Radio’s Losing Strategy

The radio revenue figures for 2007 are out and the industry is down just 2%. I say just because it could have been a lot worse and it probably will be a lot worse going forward. It seems non-traditional revenue may have helped mitigate some of the damage this time.

Radio is a business that has been on the decline for many years. Consolidation has never really paid dividends (in more ways than one) and the growth of the Internet and failure to attract the next generation has taken its toll.

Most of the executives who were in charge when their companies consolidated are still at the helm today. Their personal wealth is worth a lot less because their shareholders' value is a lot less. The respect radio people and, increasingly, Wall Street, have for them is waning.

We’ve seen the perfect storm in which a once great free cash flow business meets the digital age and the digital age is winning.

So take a look at the strategy these geniuses have come up with to solve radio's problems:

1. The decline in sales – radio is losing advertising revenue to interactive media. Their Solution: Cut the sales staff. Direct one sales team to sell advertising for all stations in a cluster resulting in economies of scale. Think of it – fewer sales calls made by fewer people on behalf of fewer stations. What else? Embrace Google AdNonsense to try to sell radio as a commodity without any people at all. Predictable result: expenses will drop but so will ad revenue. Better alternative: double or triple the sales staff at each station in a cluster. All commission. Hire one sales manager for each station to be responsible for revenue growth and hold him or her responsible for performance outlined and agreed to in advance. Oh, and get regular sales training for these people.

2. Radio listening is down. Their Solution: Publicly attack and bicker with your one credible ratings service that advertisers trust so you can thwart the roll out of the Portable People Meter. We’re talking about you, Bob Neil and the others who can’t see the advantages of digital over paper. Predictable result: Force ad agencies who want People Meter ratings to track radio audience declines with an antiquated method that under reports radio listening. Better alternative: Expedite implementation of the People Meter in markets where ratings matter. Work together with Arbitron to solve transitional problems. Bargain with Arbitron over fair rates.

3. Stations rely on morning shows to produce 40-50% of a stations revenue. Their solution: Make the morning team work longer. Cut duos into one person acts. Slice budgets for support characters. Fire established morning personalities who make too much money. Then, recycle and syndicate acts like Don Imus -- who can’t even get ratings in his home market -- to fill up airtime cost effectively. Predictable result: Lower ratings, lower ad rates, lower revenue. Better alternative: CEOs cut out their corporate jets and keep the morning show in tact. Borrow some money from your buddies in the investment banking world so you can buy a large, well-placed television ad schedule two rating periods a year to let the market know your morning show actually exists thus increase your ratings so you can increase your rates and ultimately increase your --- you know.

4. Radio appeals mostly to Gen X and baby boomers. Their solution: Fire the very personalities those listeners listen to. Citadel wasted Melanie Morgan from KSFO (among others) the other day just so a desperate Citadel could save a buck. Clear Channel and CBS also brutalized favorite radio talent by dismissing them just to save money. Consolidators have little respect for the likes of their ever vanishing pool of available radio listeners. Predictable result: You'll lose assets you can't replace. Better alternative: Sign your proven personalities to contracts to keep them on the air. Nurture the few assets radio has left. If you don’t want to pay them more, at least employ them -- they're all you have. Almost always it is a bad idea to run a syndicated show in morning radio. Local is the answer.

5. iPods, Smartphones and the Internet are cooler than radio. Their solution: prop up the uncoolest consumer electronics device of all time – HD radio. Even Joan Rivers is cooler than HD. Make people actually think radio has a future in the digital world using a David Copperfield magic act that shows the consumer a digital radio and then presto, change-o – the compelling, unique programming disappears (or never appears in the first place). Predictable results: None. It's a stiff and everyone knows it including and especially consumers. Better alternative: pull the plug on your HD equipment and vow to never say the letters HD in a sentence again. HD radio is a meaningless, outdated radio concept that has never and will never attract an audience.

6. Gen Y doesn’t listen to radio. Their solution: try to make them think that your limited playlist station is playing the most variety. Sweepers and liners are not lies, right? Voice track hour upon hour so that even an iPod has more personality. Piss younger listeners off by telling them that "we play what we want" when even the most out of touch radio executive knows that Gen Y wants to program what they want. They want to be the program director. The love options and would rather hear mash-ups of music. Predictable result: Young listeners will listen to NPR. Better alternative: Don't program to Gen Y. You blew it. It's too late for terrestrial radio. Start skunk works with some of your smartest programmers and young people to develop content for the Internet, mobile phones and podcasting. If you think you have these skills right now, you don't. But you've probably got a lot of savvy people who could -- with a little inspiration and direction -- be retrained to program beyond the transmitter and tower. (Remember, you get to keep the money even if it doesn't come from a terrestrial signal).

7. Too many commercials. Their solution: Scream at the top of their lungs to advertisers that radio is cluttered with too many commercials. Offer a breakthrough program called "Less Is More". Publicly hammer how some groups in the industry are going to cut the spot load (slightly), force advertisers to buy commercials in lengths they may not want and charge more for less. And, don't forget this gem: continue to lie to your listeners that they are getting fewer commercials when the difference is barely perceivable. Predictable result: Embarrass the radio industry. Better alternative: Fire the Hogan that came up with that idea. (Sorry, I've lost my focus). It isn't brain surgery to run ten units an hour in morning drive (assuming you haven't eliminated morning from your station) and eight units the rest of the day. No stop set is longer than one spot. You heard me right -- one spot. You've been wrong -- listeners don't like to listen to commercials crammed into stop sets and advertisers don't like it, either. Drake had it right in his glory days. And take another page from Bill Drake who forgot more than most consolidators know about radio -- instead of accentuating the negative (fewer commercials), emphasis the positive (more music, etc).

This list could go on forever but I'm getting tired typing it and you're no doubt tired of reading it.

You know, New England Patriots Head Coach Bill Belichick wanted to win so badly he had his staff videotape the opposing team's signals -- illegally, by the way -- costing him hundreds of thousands in fines.

The Broad Street Bullies (Philadelphia Flyers hockey team) want to win so badly they beat up everybody on the ice.

The Yankees want to win so badly they are willing to pay A-Rod another unbelievably large contract to keep him in pinstripes (Radio geniuses would look for ways to cut him back to playing alternate days so they could halve his salary. Then they would probably play with only eight players instead of nine to save an additional salary to offset A-Rod's half-salary -- the bean counters would love it).

Clear Channel, CBS, Emmis, Citadel/ABC, Salem and the bottom feeders that follow their lead -- I have bad news for you.

Your strategy isn't working. Could I suggest trying something else -- anything else.

Running your product and people into the ground month after month is not working.

You're losing revenue.

Losing listeners.

Lost the next generation.

Losing time to get into ancillary businesses that are necessary for economic viability.

Losing money for your shareholders.

And losing the respect of people who formerly admired you, gladly worked for you and believed in you when you said give consolidation a chance.

If we can't do better than this, we're not trying hard enough.

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