Radio: CBS Radio's thirty percent solution

Aw, come on. Stop your whining!

So you work for a major to medium size market newspaper. Your owners instituted optional buyouts, mandatory pay cuts – on average between 10 to 12 percent – and week-to-ten day unpaid furloughs to non-union employees.

It could be worse. You could be working for CBS Radio in Cleveland.

Maybe you’re in television, where buy outs are strongly suggested and the alternatives not very pleasing. There, you’re looking at pay cuts hovering around 4 to 8 percent, and unpaid week-to-two-week furloughs.

It could be worse. You could be working for CBS Radio in Cleveland.

And radio? The marrow’s already been sucked out of the bone in that industry. The pilots are automatic and voice-tracking’s the norm. There’s no need to endure the foul breath of those plebeians.

Say you’re that rare real live flesh and blood human still working in local radio and not playing a significant role in the top morning drive show in the market. You now know how an endangered species feels when learns that it’s endangered.

It could be worse. You could be working for CBS Radio in Cleveland.

Here's the CBS Radio backstory.

Akin to most publicly traded radio chains; it's had downsizing disasters, demotions in motion, and survivors doubling to quadrupling up on duties.

I’m not sure if this goes for other markets but in Cleveland CBS Radio recently imposed a 30 percent pay cut for selected employees in a take it or leave deal.

I never would've known about it if it weren't for some local agency people that tipped me off - and asked me for my take on it. This was a well kept secret. For a day or two. When will they learn? This is the Naked City. Secrets don't stay that way for long. I should've known something was up when one of their former account executives posted his resume on every media site around town, including mine.

You read that right. Thirty percent. That’s almost a third of one’s salary.

It’s bad enough when one must scale household budgets back five, ten, fifteen percent – but thirty? Making ends meet just got tougher for the selected servitude of CBS Radio Cleveland.

I wonder how many CBS Radio employees were able to convince their bank to discount their mortgage by 30 percent?

This is what we call deflation. And in its truest form it’s deadly.

This marks the first time since the Great Depression that companies are cutting jobs and existing wages simultaneously.

It’s supply and demand. If there’s no money left after paying off the essentials like food and shelter –goods stack up at retail, which force prices down.

I wonder how many CBS Radio employees were able to convince their local supermarket to give them a 30 percent discount on their food bill?

Thirty percent also means that anything left over will not be spent on anything less than an absolute necessity. Consumers that can afford to will save whatever they can for an uncertain future.

And the only certainty at CBS Radio is that it’s not going to change.

Though CBS Radio told the Wall Street Journal it’s projecting an uptick in revenue in the third and fourth quarters of this year, facts are facts. CBS Radio revenues were down 29 percent in the first quarter and 23 percent in the second. Maybe “Cash for Clunkers” brought a few auto dealers back to radio – but now that it’s over do you really believe they’re going to continue buying time at a clunker’s clip?

And consistency is not one of CBS Radio’s stronger points. 20 percent of its stations have changed format over the last two years.

Let’s read between the lines of their claim that their format flips in New York, L.A., and Chicago boosted revenue. The stations replaced their higher-priced full-time talent.

What’s the translation? Downsized positions at CBS Radio aren’t coming back. If you agreed to the 30 percent pay cut in Cleveland you’ve lived to see another day.

CBS Radio would certainly like to sell some of their stations, Cleveland included, but who’s got that kind of money and willing to risk it on radio?

Lenders aren’t lending. The only radio station buyers are those like Larry Wilson who have the liquidity to do so with their own dough.

Even a massive fire sale doesn’t do much good if no one has money to buy radio in these deflationary times.

The radio industry could learn something from Bill Veeck, the last owner to bring a World Series championship in 1948 to the Cleveland Indians. He said, it wasn’t the high cost of talent killing the game; it was the high cost of mediocrity.

The same could be said about the radio industry, post-1996.

CBS Radio, where one manager insisted that company policy was "Don't be creative!"

CBS. The acronym for Cut Budgets Severely.

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Buzzard Vehicles

Media: Imus - Fox Business blues

In media, like politics, the jokes write themselves.

Did you hear the latest about Don Imus?

Well, first things first.

Let me preface this with a fact.

Yes, Don Imus is still alive. No, those shows aren’t posthumous reruns that are on the few, mostly Citadel o & o's, radio stations that carry him.

Imus just does the same old show every day. He’s talk radio’s version of blah, blah, woof, woof.

