syndicated True Oldies format in hours it didn’t barter out. 

Like Clear Channel, Citadel feels beholden to no one but itself; least of all its listeners, its clients, and the FCC. It parcels out information on a "need to know" basis.  Unless you’re Farid or Judy, you don't need to know – and even they didn’t know that one of their Scranton stations went dark.

When the FCC was F-Troop under Kid Michael Powell and Boy Kevin you could get away with anything.   But it’s a different FCC now.  The days of ‘if you see a chance – take it’ are over and perhaps Citadel, as we know it, will be, too.

It’s been said that the omens are plentiful at this spring’s Vegas bash.

Concomitant with the NAB convention opening, came news of a filing Clear Channel Communications parent CC Media Holdings Inc. made with the SEC, which revealed its whopping 23 percent loss in revenue during Q1 2009 compared to the same quarter last year - from $1.56 billion to $1.21billion.

Clear Channel did make one top ten list.  It joins Univision, Rite Aid, Six Flags, Beazer Homes USA, Harrah’s Entertainment, MGM Mirage, United Airlines, Ford and GM as one of the ten most bankruptcy-endangered companies in the U.S., according to MSN Money.

While we’re at it, how about the report that many chains are shutting down their HD Radio stations to cut the additional $3,000 to $5,000 they add to an annual electric bill?  Just think.  If the HD Radio Alliance got their way and the HD stations went full power, that annual bill would jump to around the $30,000 to $50,000 range.  Of course, that doesn’t include the extras HD Radio is siphoning off the bottom line like license fees, maintenance, and those darned overheating problems.

It seems like the only trade reporting on good vibes at the NAB convo is the same one that commended John Hogan’s new initiatives – Inside Radio.   Yes the Clear Channel owned and operated Inside Radio.  It’s to the radio industry and the NAB what Pravda was the old Soviet Union.

I’d be remiss if I left out U2’s Bono and his poorly timed (for the NAB) comments

 on the proposed performance fee royalties for terrestrial radio stations with music formats.

Just a few weeks ago, Fumbles was falling all over himself with praise to Bono for thanking radio for helping U2 achieve superstar status.  

Yesterday, Fumbles went bipolar.  Turns out Bono’s in favor of the performance royalty fee for terrestrial radio. Read his statement here.

Now, let me tell you about Bono.  He’s probably the smartest and most fiscally responsible rock star since David Bowie.

Bono also has a pretty good memory and can recall when the band released “Beautiful Day” in the fall of 2000 from their forthcoming album All That You Can’t Leave Behind. He was told that radio in America had changed – and the band would now have to pay to receive airplay on pop and rock stations.  And since U2 had a long lag time between albums – it would cost the band at least double the going rate to get "re-established at radio."

Bono – and every other artist looking for radio airplay - learned that a couple of years after deregulation, Sam Zell’s drinking and strip joint buddy, Randy Michaels, who had maneuvered himself as CEO of Clear Channel’s radio division, came up with the radio equivalent of clean coallegal payola.

When Clear Channel marketed its new pay-for-play rate card – the other radio chains fell in line like the penguins they are.   The radio industry pitched legal payola as an example of that non-traditional revenue stream that Wall Street was becoming skeptical about.

U2 paid the freight, got airplay, and a hit single and album that followed.  But Bono never forgot that he had to pay for something he used to get for free – and knowing that payment was deducted from directly from the band’s royalties bothered him even more. Things like that don’t sit well with an artist who probably still has his First Communion money hidden in his shoe.  

He’s not getting mad.  He’s just getting even.

If a frog is dumped in boiling water, it leaps out and lives to see another day.  If it’s dumped in cold water, which is heated slowly enough, it gets used to heat and is boiled alive.

Dead boiled frogs.  That’s what the radio industry has become; so immune to the crises facing it that its participants don’t even notice they’re drowning in it.

David “Fumbles” Rehr, this is the industry that you represent and it’s your show.  


You may resemble Buster Poindexter but you always remind us of Dr. Kevorkian.


Anonymous said...

"When the FCC was F-Troop under Kid Michael Powell and Boy Kevin you could get away with anything."

