Monday, December 29, 2008

Radio: Sirius - Doggie downer

If the New York Times is going to do a hatchet job on your joint in their Sunday business section, you can only hope that it runs on the Sunday between Christmas and New Year when it’s least likely that most regulars will read it.

That’s Mel Karmazin. Even his bad luck is good. Well, maybe.

The Times piece wasn’t really the hatchet job it could’ve been but it took far too many words to make one specific point: Sirius XM is stuck in debt it can’t get out of.

And behold the madness of Moody’s Investor Service as they toss another anvil on Mel’s credit rating.

But you won’t hear terrestrial radio chortling over Mel’s financial tribulations. Sirius XM’s a piker compared to quandaries a few radio groups will be facing in the coming months.

It does make that siege mentality of radio promoted by the NAB over the Sirius and XM merger appear appallingly ridiculous.

Before you’re ready to kick Mel while he’s down, keep in mind that we’ll be witnessing a few radio CEOs choking up, blubbering, and melting into puddles as their over leveraged stations crumble into dust.

You can count on Sirius XM either imploding into a black hole of irretrievable debt or filing for Chapter 11, which would get the company out of exisiting deals they may not be comfortable with.

Either way, Mel knows that once you commit to a target, the details that follow shape themselves to the task at hand.

Regarding Mel’s future with Sirius XM? I expect him to ride out his contract, which is up – coincidentally – around the same time as Howard Stern’s.

You see, Mel doesn’t lose arguments, he just ends them.

Thursday, December 18, 2008

Radio: The Grim Reaper is the new Santa Claus

I’ll tell it like it is. The Grim Reaper is the new Santa Claus.

It’s a bummed-out Christmas for our industry.

The bad news far outweighed the good.

A survivor of a recent massacre called to tell how surreal it was. One of their other stations had changed to its annual continuous Christmas format – and its music was being piped through the building as terminated employees were being escorted from the building.

There’s nothing like being ordered to leave the premises while Burl Ives sings “Have a holly jolly Christmas.”

Our industry used to be fun. On a good day it didn’t seem like work – and even the bad days were good.

This year’s Christmas bonus is knowing that you’ll still have a job come the first quarter of the new year. How long into the first quarter? We’ll deal with that by mid-January.

It’s been a rough year for all media – old and new.

It’s gut-wrenching for an industry we know, love, and rely on to endure this continuous cycle of downsizing.

Sure, the bad economy is a large part of it, which started while speculators believed Ayn Rand and Bernie Madoff could do no wrong - but the post-deregulated radio industry’s resistance to reality since 1997 played the largest role in its demise.
We can either evolve or devolve. Lately, it’s been the latter. For 2009, we have to make it a conscious attempt to do the former.


Stop attacking “new media” as the enemy. Learn how to work with it – not against it.

How did radio reinvent itself when television achieved traction in the fifties?

It became the “last great illusion.”

Like the written word, radio learned how to engage one’s imagination by creating audio masterpieces through creative production and proficient writing.
I've mentioned this before.
Fifty-one years ago, Stan Freberg successfully sold radio’s cinematics to the ad community with an effectual audio promo.

By utilizing ingenious writing and sound effects, he drained Lake Michigan’s water and replaced it with hot chocolate and a mountain of whipped cream. Then six helicopters in formation dropped a giant maraschino cherry on that summit of whipped cream.

The closing line? Let's see them do that on television!

That spot was produced with a reel-to-reel, tape, a razor blade, and round pots. No multi-track, no digital read-out, no Pro Tools.

Why doesn’t radio do that today? Could it be because there’s no “creative” line-item? Who has the time to measure creativity’s role in generating revenue?

And that’s why creativity – radio’s most essential component - has gone from an asset to a liability in just one decade.

The only way radio can be saved is to entertain its listeners and sell its clients’ products to them. To do that it must restore the art of playing to one’s imagination. and, dare I say it, throw in some localism.
Let me ask the question because I really want to know the answer.

When was the last time John Hogan, Dan Mason, Farid Suleman, Peter Smyth, and Jeff Smulyan spent a day – without distraction - listening to their own radio stations?
I rest my case.

Potential radio listeners don’t want or need more radio stations – they want better stations on the frequencies they can hear. And they definitely don’t want the HD Radio and its smorgasbord of insipid formats and auditory mediocrity.

