Managing Radio By Losing Money

Now we know just how bad things were getting at CBS Radio when Joel Hollander presided over it.

David Hinckley in The New York Daily News Monday reported the figures based on BIA statistics. It isn't pretty.

Hollander's ill-conceived attempt at radio programming called "Jack" ("We play what we want") was supposed to replace the aging oldies station WCBS-FM. It was a bold move Hollander thought was urgent, but I think it said "panic".

CBS-FM had, according to Hinckley's article, slipped from about $40 million per year a few years earlier to $23.9 million when the mid-year shift to "Jack" took place.

Hollander's strategy fizzled.

The first full year of "Jack" only did $16.1 million.

Of course, if numbers don't lie, then neither does traditional radio wisdom. I guess Hollander wasn't blaming his sales team for the decline at CBS-FM -- just the fact that it was an oldies station. Some programming changes to make the oldies station younger were forced on the PD during its decline. Lots of analysts forget this, but program directors know the many pressures legendary PD Joe McCoy had to fight off. Back in 2002, for example, CBS-FM was playing 70's oldies on Saturday night. That departure must have been a hit with the many loyal listeners that liked the general mix of music.

That may have made the brain trust feel better but not the listeners. Ditto for the deemise of the longtime Sunday night doo-wop show.

Who made these decisions?

I call this management by interference. CBS caused the decline, then pronounced its best work dead and brought in "Jack" which failed.

$40 million down to $23.9 million down to $16.1 million.

And if you're looking for ratings, "Jack" is weak there, too.

So what was Howard Stern worth to CBS Radio when they failed to keep him from joining his old mentor Mel Karmazin at Sirius?

Can you say $50.8 million for WXRK's billing in 2005?

A year later and without Stern, but with a format and call letter change WXRK's replacement, WFNY billed $18.7 million -- a 60% decline. Think the afternoon show caused it? Nah.

CBS Mismanagement had a year's notice on the Stern departure and now we know why CEO Les Moonves kept Stern on the air while Stern turned his CBS show into a giant promo for his satellite gig.

That's a year of promos for Stern on satellite -- free promos!

CBS had no replacement even though they had a year to protect their franchise. David Lee Roth wasn't the answer. Ask a program director.

CBS still has no Stern replacement. And as a programming friend of mine said, "no program director would call a station Free FM". With management meddling it reminds me of what the vaudeville singer Jimmy Durante used to say at least when it comes to programming radio -- "everybody's tryin' to get into the act".

It gets worse.

Through mismanaging their morning talent Don Imus on WFAN, yet another day of reckoning is coming.

WFAN is a top biller -- fourth in the market at around $50 million a year. The morning show is usually a large chunk of the revenue. CBS has its work cut out for it just to match the Imus numbers when it settles in on a permanent replacement.

Imus destructed a few weeks back but only after his employer encouraged and rewarded him for being edgy all these years. It was Imus' fault. It was his mouth. No one made him open it. But CBS created the situation and ultimately bailed on him (and the revenue) when the advertisers threatened to bolt.

They may leave anyway without Imus. But what's CBS to do -- manage its talent? Common!

CBS all-news WINS is second in the New York market at almost $60 million. You can't find fault with that, can you?

Well, some people can.

More than one able program director thinks commercials, promos and features is not an all-news station, but if you're new CBS President Dan Mason right now you're going to leave well enough alone.

Did I mention that WINS listeners are ancient? I guess news of the 70's on Saturday night wouldn't work, would it?

By the way, Clear Channel comes out looking the best in New York with its perennial top performer "Lite" WLTW adult contemporary format. It's cheaper to run. A money machine that tops the market with $65.6 million and the most listeners.

So there you have it, managing by losing money in New York city CBS-style.

But it's not just CBS. In radio markets all over the country mismanagement is helping to accelerate the decline of the medium, under siege by new technology and a next generation that radio let get away without much of a fight.

As long as radio executives are playing program director, sales staffs are being cut and promotional budgets are held hostage to pleasing the shareholders' need for an extra penny of profit each quarter expect to see more declines in radio revenue.

Can you see why I am not thrilled with Google's AdSense? When Clear Channel agreed to give up a percentage of its prime commercial inventory (not the unsold kind) for bid on the web, I said this isn't the answer. Find another Howard Stern and you could hire a bunch of vacuum cleaner salesmen to take orders.

You need a sound product before you have sound sales.

That always was, always is and always will be the mantra of successful and profitable radio.

Radio mangers playing PD should be left for weekends -- on their iPods.

Tomorrow: My first annual "Lowry" nominees for those who embody less is more in every facet of radio. To get it, insert your email address below.

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