"FCC Commissioners Adopt IBOC Radio"

"Short and to the point, Ferree set up the charade by brandishing a logbook of some of the first radio licenses the FCC ever issued... 'A few questions remain to be settled, including how the IBOC system will function in the real world; what is the potential for and extent of interference that IBOC could cause to existing services; and the technical feasibility of nighttime AM IBOC transmissions'... 'I understand that questions remain to be settled on interference and technical feasibility on nighttime AM IBOC, but I'm confident that the procedures and processes that you have put in place will allow us to accomodate those efficiently and productively.'"


And, Struble even went so far as to payoff Rep. Dingell during his investigation into the FCC's corrupt procedures.

Anonymous said...

John. thanks for your inclusion of the Bono incident in your latest blog. You are absolutely right. I was a PD at an alternative rock station when I received new orders. My GM would now be selecting the music played on our station because of a deal he struck with an independent promoter. He said it was non-trad revenue just as you said and I was not allowed any input in the music choice because of 'legal ramifications'. Yes my GM added "Beautiful Day" not because it was a good song but because there was a bonus attached to it for the promoter who was pushing it and provided us a lucrative annual payment to promote our station. There was also a lot of good music I could not add because they were on smaller labels or not being worked by this indie.

Anonymous said...

I am disapointed you did not "translate" Fumbles's NAB speech. I sat through it. It was the same as last year's. Still pushing HD radio. Still pushing innovation as if anyone can afford it. The man lives in a dream world. If there is one difference between last year's Vegas speech and this one it is that even Fumbles is losing the one gift he had which was being a good speaker. I don;t know whether or not it was his speech or if the man is just no longer effective. Maybe it is a bit of both. Whatever the case you are right to say his time as head of the NAB should come to an end.

Anonymous said...

Bono has definitely caused a stir with his comments. Aw, the poor stations that carried his specials feel betrayed because he is for the performance tax. The stations carried the Bono special because they knew it would draw ratings not because they like Bono.

My favorite comment came from a consultant I once had the unfortunate opportunity to work with, Dave Lange. He said. “Perhaps radio should take a day, one day, and just drop U2 from the airwaves. Perhaps we should also include the other artists that have gone ‘public’ with support for the ‘tax.’ We don’t need to promote it on our airwaves – just in the ‘radio media’, and quietly execute it.”

You may not know this and he certainly would not admit it. Dave Lange works for Mike McVay Media. Mike McVay Media consulted a number of AC stations for the company I was with and he was very forceful in insisting that all of his stations adopt a legal payola policy. Some of our AC stations actually went through his company and dealt with Marty Schwatz who doubled as an independent promotion person.

To paraphrase Bono the whole legal payola incident left a bad taste in my mouth. No one will dispute that there was always some kind of a payola, plugola free tickets, free trips from record labels. It is when it became legal and stations became obligated to participate that the music we played on the radio no longer matched what our listeners wanted to hear and research bears that fact out.

Anonymous said...

Funny stuff, but really just more of the same. If you want to see what the future of radio will be like, watch what happens to WARM. If radio is viable, there is absolutely no reason for that station to stay dark. But it will. At least for as long as Citadel can keep it off the air without losing the license. And possibly even longer.

As for David Rehr, does anyone really think he cares one bit about the broadcast industry? He's a mouthpiece and a hired advocate. He makes a million a year and has been in this game for a long time. By any standard he's a wealthy man who could walk away from the NAB tomorrow and never have a serious need to work again. Not that I expect he will do that, since he's fairly driven. But he has no skin in this game. Yes, he'll tag the bases for the industry and try to get a win when he can, but the only way radio will gain stature is by making radio a significant force in the communities they serve. And that just ain't happening.

Seriously, would anyone reading this forum advise their kid to get a job in radio? The industry is just going to keep bleeding slowly while the owners try to recoup their investments, and eventually the WARM story will be repeated in station after station. No new day is dawning for radio, just a long cold night.

Anonymous said...

RE: WARM in Scranton

The FCC should use Citadel as an example of how they will not put up with license holder abuse. Citadel should be fined. If they can't afford to buy a new transmitter within that year's grace time they shouldbe forced to give up their license. That should apply to anyone and everyone holding a license. It is a disgrace for a company Citadels to do something like this. If they can't afford the station they should not have the license.

BB said...