Look, Sirius XM may be imploding in debt – but there’s rationale for the millions that chose to BUY what they listen on the radio over the choices they can receive free.

Engineers are s-p-r-e-a-d so thin they can’t focus on detail; in particular radio’s delivery mechanism. How many stations have you heard with pitiable audio processing and pitch escalation?

And don’t get me started on how radio has ignored the programming and sales potential of the Internet.

Potential listeners want quality music, not a quantity of variations of “classic hits” on stations that believe they can be on a first-name basis with its listeners.

The younger ones demand their own musical soundtrack – not one playing the outmoded crap the major labels persuade your present decision makers to play.

The iPod is today’s turntable. There was a time in the not to distant past that radio programmed music that people would buy and listen to on vinyl or cassette or CD. Today, it’s MP3. Tell me what’s changed other than radio no longer being influential in motivating music sales? Calling the iPod competition is a poor excuse.
Listeners want quality news but get quantity news. Radio’s convinced it’s fulfilling those needs with truncated, facts-optional, newscasts with murder on the ones, weather on the twos, traffic on the threes, sports on the fours, and armed robberies on the fives.

How about talk shows that aren’t crammed with hate or stupidity or both?

Face facts. We’re in a hyper-competitive world.

Maybe deregulation softened-up radio. Is this medium so emaciated that it can no longer stand up to its competitors?

Radio has been living in a world where competence is expected and only flawless execution is acceptable – and it hasn’t been able to pull off either very well.

Most importantly, the ultimate competitive advantage is passion.

When passion is unbridled, it drives convergence, encourages mastery, leverages spontaneity, cultivates ingenuity, and enhances instinct. The pieces of the puzzle come together and intelligibility transpires.

The outcome is quickened and unmitigated product that otherwise would never have been possible.

Start by investing in yourself. It’s the most important thing you’ll do in the coming new year.

Monday, December 15, 2008

Media: Bush's broken Boy Toy

You’re Boy Kevin Martin. You’re living in the waning days of the Bush Administration and your reign as Chairman of the Federal Communications Commission is coming to a disgraceful and bitter end.

You’re Boy Kevin Martin and you’ll be forever known by your new acronym for the FCC – Federal Communications Crook. You wear it well.

You’re Boy Kevin Martin and you turned the FCC into your own personal hackapalooza. Under-the-table deals were your specialty.

You’re Boy Kevin Martin and you offered your own personal directory of preferred lobbyists to anyone wanting to buy in.

You’re Boy Kevin Martin and you should’ve known the end was near last May when the General Accountability Office ratted out your less than fortuitous leaks of confidential material to certain lobbyists and companies.

You’re Boy Kevin Martin and you responded to their accusations by claiming your only motive for passing along confidential information to those that benefited from the inside information was strictly a courtesy. They were simple timelines to your inner circle on when to prepare their lobbyists and other assorted influence peddlers to descend on Congress. Translation: It always helps to know which palms need greasing and when.

You’re Boy Kevin and you have the same motto as Jerry McGuireShow me the money.

You’re Boy Kevin Martin and you forgot the one rule that applies how business is done whether you’re a politician, a crook, or both: Never write if you can speak; never speak if you can nod; never nod if you can wink.

You’re Boy Kevin Martin and you believed in running the FCC on the down low. Above the law, below the radar.

You’re Boy Kevin Martin and when Rep. John Dingell (D-MI), who chairs the House Committee on Energy and Commerce, threatened to investigate the improprieties uncovered by the GAO, you had that irritating professional letter-writer, whiny speaker, radio/TV industry yes man and CEO of the National Association of Broadcasters, David “Fumbles” Rehr prepare an officially sanctioned “Defend Boy Kevin” campaign.

You’re Boy Kevin Martin and you had to know the walls were closing in when the HCEC sent you a letter requesting e-mails, memos, handwritten notes, and meeting schedules for the last three years. It said their investigation was linked "to management practices that may adversely affect the commission's ability both to discharge effectively its statutory duties and to guard against waste, fraud and abuse."

You’re Boy Kevin Martin and countered by claiming an investigation would violate the commission’s trade secrets until you were reminded that you're not supposed to have any.