Now no one’s saying they don’t know cheap – but if Citadel CEO Farid Suleman and his sidekick Judy Ellis could really squeeze a nickel until the buffalo choked, they’d have Imus voice-track one morning show and run it for an entire week. Scratch that. You could go for a whole month.

Believe me. His audience? No one will notice. No one will care. Is there one market where he’s even in the top ten? Who or what is his audience anyway? Does anyone know of someone who actually listens to Imus?

Imus’ radio show is also simulcast for television – and this is the news at hand.

The way-past-his-prime Don Imus is swapping one low-rated cable TV channel simulcast for another.

He’s leaving Rural Free Delivery TV (RFD-TV), which bills itself as “Rural America’s most important network” for the Fox Business Network (FBN), which will now video simulcast his radio show.

RFD-TV’s programming is targeted to the U.S. farmer and cattle raiser. It carries a mix of farm news and reports and classic country music programming, comparable to the old Nashville Network cable channel. They even carry a show that auctions cattle that look like Don Imus.

Its distribution is limited to the upper tier channel placement at Dish Network and DirecTV satellite systems, Mediacom, Charter Communications, NCTC cable cooperative, and a few independent rural cable companies.

According to Nielsen, RFD-TV averaged 49,000 viewers year-to-date. RFD is available to 40 million households.

Chances are you’ve heard of but never watched FBN. It’s is the “other business cable/satellite network,” launched by Rupert Murdoch in October 2007.

The ratings-challenged channel is available to almost 50 million homes nationwide, compared to over 90 million for rival CNBC.

With exception to Manhattan, FBN is in the optional upper digital tier of cable and satellite systems.

Upper tier channels cost subscribers of cable and satellite TV additional fees to receive.

According to June 2009 figures from Nielsen Media Research show that FBN was watched by an average of 21,000 people nationally from 5 AM to 9 PM. That’s 11 times smaller than that of CNBC’s audience in the same daypart.

Imus is not trading the farmhouse for the penthouse. Try under the bridge.

Bloomberg News, the original business channel, which is also available in real-time on line, is unrated by Nielsen.

At the time of its launch, in October 2007, Fox hyped FBN as a younger, sexier, edgier business channel – or CNBC with raging hormones – designed to capture the latter’s younger, more active end of the business channel viewing demo.

To give FBN some Wall Street cred – and at least one person that looked over 25 - Murdoch lured long-time CNBC "Red Fox" Liz Clayman to his den.

The only stipulation was that her skirts had to be even shorter than Fox News Channel's Fox & Friends’ Gretchen “the Flasher” Carlson’s.

Hoping for a cable channel cat fight, FBN pitted Liz opposite Money Honey Maria Bartiromo in the 2-5 PM afternoon drive slot. But CNBC viewers were more engrossed in their own in-house Betty/Veronica, Mary Ann/Ginger assessment of Maria and Erin Burnett.

Liz Claman – even calling in favors from blue-chip guests like Warren Buffet and Bill Gates – quickly became forgotten but not gone.

Now, it appears FBN has given up on being the MTV or G4 of business channels. It’s now going in the exact opposite direction by handing over morning drive to an ancient artifact whose appeal is strictly octogenarian-plus.

What Stonehenge is to the Druids, FBN is to has-beens.

“We have to teach people we exist, and then convince them to find us,” sayeth Kevin Magee, the executive vice president for FBN. “And then once they do those two things, they have to watch us.”

Whatever you say, Kevin. Unless you’re strictly looking for a blip in assisted living and nursing homes, your chance of Imus increasing FBN numbers is slim to none.

There must be an addendum on all Fox News and Business contracts that reads, “Never let the truth get in the way of a good story.”

Media: Zell hath no fury

If Sam Zell were a horse he’d be gelded.

Tell me what there is not to like about the news that the Internal Revenue Service and the Labor Department are investigating Sam Zell?

This revelation is hot on the heels of reports that Tribune Corp. creditors are demanding that the portly pugnacious Zell and his ex-Clear Channel crackerjack cronies get relieved of their duties.

So the bullies got bullied back and it’s all over now.

Their DNA is all over this malfunction.

The Sam Zell-Randy Michaels hires were dead giveaways with those wacky executive titles.

Take Lee Abrams for example. He was about to get the boot from Mel Karmazin following the Sirius-XM merger. Lee needed a job so Randy created one for his fellow chunkasaurus. Remember, these guys have been tight for decades – all the way back to the time when Lee invented FM radio.

