Radio’s Deadly Game of "Hi-Lo"

For those who may not know, radio when it was in its second heyday used to employ a contest giveaway called "Hi-Lo" where callers to the station eventually guessed the jackpot and won money.

Many of us, as program directors, also ran contests similar to “Beat The Bomb” where a contest caller went on-air to see how long they could hang in before a bomb went off (a sound effect, not the real thing). Tell the jock to stop at 35 seconds before the bomb goes off and win $35. Stay with it too long and the bomb blows and you win nothing – except a consolation prize like a 45 rpm record or an album if you were lucky.

Ironically, today’s consolidators like Clear Channel and Cumulus who are leading the charge to go private are playing their own versions of these once popular radio games.

They’ve mastered their own deadly game of "Hi-Lo" because the industry has gotten investors to buy public radio shares after consolidation was enabled in 1996 at prices that were generally much higher than they are now.

That’s where the “Lo” comes in except I think I’ll spell the consolidator’s low “L-O-W” as in decreasing shareholder value.

Radio companies – particularly our consolidation cheerleader, Clear Channel – ain’t what they used to be especially if you, like many investors, bought into the company you thought would be a growth industry.

Radio is no growth industry.

It has no future just a glorious past. Tomorrow’s youth wants little to do with it and radio stations have obliged them by ignoring the demographic.

Then there’s the “Beat The Bomb” aspect of consolidation.

Maybe we can call it “All In The Family” where the Mays’ and the Dickey’s head for the exit with their investment bankers and hangers on poised for the future as they would have us think.

What future?

Theirs – of course.

Look at their managers, programmers and salespeople. Their investment has not paid off.

Look at their shareholders. Well, enough said. "Hi" is high and "Lo" is Low. That’s easy enough.

Remember when Mel Karmazin used to use the words “shareholder value” what seemed to be every other sentence he spoke? But, ah, I reminisce.

You can’t blame Clear Channel and Cumulus for leaving this sinking ship. They helped to sink it. No wonder they want to get out while they can and be ready for their future.

More public radio companies are sure to follow.

The consolidators are playing a high stakes game of “Beat The Bomb” trying to time their departure at the best moment to line their pockets and before the bomb explodes – so to speak.

A major difference between “Hi-Lo”, “Beat the Bomb” and what today’s consolidators are doing is that back in the day (before consolidation) you could actually win something if you played "Hi-Lo" or "Beat The Bomb".

Today, with consolidation, you always lose.

Your share price is lower.

Your industry is worse off.

Your top managers are devalued.

Your future with the next generation is compromised by greed and a lack of vision into the digital future.

Well, there’s always “Cash Call” – the evergreen contest from the ratings wars where a listener had to answer the station’s call and know what was in the jackpot.

Today, the call comes from an investment banker and only the family gets to win.

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