You’re Boy Kevin Martin and it only got worse when over thirty of your own staff members, past and present, told how you’d been pushing your own agenda to deregulate and eliminate more media ownership rules. They also brought up your way of dragging out meetings that don’t go your way and how you suppress agency studies when they don’t support your viewpoint.

You’re Boy Kevin Martin and your friends in broadcasting are really going to miss your rubber stamp. They’ll also miss the eight-year -majority rule of the FCC along with Republican Deborah Tate whose term on the five-person commission is about to expire.

You’re Boy Kevin Martin and just a couple of weeks back you announced plans on distributing free wireless Internet –with a proviso that would forbid pornography, whose definition would be up to you.

You’re Boy Kevin Martin and - guess what? - the HCEC just released their long-awaited bipartisan 100 page in-depth report on your FCC, titled Deception and Distrust: The Federal Communications Commission under Chairman Kevin J. Martin. You can read it here.

You’re Boy Kevin Martin and your official title may have been FCC Chairman – but your real title was bagman Numero Uno for big media.

You’re Boy Kevin Martin and you had one of the best offices money could buy on Capitol Hill.

You’re Boy Kevin Martin during your FCC Chairmanship, wrong was the new right.

You’re Kevin Martin and you look like someone dropped a punch line on you and you were the joke.

You’re Boy Kevin Martin and your career on Capitol Hill has gone from shakedown to takedown, and finally – breakdown.

You’re Boy Kevin Martin and you and your rubber stamp are outta here!

Sunday, December 14, 2008

Profiles in Discourage

In 1955, the Pulitizer Prize-winning book, Profiles in Courage, written by John F. Kennedy, then a U.S. Senator, with the help of his speechwriter Theodore Sorenson, was released.

The book profiled eight U.S. Senators from the early 1800s to the early fifties who, at one time or another, were ostracized for making unpopular political decisions, which later proved to be in the best interest of the country.

I think someone ought of write a book titled Profiles of Discourage - a who’s who of liars, cheaters, swindlers, extortionists, and other assorted scam artists that have been outted since our economic meltdown.

This one could be a multi-volume set. There’s no shortage of candidates for inclusion in this series.

Just yesterday, the Sunday New York Times profiled four more.

There's Senator Charles E. Schumer, who’d never refuse selling out Main Street to Wall Street for a substantial donation.

How about Mark S. Dreier, the attorney who issued made-up promissory notes from his employer, Solow Reality, causing $38 million investor dollars to disappear?
That's nothing compared to Bernie Madoff whose Ponzi scheme cost worldwide investors an estimated $50 billion.
Then there’s Rod “Do I look like Joe Pesci in this outfit?” Blagojevich, the Illinois governor, who went from shakedown to takedown to breakdown when his questionable auctioneering skills were caught on tape by the Feds.

Note to Gov. B. You're just a wannabe. A Pesci character would've gotten wise to a wire.

Does any of this really surprise you?

It shouldn’t.

I’m of the belief that half the world wakes up every morning with the intent of cheating the other half out of everything they own.

And in every dream home there’s heartache.

Tuesday, December 9, 2008

The Road to Zell

Before you say Sam Zell got what’s coming to him, stop. He didn’t.

His Tribune employees – those on the front lines that write, produce, print, and distribute the papers didn’t deserve this.

True, Zell tries to come off like one of the guys. He drinks, he swears, he tells jokes.

He’ll even put his arm around an employee or two.

He thinks of himself as Jane Goodall - observing the apes by living among them.

Sure, his employees technically own the joint with Zell under his employee stock ownership plan. But let's face the facts here. The only way they’d ever have a prayer of making out in that deal is if Zell found a greater fool to buy it.

Too bad there aren’t any left.
Even the young Saudi Princes can’t be conned any longer. Just ask Michael Jackson.

Don’t feel bad for Zell. It’s only Chapter 11 – not Chapter 7, which is liquidation. This allows him to reorganize – and also purge any contracts or deals he’d rather not honor.

Or Zell and his Machiavellian posse could make a quick exit, taking the Cubs and the few other chattels not integrated in the Chapter 11 filing, and leave the Trib mess for others to clean up. Sound familiar?
Let’s turn the calendar back to Saturday, September 26. 2008.