Lee’s title is Senior Vice President/Chief Innovation Officer. His job description says he’s to “spearhead the company’s innovation efforts across its publishing, broadcasting and interactive divisions.” It added that he was “the first person to hold the position in the company’s 160-year history.” We can now say that he will also be the last.

And how does Lee work hard for the money? He writes memos. Lots of them.

I was a little surprised when his job description didn’t read that he is more of an idea than a character or a real person.

Of course, he’s also living out his fantasy of becoming a television celebrity with his new featurette for the Trib's WGN-TV, Sky Dives.

This is a high tech continuation of his old XM Radio blog, where he’d put a video of himself and hangers-on flying from Washington DC to exotic locales like New Haven, Connecticut to sample a pizza slice at Pepe’s.

Sky King reruns would be an improvement.

Zell will probably walk and surrender his option to buy a 40 percent stake in Tribune for $500 million.

Sam, the elevator is at the end of the hall. Use it. Press 'down.'

It gets even better.

Smoke smelling Trib junior investors have hired the law firm of Zuckerman Spaeder for representation.

They want to jump in line ahead of senior investors for compensation from the forthcoming Trib fire sales.

The juniors argue that the seniors have already banked fees in the Trib’s employee stock ownership plan – and contributed to the company’s collapse.

Sam, you’ve got to give up that Grave Dancer nickname you so adored.

Try this one on for size. You will be forever known as The Dismemberer.

What a legacy you’re leaving.

A $13 billion debt for starters.

Your Trib is about to be parted out like some old junked car - minus the Cash for Clunkers tax break.

Sam Zell and Randy Michaels: from Big Shots to Big Lots.

Think about it. The Trib is about to be piecemealed on the open market at a time when old media and commercial real estate is a fraction of what it was worth a decade ago.

Sam, the L.A. Times, Hartford Courant, Orlando Sentinel, South Florida Sun-Sentinel, Baltimore Sun and the The Morning Call, among others, and Tribune Broadcasting, Tribune Entertainment, Tribune Media Services, the Chicago Cubs and the Wrigley Field they play in – and the real estate – the Trib tower, the L.A. Times building - all are worth less today than when you bought them.

When a $33.7 million radio station in San Francisco is price-slashed and sold for $6 million and change you’d better be ready for your own haircut.

No one will argue that there are some troubled newspapers that’ve employed writers who can’t write, reporters who can’t report, and editors who can’t edit, but Sam, you and your cohorts were managers who couldn’t manage.

Sam, we feel for the Trib employees that were forced to live in the bubble of your ego right up to the end. Your luck ran out but they’re like passengers in a plane. You and your crackerjack cronies took your golden parachutes and jumped and no one knows how to land the plane other than crashing it.

But we all know that you, Randy, and the boys will find a way to survive this one. Eventually the economy will recover, and – who knows - when it does you’ll probably find another host to lay your eggs in.
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Cleveland 1973

Radio: In search of research

I’ve been on a quest to unearth a non-radio research study that exceeds some of those recent crazy claim reports certain researchers have done on our industry.

How about the one in support of HD Radio, which claims that Microsoft’s latest Zune model will save that digital disaster?

There’s the one commissioned by the NAB and RAB on the “success” of their Radio Heard Here campaign.

Did you happen to read the new piece-of-you-know-what research claiming that buying smart phone apps for radio stations will automatically translate to actual listening to terrestrial radio on mobile?

Radio-oriented research has become so tainted and implausible that it’s not taken seriously by anyone other than those in the industry that concoct them. Most level-headed individuals in radio would prefer that these radio witch doctors would just go away.

If you want one true fact, it’s this. When a troubled industry churns out highly questionable and excessively positive “research studies,” like it or not, they send the wrong message.

It’s the message of a scoundrel, a liar, a manipulator. It’s not the image radio wants or needs.

A few of the usual suspects sent me threatening e-mails for daring to criticize their fiction…er…findings.

And now I think I’ve found a research study that almost tops some of the wild and weird research on radio we’ve been reading from those usual suspects.

Let’s look at this new, just-released study from the Minneapolis-based MORI Research

It reveals, among other things, that 59 percent of adults identify newspapers as the leading advertising medium they use for planning, shopping, and purchase decisions.

See, the newspaper industry, like radio, has a problem. It loves to manipulate research.