Does anyone reading this blog or comments really expect anything different? The terrestrial radio industry in the U.S. is DEAD...DEAD...DEAD. Period. End of story, turn out the lights. Anyone that believes otherwise, please wire me $2000 to my bank account so I can give you a portion of the $57,880 I just inherited from my great uncle in an unnamed country. I promise.

Anonymous said...

I beg to differ on the "death" of radio. There will be less stations and most AMs and a few 80/90 FMs will be history and we will be better off because of it. Radio will eventually serve as an alternative to internet-delivered audio. Because of its precise measurement of audience stations will be sold on its internet audience and terrestrial delivery will be an added bonus. Radio is still a medium listened to by millions and it will be what is listened to when wireless internet is not available. Don't write off terrestrial radio. I think that the people and companies at the NAB this week will not be around in the next three to four years either since they caused the problem but didn't find the solution.

Will Apple put FM in an iPhone/iPod as a standard feature. Never.
Does HD radio have a chance? No.

There will be a need for talent and creative programmers since it will be a brave new world. The next generation of salesperson will know how to make money with internet radio since it is already a part of their lives.

Death, no. Transformation, yes.

Anonymous said...

I will give Dan Mason credit for one thing. He is keeping a low profile while his contemporaries are getting shafted left to right.

Mention the names Smuylan, Dickey, Hogan, and Farid and you would think you were saying profane words at the NAB.

Not that Mason is any better mind you. We have had as many cuts maybe even more per capita than Clear Channel and Cumulus combined. He is the best at getting out of any room before the you know what hits the fan. His henchmen get all the attention.

I cannot see those names in our industry much longer either nor should we.

Anonymous said...

John, Thank you for making sense of the Bono issue. Unlike your buddy Fred Jacobs, you presented the facts on why Bono made his decision. The shame of his decision is that he and the band can rest, assured that they will get their royalties. Though that will not be true for some of the smaller acts that don't sell the megamillions of U2 or have a manager like Paul McGuinesss who watches the Bono store like a hawk. The RIAA will rip off most acts and good luck in trying to get what is owed to you. It will work the same as the trickle down theory.

I have no less respect for Bono. I only hope he reviews all the facts and I do hope someone shows him your blog. You have been covering this issue longer than anyone and called attention to it when the rest of the industry ignored it and insisted it would never happen. The NAB gave away royalties to the RIAA for streaming audio. I expect the NAB to cave in to the RIAA too. As someone else pointed out in this forum the people who are milling around the NAB convention this year will not be there in three to four years. They will leave the mess they created for others to clean up.

Anonymous said...

John --- You forgot to mention Fumbles's new NAB slogan: READY FOR THE REBOUND! I think we've been ready. Now, where is it, Fumbles?

Next year, the NAB meetings should be held at a funeral parlor.

Anonymous said...

The Farid and Judy show is always a joy to observe.

The Peter Principle is alive and well and living in Citadel.

I'm surprised Farid hasn't recycled old Paul Harvey newscasts as new. Maybe I just gave him an idea.

Was Judy Ellis always that way?

Anonymous said...

A) It's safe to say U2 has derived more monetary benefit from radio than radio has extracted from U2. Unfortunately it's impossible to actually quantify how the millions of spins U2 has received for free since the early 80s have created tens and hundreds of millions in revenue for the band. Bono can bite my shiny metal ass.
B) Not only will these major companies be out of the business in the coming years they NEED to get out for the sake of the industry. New blood (and it exists) is needed, new visionaries are needed, new tactics are needed, new respect for programming is needed. Only when these shysters get out of our way and take their golden parachutes can we begin to see the light and I truly believe there is plenty of light for radio.

Anonymous said...

smart move. yes why dont you just pull all of the u2 music from your playlist.

boycotting is not the solution. reasoning is. the nab is doing a head to head battle when it should be extending diplomatic relations directly with artists and managers. bypass the riaa. bypass the labels. go directly to the source and plead your case.

the fat cats campaign is terrible and will only alienate artists and radio further.

we need new leadership at the nab (and radio in general) before we lose everything.

Anonymous said...

Why have the other radio trades refused to make mention of Citadel not knowing their WARM-AM in Scranton was off the air for weeks? It was covered in a number of newspapers, including Philadelphia and I watched the video link from the Scranton TV station. You would think a station being forced to shut down because it can't afford to fix its own transmitter would be a major story in the trades.