I hear it was quite the party.
No, I wasn’t there. My invitation must’ve gotten lost in the mail.

Every couple of years or so, Sam Zell likes to throw himself a birthday party and invite an intimate gathering of around 800 of his closest friends and colleagues and cloak it as a magical mystery event.

This time around, guests were bused to the corner of Halsted and Archer and welcomed into a 15,000 square foot circus tent. In addition to the Fellini-esque costumed characters, performers and booths, guests were treated to a private concert by the Eagles, while dining on fine food and chugging down top-shelf liquor.
The last time I checked, the Eagles were charging between $6 million and $8 million for a private party performance.
Maybe Sam didn’t get the memo about trimming the party budget this year?

It’s not quite AIG spending $440,000 of its $8 billion taxpayer-funded bailout on a weekend retreat or the Big 3 auto CEOs taking their private jets from Detroit to Washington to claim poverty – but if you’re thisclose to bankruptcy, you’d think….

Now, let's party like it's 1992.

Terry Jacobs’ Cincinnati-based Jacor Communications was on the brink of bankruptcy.

Sam Zell picked up its scent, met Jacor’s broadcast head Randy Michaels and – maybe it was their penchant for dirty jokes and dirty tricks done dirt cheap – they hit it off.

Zell was known for buying undervalued assets, building them up, and then spinning them off for a tidy profit.

He affectionately called himself the Grave Dancer.

Michaels sold Zell on an opportunity. The FCC had just approved duopolies, allowing one broadcast company to own up to two FMs and two AMs per market.

Duopolies were the precursor to the imminent 1996 Telecommunications Act, whose poorly-written radio ownership revisions allowed nearly unrestricted ownership of radio stations by a single company.

Zell bought Jacor for $70 million – considered a pretty steep price at the time – and when the Telecom bill became law, Michaels took Zell and his credit on a shopping spree.

Their shopping cart filled quickly with radio properties from Noble Broadcasting, Citicasters, OmniAmerica, and Nationwide.

Michaels also added two radio syndication companies, Rush Limbaugh’s EIB Network and Premiere, and a television station, WKRC in Cincinnati, an ABC affiliate to Zell’s shopping cart.

Within a few months, Jacor had become the third largest radio group in the U.S. – and certainly the most influential in the brave new world of radio management and programming structure.

In 1999, Zell sold Jacor –230 radio stations in 55 markets - to Clear Channel, another company that was buying up properties at a rapid clip – for $4.4 billion. Zell was also successful in persuading the company to install Michaels as its radio division’s CEO, a position he held for three years.

That brings us to the here and now.

Both Zell and Michaels enjoyed many adventures since then and reunited in late 2007 when the former took over Tribune and installed the latter as its executive vice president. Zell put up roughly $300 million for an $8.2 billion empire.

And that’s who he is – the people he attracts and those that he keeps around him.
Then there’s Local TV LLC, a founded in December 2007, made up of nine former New York Times-owned stations. Randy Michaels was its CEO until Zell did the Tribune deal. Then Michaels jumped to Tribune and formed a “broadcast management company” to oversee Local TV’s operations. The following day, Local TV picked up eight TV stations Fox put up for sale to help finance their Dow Jones deal. Local TV is owned by Oak Hill Capital Partners, a private equity firm, founded by Robert Bass.

In total, the Trib oversees 23 TV stations.

Zell did what anyone in his position would do when borrowing money. You spend it all and you spend it fast.

His deals are always intricate and well planned. He layers transactions on top of transactions in a pyramid that is so inscrutable his finances are nearly impossible to trace.

Here’s my suggestion to Zell.

Call your party planner – the one that handled your birthday party in September.

Did you check the Trib’s Chapter 11 filing list of creditors? The thing runs 2,387 pages.
You had a 15,000 square foot circus tent for your 800 guests, right?

I figure you’ll need at least a half dozen tents to handle your creditors – even if only a few show for the hearing.

Now, that’s a party.

One question. Will it be a Fellini theme or a Lynch?

Sunday, December 7, 2008

Radio: Two losers join forces.

There’s no greater recipe for disaster than two floundering companies joining forces.

CBS Radio meet LAUNCHcast.