Newspaper Association of America (Pronounced "nay") CEO John Sturm said of the new study, “While new technologies have their place in any total marketing program, newspaper advertising remains the most powerful tool for advertisers who want to motivate consumers to take action.”

One-hundred years ago, the village blacksmith said, “While automobiles have their place in any transportation medium, horses remain the number one means of transportation.”

MORI’s “preliminary data,” as they call it, showed that rival media trailed well behind newspapers as the primary medium for advertising.

Newspapers came in at number one with 41 percent. Yes, pause for a chuckle.

Moving right along, the Internet was number two at 21 percent. Direct mail was third with 14% percent. Television weighed in at fourth with only 8 percent. Catalogs came in fifth at 6 percent followed by magazines in sixth place with 3 percent.

Last, but not least, was radio, coming in with a whopping 2 percent. No medium did worse.

In fact, “None of These” fared better than magazines and radio with its 5 percent showing.

It gets better.

The study also claims that:

73 percent of adults regularly or occasionally read newspaper inserts. What? Can’t you break it down between those that regularly read inserts and those that occasionally check them out?

Even the deef and dumb HD Radio “studies” weren’t that ambiguous. On second thought, I take it back. They were.

82 percent were “spurred (their word) into action” by a newspaper insert in the past month.

Here’s the breakdown on the “action” they took: 61 percent clipped a coupon; 50 percent bought something (which makes you wonder about all those coupon clippers that didn’t buy anything); 33 percent went to a web site to “learn more,” and 27 percent tried something “for the first time.”

MORI added that their “preliminary data” also revealed that other media trailed “well-behind” newspapers as the primary medium for checking advertising.

MORI claimed this study was “conducted this phone and Internet survey of more than 3,000 adults for the Newspaper Association of America representing the $47 billion newspaper industry and more than 2,000 newspapers in the U.S. and Canada.”

How about that? – the Newspaper Association of America.

Let’s take it one step further. Who are MORI’s clients?

Gannett (via USA Today), Knight-Ridder, which no longer exists (The McClatchy Company of Sacramento, Calif. purchased its assets in 2006), the Seattle Times, the Washington Post, Copley Newspapers, the San Antonio Express-News, the Orange County Register, and the Sunday newspaper nationally distributed Parade Magazine, among others.

They also do research for AOL. And we know how healthy that joint is these days.

You’ve probably heard about the five stages of decline in business: 1. Hubris born of triumph; 2. The unbridled pursuit of more; 3. Denial of risk and peril; 4. Grasping for salvation - and 5 and final - Surrendering to irrelevance or death.

That moment of truth arrives in stage four. Leaders recognize the downward spiral they’re in – and their response will determine the business’ fate.

General Motors was locked in denial, believing that they’d survive because – after all, they’re GM. They convinced themselves that they’d come up with a hot new model car or truck to save their sorry asses. They flew to Washington, figuring they’d twist a few arms and return to Detroit with a few bucks to keep the lights on until they reinvented the wheel. Their CEO lost his job.

Rival Ford read the room, recognized their dilemma, and changed the dynamics of their business.

Though the downward spiral sequence is alarming, the outcome can be reversed at any stage of the process except for number five.

If you haven’t figured out the scorecard, please be advised that both radio and newspapers are hanging on – and just hanging on – in the fourth position.

I don’t want to see radio or newspapers go under. Both must recognize the 21st century and transform the way they do business.

There are too many radio CEOs that are trying so hard to convince themselves that they’re the Comeback Kids of the industry. I hate to clue them in. They’re more like the next Freddie Kruger – and the future of their version of radio industry may well be their Nightmare on M Street.

But, come on, admit it. Wasn’t it nice to read someone else’s lies for a change?

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Betty Korvan interview from 1979

Radio: Shack attack

I’m telling you. I couldn’t make this stuff up if I tried.

Did you hear the latest one about Radio Shack?

No, not the one about HD Radio. They pulled those stiffs off of their shelves a year ago, maybe more.

From this day forward, Radio Shack will be known as The Shack. Just The Shack. No Radio.

That means their 4,400 company-operated stores, their 1,400 dealer outlets, and 700-plus wireless phone kiosks will no longer display that word.

Why? A spokesperson for The Shack says, “Fewer of the company’s customers going forward will ever own a radio.”

Ouch!

Lee Applbaum, the Chief Marketing Director of The Shack told the Clear Channel-owned Pravda….er…Inside Radio, “This creative is not about changing our name. Rather, we’re just contemporizing the way we want people to think about our brand.”

