The CBS Radio Turnaround

Last week CBS CEO Les Moonves revealed his company’s latest financial numbers. The radio industry has been declining, but Moonves was still optimistic about his radio division in spite of continued losses.

I think this is one of those times when you can believe the CEO.

I must mention that I like the people at CBS Radio and I have many friends there. I’ve known Radio President Dan Mason forever. Always liked him. He’s the real deal. So you may want to take some of this into consideration when you read why I’m bullish on CBS Radio. On the other hand, former CBS Radio President Joel Hollander was always very nice to me, but I didn't think the direction he took the company was right. I sure haven’t been afraid to speak out on some of the detrimental moves he made during his tenure at CBS Radio.

When it comes to pure terrestrial radio, here’s why I like what I have been seeing at CBS:

1. Mason is targeting listeners who are available for terrestrial radio formats – Gen X and baby boomers. It would be nice to start youth formats on, but the youth market is not available to terrestrial radio. Online, yes. On mobile devices, yes. Not radio.

2. CBS Radio is methodically restoring proven music formats to its FM stations – some ravished by Free FM talk. Free FM was the brainstorm of the Hollander team. It neither resonated with the available listeners nor advertisers.

3. The return of WCBS-FM was not just righting a wrong, it was a statement. Mason was saying, in effect, CBS made a mistake to write off an oldies station that was so beloved in New York City and that he wasn't afraid to admit it. The old regime thought the oldies format was long in the tooth and switched to Jack (“We play what we want”). Mason knew from his programming experience that WCBS-FM which still had a large, faithful audience wanted to hear what they wanted. He gave it to them and CBS-FM started regaining its former listeners according to Arbitron.

4. The turnaround is not based as much on the past as it might seem. Note that CBS-FM plays 80’s music with its 60’s and 70’s library and the ratings show they are getting away with it. Translation: the audience was indeed open to freshening up the sound as long as the station they loved survived basically in tact.

5. Long overdue structural changes have been made to management resulting in a trim line of command with Mason taking the most responsibility for the largest markets. Yet, CBS Radio didn’t fire everyone who was removed from corporate responsibility. Many were reassigned – comforting in an age when consolidation has made people expendable.

6. The People Meter bodes well for the format changes. Imagine the ratings on CBS-FM once the first PPM ratings are release in the next few months. PPM is about the future and the formats that Mason is slowly revitalizing on the air will likely benefit greatly with larger cume listening numbers.

7. Changes in selling CBS Radio are also underway. Check out the recent moves by Mason to get that element of his plan ready to take advantage of increased ratings. A good programmer knows that great ratings mean nothing without great billing.

Challenges remain.

I would caution not to assume that the next generation will listen to terrestrial streams on the Internet. The next generation I have come to know wants shorter forms of programming it can toggle back and forth to. No one I know in the terrestrial world understands the Gen Y “listener”. So once terrestrial radio is fixed and audiences have been restored, the move to Internet content will not mean simply streaming the stations.

I am convinced from the work I have been doing with the next generation at USC that there are about ten caveats that must be heeded.

HD radio is also a white elephant. It is a flawed concept – too little, too late. Wasting time putting streams on a radio that is not likely to be available to listeners unwilling to buy an Hd radio is a waste of time and revenue. HD would be better turned off or at the very least ignored by terrestrial stations. That’s what listeners have chosen to do with it.

The mobile future must be addressed now. Changes are underway that will soon captivate a generation – the one radio lost while consolidating. The iPhone, Sidekick, Blackberry Pearls are already fascinating Gen Y as they sign up for smart phones. Google is planning a 2008 release of its version of the iPhone and anything Google does cannot be ignored.

Terrestrial radio is still a good cash flow business if it is directed at the available audience.

But radio will be a relic if it simultaneously fails to fully understand and keep up with the radio of the future – the smart phone.

CBS is putting on a clinic in terrestrial radio.

Will it lead in tomorrow’s radio as well?

For those of you who would prefer to get Jerry's daily posts by email for free, please click here. Then check your mail or spam filter to initiate service.

Thanks for forwarding my pieces to your friends.