Let’s start with this question. What does the future hold for CBS Radio?

Earlier this year it put 50 of its 140 stations up for sale. But after the deadline for bids passed, CBS Radio said "only kidding" and said it wasn’t in any hurry to sell them after all.
A week later, CBS went on a downsizing rage, blowing out heritage morning shows and mass-firing on-air talent.

Now, let’s look at LAUNCHcast, one of the oldest names in streaming audio.

Its parent company, Launch Media was founded in 1994 by former Capitol Records executive Dave Goldberg and Robert Roback, a former securities attorney.

LAUNCHcast allows users to create their own stations or playlists of songs. But its had a life-long identity crisis.

In June, 2001, during the end of the dot-com mania days, Yahoo purchased Launch Media in a $12 million deal. Goldberg stayed on as CEO and Roback as President.

Nothing happened. LAUNCHcast remained LAUNCHcast – as identity-challenged as ever.

Now, let’s fast-forward to early 2007. Goldberg and Roback quit Launch Media and despite Yahoo’s claims to the contrary, rumors ran rampant that LAUNCHcast was up for grabs.

Yahoo closed its subscription-based music service in February and announced a partnership with Rhapsody that allows users to stream full-length songs in search results in September.

Its latest modification occurred just last month when Yahoo announced that LAUNCHcast would discontinue its four-bucks-a-month premium service, which streams music without spots, in higher quality audio.

The financially distressed Yahoo now claims they’re letting LAUNCHcast go because of “unfavorable Internet royalty rates.”

Could Yahoo’s dumping LAUNCHcast on to CBS Radio have everything to do with the fact that Microsoft CEO Steve Ballmer will acquire Yahoo once its dead weight becomes someone else’s problem?

What jumps out at me is that the last time I checked, LAUNCHcast’s audience plunge 43 percent to an estimated 2.9 million listeners in the U.S. – and, as of this very moment, still can’t be heard on Safari and Firefox browsers.

That, according to CBS Radio, will change once they take control of LAUNCHcast in February ’09. It still doesn't solve their massive listener loss.

Before we go any further with CBS Radio’s alliance with new media, shall we review their old media terrestrial radio track record post-1996 deregulation?

Though it’s considered sport at 1515 Broadway, you can’t blame everything that went wrong at CBS Radio on Joel Hollander.

We’ve witnessed myriads of missteps and blatant train wreck formats before and after his New York minute at the helm.

In just one week, CBS Radio fired its entire airstaff at one station and for the fifth time in five years changed its rock format by moving its “alternative hits” HD Radio side channel and making that the new format. Things have to be pretty grim when you raid HD Radio for a terrestrial format.

There’s WXRK in New York where, over this past week, sniper fire resulted in one casualty and a handful of demotions.

It’s true that Hollander dumped its New York-based alternative rock format for its foolhardy Free FM before it changed back to alternative, with a playlist that sounds more suited for the Los Angeles market. And they wonder why they're locked in a 1.7-1.8 Abritron share?

Then again this is a company that actually believed that the musical tastes of Detroit and Philadelphia were identical. What was that line? “Both cities – same lunch-bucket market?”

In Chicago, they fired Ed Volkman and Joe Bohannon after hosting WBBM-FM’s morning drive for twenty years. Problem? They were making too much money according to CBS Radio.

In Minneapolis, there was another massacre, which took the jobs of an estimated dozen or more.

CBS Radio also pulled the plug on its syndicated morning show, Opie & Anthony, from two of its rock stations. It seems like only yesterday that they were being hailed for their “triumphant return.”

Is it true that CBS Radio has fired over 700 employees in less than a year’s time – and admit that they’ve only begun to whack?

Now, compare those casualties to the much larger Viacom. They announced 850 job cuts but theirs are spread across its many divisions, including Paramount Studios and MTV Networks.

Did you read the CBS spin in Crain’s New York Business?

Let me quote the unnamed CBS spokeswoman who said, “We’ve been moving more toward the cluster approach. We’re working closer together and sharing resources across the stations.”

I’ll bet the CBS Radio sales departments loved hearing that motivating statement.

And you thought John Hogan had the trademark locked for “less is more?”

From January to September this year your revenues are down ten percent - to $1.2 billion and your operating income is down almost double that – a whopping nineteen percent to $420 million.