I will be curious to see if the "new" FCC takes action or lets this one slide. I wonder who Farid Suleman and Judy Ellis are writing campaign contribution checks to.

Anonymous said...

We thought it was bad when we had characters like Randy Michaels and Mel Karmazin in terrestrial radio. I guess we still have Randy on the edges of radio with Tribune. The idiots running radio today are rank amateurs. How did John Hogan ever get his job? He got that far by being Randy Michaels's valet? We know how Dan Mason got his. He sold refrigerators (White Westinghouse brand) to the eskimoes at Cook-Inlet. How did Farid Suleman get his job? By being a beancounter and door opener for Mel. I get the picture. A bunch of butt kissers worked their way into the ranks of an industry they know little about. No wonder radio has gone to hell.

Anonymous said...

I have heard that Bono is the kind of guy who still has the first dollar from the first gig that U2 ever did hanging up somewhere. Can't fault him with fiscal responsibility. I wish those who were running our country for the last twelve years were that fiscally prudent.

On the other hand Bono is so wrapped up in himself that he fails to understand that this performance fee will work against ANY act getting airplay on the radio.

I won't argue that radio can't break an act without support from other media and radio's influence with young people who set the trends and buy the most music is next to nothing BUT it is still a somewhat viable medium and for that reason should be kept free of performance taxes and royalties.

John, you said it yourself about free market systems. This is the future of how business is done. Why should radio and record labels go in the opposite direction. It will kill both sides.

Can the royalty fees for streaming that Fumbles Rehr negotiated be declared illegal or is it too late. Why would anyone agree to allow the RIAA to be the "bank" for artists to receive royalties from. They never paid honest royalties to any of their artists.

Anonymous said...

Denial. That one word says it all for the radio industry.

Anonymous said...

AMP's success in the LA in the PPM is exactly the way to follow your own course and compete with repeater radio and syndication.

Anonymous said...

"Will Apple put FM in an iPhone/iPod as a standard feature. Never. Does HD radio have a chance? No."

"Will radio ever be built into an iPod?"

"And what's peculiar about that is that such gadgets are indeed on the market. But they aren't manufactured by Apple and they don't have 75% of the mp3 player market, the way the iPod does... Thus there is no chance - none whatsoever - that Apple computer will ever in a million years add an FM (or HD) radio to their shiny little miracle child."


"The FM-Free iPhone"

"The NAB Board meeting in Washington this week has FM on cellphones as a big agenda item. Too bad the NAB and most radio CEOs do not understand Apple CEO Steve Jobs' thinking in continuing to exclude FM radio from the increasingly popular iPhone... Of course there are technological issues that keep Apple from readily including FM on iPhones not the least of which is the fact that U.S. FM is not compatible in parts of Asia and Europe where different standards exist... Remember when the HD advocates ballyhooed the HD docking capability to use iTunes for music purchases. Hold that image. No one else can picture it -- especially the marketplace. Tagging got tagged out at home plate. What radio doesn't get -- and apparently isn't in the mood to see -- is that you can't cram a radio into a smart phone and expect an entire generation to use it like a Walkman."


Correct - right, Booble?

Anonymous said...

Analog FM is one of the few worldwide standards. The differences from country to country are, for the most part, minor, and world-band FM tuners have been built into cars for decades. Apple's decision to not include an FM radio is a marketing decision, not a technical one, just as the USA cellular carriers ask the handset manufacturers not to include FM radios. Cellphones in most of Europe and Asia already have FM radios in them. Few people realize that Nokia is the largest 'radio' manufacturer in the world in terms of annual receivers.

Anonymous said...

"Apple's decision to not include an FM radio is a marketing decision, not a technical one"


"Of course there are technological issues that keep Apple from readily including FM on iPhones not the least of which is the fact that U.S. FM is not compatible in parts of Asia and Europe where different standards exist"

The spacing in Eurpoe/Asia is 9khz, not 10khz as in the U.S.

Hunter said...

John --- You forgot to mention Fumbles's new NAB slogan: READY FOR THE REBOUND! I think we've been ready. Now, where is it, Fumbles? Next year, the NAB meetings should be held at a funeral parlor.