And have you seen that new Bank of America TV spot that opens with a shot of an alarm clock MP3 docking station?

Look closely the next time it runs. That’s not an alarm clock radio.

Last week Ad Age carried a story on what marketers want from radio. You missed it? Read it here.

You’d think that when Diane Whitehead, the director of national retail advertising for Verizon Wireless, speaks – the radio industry would listen and take heed? After all, Verizon is only national radio’s number one client and local radio’s number two advertiser. She asked, “Radio promises us effectiveness, but can you prove it?" She added, "Yeah, radio gets X million people to listen, but what are they doing with it? How are they engaging with it?"

Ms. Whitehead also made note of a five-minute, seven spot break she heard on a Jersey station, which featured two spots for Home Depot and one for rival Lowe’s.

It’s sad. The radio industry continues to sputter and fail under most of its present leaders and advisors. They’re legends in their own minds and too engaged in getting their egos massaged to take notice that its very name - radio - is considered passé.

Radio has less of a clue as to what it should do on line. Remember when the words creativity and innovation were used to define profitable radio groups? Today, those words are used to define new media.

Radio still labors to typify new media as a collective industry that intentionally tries to cripple it – when nearly all of radio’s ills are self inflicted by apathy, greed, short sightedness, lack of planning, and no specific goals other than trying to figuring what its supposed to be while time ticks away.

iPods and satellite radio aren’t direct competitors to terrestrial radio. Neither were CD players, turntables, cassettes, and eight-tracks, and rival terrestrial stations in the past. You listen to whatever is providing you with the best entertainment at that moment.

The acquiring radio chains failed or refused to recognize the cultures of the stations that were being purchased. That was the industry’s greatest vulnerability. The seizure and occupation of anything, whether earned in war or through acquisition, is almost always a seizure of hostile territory.

The occupation of territory is labor-intensive. It’s police work, not soldiering. Soldiers kill enemies. Police identify and remove only lawbreakers and social misfits. Most acquiring radio chains failed to understand the culture of their just-purchased companies and in most cases, the best and brightest were replaced by – well, to paraphrase the late Paul Harvey - you already know the rest of the story.

One story I’m familiar with found a highly successful, independent-thinking program director answering to a new boss who was a stringent paint-by-numbers guy. Arguments over musical direction ensued. Both had valid points – but the incumbent programmer knew the market best and his numbers proved it.

So a market study – when radio could still afford to 'em – was commissioned. The end result proved the incumbent programmer was right – and the new boss was wrong.

Or you could say the incumbent programmer was dead right.

A month later the new boss replaced the incumbent with a clone of himself. Today, that station has seventy-five percent fewer listeners and is an also-ran in its target demo.

Consolidation was the alternative to competition. Theoretically, it would be less costly and risky than having multiple groups compete in one market. But it didn’t work that way. Clear Channel and others attempted to redefine a balance of power – but minus any long-term goals. In fact, most chains, Clear Channel included, didn’t even know what they were trying to achieve beyond the next quarter’s earnings.

Successful merger math is defined as one and one equaling three.

In today's post-post-deregulation go-go, buy now-pray later radio acquisition world, the inability to service debt has become the radio industry's greatest accomplishment. That, and losing audience at a rapid clip.

The major radio chains that persist on keeping their gargantuan, sluggish properties alive with their own brand of voodoo economics will continue to create only long term inefficiencies, which will keep its cash flow lethargic. At best, it’s a stay of execution. In the long run, they will not survive.

Some things were never meant to be that big: banks, insurance companies, and radio groups.

I have to laugh at all the complaining and lack of focus on Arbitron’s PPM. Sure, it’s not a perfect science – and any discrepancies should be addressed immediately.

But what ever happened to pride in product? What ever happened to building a rock-solid radio station?

Instead of focusing in on how to best manipulate a PPM – why not concentrate on building a solid product that will provide a loyal audience that already know and listen to you? The only stations that survived in the sixties through the early nineties were those that put little on manipulating the actual diary holder other than the usual tricks of the trade. The most successful and dominant stations earned mass appeal trust and TSL.

We’ve been watching the forgotten but not gone children of privilege play with their radio toys for a little over a decade. It’s been fun. Art Linkletter was right. Kids say - and do - the darndest things. But, if you don’t mind I believe it’s time for the adults to take control of the business again.
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Rasta-Buzzard vibrations