I’d say CBS Radio lost its buzz – but maybe it never really had one.

Sure, WFAN, WXRK, KROQ and a handful of others received critical acclaim when Mel brought them on-board when he sold Infinity to Viacom, which had acquired CBS.

But over the next few years neglect claimed radio piece by piece. Just like a body ravaged by an incurable disease – the toes, the feet, the knees, the legs, the fingers, the hands, the arms, the heart – and finally life. The rot spread from station to station to station.

Let’s get back to this CBS Radio-LAUNCHcast deal for a moment.

Here’s how Yahoo’s explaining the deal to its users.

It’s no secret that CBS wants to stick it to Mel Karmazin and Sirius XM and looking to the Internet to fulfill its fantasy.

In the past year, they cut the AOL Radio alliance and bought the somewhat Pandora Radio-like Last.FM, which it planned to promote through CBS. So far, its highest profile was on their short-lived Swingtown TV series by creating a special ‘70s music channel featuring the music played on and inspired by the series.

It’s not how much you own but how you run what you have. Since its terrestrial radio’s been run into the ground can we expect the same from CBS Radio when it comes to new media?

Garbage is garbage no matter how you package and deliver it.

That’s not to say that CBS doesn’t have some great radio stations, talented performers, and top-notch management. They probably just haven’t gotten around to firing them yet.

You are correct to say that according to comscoreArbitron’s September ’08 ratings, CBS Radio is in first place with a 2,212,700 cume and an average quarter hour of 200,104. Clear Channel is second with a 1,381,430 cume and a 105, 415 quarter hour. Way down in fifth place is LAUNCHcast with a 1,035,307 cume and a 121,467 person quarter hour.

Come February, those LAUNCHcast numbers will become part of CBS Radio’s cume and AQH- giving it, in a blue sky world, a weekly cume of 3 million-plus.

Let’s stop here for a moment to qualify these numbers. Arbitron’s on-line survey division, comscoreArbitron, sample approximately 200,000 persons who’ve had cookies planed on their computers – and the results are extrapolated – but – and it’s a big but – the only streaming audio stations that are included in the survey are paying a fee to Arbitron to be included. There are many stations that aren’t integrated into the survey because they did not pay for the inclusion. That number easily runs into an unrecorded 100 million-plus time spent listening.

That gives new meaning to term margin of error.

Here’s another question for CBS Radio. Considering the “fact” that it has an almost 1.4 million cume - how much revenue are you really generating from your streaming audio ventures? Just asking.

It’s time for a reality check. CBS Radio has taken to playing the victim while blaming others for the problems it originally created.

I dislike that phrase, "I'd rather be lucky than good." The trouble with luck is that it eventually it runs out. You can only get away with selling iceboxes to Eskimos forever for so long, you know.

Monday, December 1, 2008

Radio: Number One then....Number one NOW!

There’s not much I can add to the many fitting tributes I read today about the late, great radio programmer Bill Drake.

I never met him, never worked for him – but I knew him well. Most of what I learned about radio programming came from listening to endless hours of top 40 radio in the sixties - especially my hometown Drake station, WRKO in Boston.

The secret to Bill Drake’s format was that it wasn’t complex. It was, quite unmistakably, logical. Play the hits in a structured format that refined one’s air personality. The fewer words one uses makes each word more important. He perfected top 40’s forward motion.

Drake ran one contest at a time, one giveaway at a time.

Drake stations weren’t conservative. On the contrary, they broke a lot of hits.

Drake stations played fewer commercials than the competition and charged appropriately for the exclusivity.

Drake stations weren’t impersonal. They respected the listener.

Drake’s stations weren’t like McDonald’s franchises. WRKO was Boston, KHJ was Boss Angeles, CKLW was the Motor City. The music, the personalities, the promotions all spoke the language of their city of license.

Drake’s stations didn’t employ just liner card readers. They were genuine personalities whose names and dayparts we can immediately recall forty years later.

Radio & Records reprinted an interview they did with Bill Drake in December, 2007. It’s a must read - here. (link is fixed.) I hope someone's able to dig up that great story on Drake done by Cheetah Magazine in 1967.

Bill Drake…..Number one then, number one NOW!