Peter Smyth, it’s true that people are worried about the future of radio - or at least those of us who work for radio are.
I read your latest From the Corner Office last week and have to respond.
Peter, I’m not going to counter-point the half-truths and untruths in your latest letter.
Just a few points, please.
You say the Great Recession is over? Really.
How might I ask did you reach that conclusion? Unemployment continues to rise. Foreclosures are on the increase.
They’re related, you know.
If you don’t have a job, you can’t afford to pay the mortgage - and you lose the house.
And Peter, what does one do when they're foreclosed-upon. For one, they're less likely to spend whatever money they have left.
Our industry is based on consumer advertising. If they’re not buying, clients stop advertising. Some go out of business.
Here are all the stats you need.
The real world isn’t like radio, Peter. When Lew Dickey or Farid Suleman misses a payment, they have floatible options. They can give up more equity or try and pawn off debt.
Happy days are here again because the Dow cracked 10,000? Two words: Sucker’s rally.
Peter, you need to get out more. There’s little reality between Wall Street and Main Street. Or Dorchester Street.
I can even show you a few empty storefronts Newbury Street? How about Copley Place? It has a few shaky tenants.
Remember that 10,000 hallmark was hit a decade ago - March 30, 1999 to be exact. So even by Wall Street terms, our economy is, at best, torpid.
Are we really better off today than we were a year ago? Yes and no. The stimulus programs - tax credits and “Cash for Clunkers” brought consumers out of hiding - but all of that money’s been absorbed.
How many publicly traded radio groups are about to go belly-up?
How about the radio industry? Are we better off today, post-pillage deregulation?
I’d prefer your optimism to remain cautious, Peter.
We now know that the country was thisclose to plummeting into another Great Depression. We also know that we’re not even close to lifting ourselves out of this current Great Recession.
Truth be told, Peter. We’ve managed some temporary form of stabilization in a still depressed market.
Did you read Northeastern University economic prof Alan Clayton-Matthews' take on the economy in yesterday's Boston Globe? "I had seemed we hit the bottom this summer, but I'm not so sure anymore."
Yes, I believe we will have a turnaround - but it will be slow and imbalanced. Not everyone will get out of here alive.
Could we agree that the Internet is to radio what the horse was to the car?
The first cars were manufactured in retooled horse carriage factories.
The engine replaced the part where the horse used to be.
The only surviving radio stations will be those with creative content and retooled and grafted to on line and mobile.
See, we don’t need more radio stations. We already have too many. We do need live and localized radio stations providing what our potential audience wants.
And I don’t care what your consultants say. Slapping one of your radio station apps on a smart phone isn’t social networking.
There’s only one alternative. It’s the obit you don’t want to read, Peter: After several attempts to shock the radio industry back to life with gimmicks like HD Radio failed, it was pronounced obsolete on - fill in the date.
Since deregulation, radio’s been in denial.
Don’t blame the casino for losing your money. Look in the mirror.
Don’t blame the audience for your loss of time spent listening. Just listen to your product.
Don’t say it can’t happen here. It already has.
Radio lives in an alternate reality where fish sing, birds swim, and humans get in the way of voice tracking and syndication.
There will be more rounds of economic disasters from time to time. It’s inevitable. But you are in control of your own destiny. The disasters will be measured by how much or how little you prepared for them.
Here are three more words: Commercial real estate. We haven’t felt the aftershocks - because the quake hasn’t happened yet. But it will. Those commercial deals were bundled up and sold along side the equally toxic subprime residential mortgages.
Remember the tech boom at the end of the last decade when VC’s were running out of ink signing off on anything that had the word Internet embodied in the first sentence of a business plan?
Remember it was assumed that housing prices would continue to rise forever, which led to banks giving away mortgages to anyone whether they wanted them or not? Supply and demand? Come on.
Normally, I try to let sleeping dogs lie. But this is one hound that keeps barking and won't shut up.
I’m talking about your bud Lew Dickey. He’s now whining to Inside Radio that he gave away the store just to fill inventory. He forgot to add that he and others kept adding more inventory, too, in an attempt to meet budget. Supply and demand? Come on.
How can you have demand when you have an endless supply?
I don't know how everyone missed this one. A couple of weeks back a Seattle paper got radio broker Gary Stevens on the phone to discuss classical music formatted KING-FM's financial problems.
You're familiar with classical music, Peter. You dumped the format in two markets, Detroit and Philadelphia. Too bad the formats you replaced them with stiffed, too.
Here's what Gary said about the radio market to Seattle Crosscut: "Two years ago, a Seattle FM would have been worth $50-70 million, even if it wasn't profitable. In the current meltdown, so few radio stations have been traded, there aren't comparable sales numbers, but if I had to guess, KING-FM might bring in $15-25 million, in today's market, assuming a buyer could find financing."
Times are tough when even a seasoned radio broker like Stevens is quoting rates out of Filene's Basement's automatic markdown - before the markdown.
Shall we join reality, already in progress, Peter?
Let’s start with this report from Veronis Suhler Stevenson (VSS).
Their 23rd annual U.S. Communications Industry Forecast report that the largest declines in 2009 ad revenues will be newspapers (-18.7 percent/$35.5 billion); consumer magazines (-14.8 /$11 billion); radio (-11.7 percent/$15.8 billion), and broadcast television (-10.1 percent/$43.0 billion).
Growth will come from digital media. VSS forecasts increases in mobile (+18.1 percent/$1.3 billion) and Internet (+9.2/$23.8 billion).
VSS also predicts 2010 will be the year marketers will move advanced and sophisticated social media into its mainstream - effecting nearly all marketing initiatives.
Sounds like radio has some work to do. Up for it?
Finally, Peter, are you aware of the TV sitcom Gary Unmarried. In a recent episode the lead character, played by Jay Mohr, is trying to land a gig as a L.A. radio sports talk show host. He sends the station a demo and….well, click here and hear it yourself.
The song remains the same