What To Expect Next From Radio Consolidation

The table is set for more massive personnel cuts in radio -- with Clear Channel's big bang possible within days.

By now, most radio people can see what group CEOs have done over the 12 year history of consolidation and have a pretty good idea what the general effect of more budget cuts will be going forward.

I'd like to share with you what I am seeing and see if it jibes with what you're thinking.

One thing is certain: radio will become a smaller business in almost every way including advertising revenue. Many optimists think radio will recover from the economic doldrums it is presently in as it did when television came along in the 1950's.

But this time it is different because we have at least two major forces asserting itself on radio right now.

A new generation that grew up and continues to mature without a great love, addiction or preference for terrestrial radio.

New technology, the developing Internet, social networking and sophisticated mobile access. The only way terrestrial radio could compete is to become a content provider and marketer in the digital space. Consolidators have shown little interest and even less commitment (budget-wise) to do that.

So, here's what you can expect next as radio continues its unnecessary decline:

1. Commuter PDs

Keep an eye on what Clear Channel did yesterday by appointing WHTZ (Z-100) New York Program Director Sharon Dastur to also be PD of alternative-formatted WKQI, Detroit. But here's the rub. She will be commuting from home base in New York to Detroit once a month. The Detroit station has been without a PD since Dom Theodore left to join the CBS cluster in Detroit.

I guess they liked what they saw -- especially on the bottom line.

Content is really all radio has -- for listeners and advertisers. Any real program director will tell you that one station is a 24/7 challenge for even a great PD. It takes creative time. Teaching and coaching time. Marketing time with sales. And a constant effort to keep the station sounding fresh. God bless Clear Channel if they can do all this from a distance, but the most successful PDs in radio know better.

Commuter PDs aren't new. Your industry leader, Clear Channel, sent Rhythmic WJMN OM/PD “Cadillac Jack” McCarthy to New York to program WWPR "Power 105.1" while shuttling back and forth to Boston.

You've already seen PDs who oversee more than one station per market -- poorly, I might add. Now, consolidation is expanding the new age PD to be like a mini-consultant working from city to city.

Obviously, radio groups are not interested in local programming or else local PDs would be a requirement.

So going forward the reward for a programmer who does a good job in one market may be a ticket on the next air shuttle out of town -- coach, of course.

2. Shrinking Sales Staffs

As incredible as it may seem, the next round of budget cuts will target the very asset consolidators need the most -- salespeople on the street.

Somehow radio's best and brightest egos have decided that there are major savings to be had by employing fewer salespeople.

Go figure.

I appreciate that CEOs want do a makeover on their losses, but when you need more sales, you need more salespeople.

So what you're likely to see is one sales force per cluster where owners will (incorrectly) assume that one small sales team (underpaid and under trained) can sell five or six radio stations at the same time. Sure, they can represent five or six stations simultaneously, but don't confuse that with selling.

Radio was once one of the best at relationship selling. You don't have to look any further than to Bill Burton in Detroit to see what an old timer (said with great respect) can teach a Lee & Bain genius.

The problem runs deeper than cutting salespeople -- that's bad enough. But there is a lack of respect for these folks and even for their managers who had to earn the way to their GSM positions.

Fagreed Suleman of Citadel thinks he doesn't need so many salespeople because a lot of business is simply phoned in to his stations. Really? Is that why the company continues to lose money and under perform?

None of the major consolidators invest in adequate sales training -- but they give good lip service.

And before the consolidators got their you know whats caught in the ringer most recently, what were they trying to do to reinvent radio sales?

Turn to Google and let advertisers bid on "excess" inventory.

Well, that didn't work and radio still has a lot of excess inventory. Google is real nice for the Internet where there is a different kind of relationship between providers and advertisers. But radio needs face-to-face relationships.

So, once Clear Channel puts the knife to multiple station sales staffs in their clusters, the other cluster f#@ks who run radio groups will happily follow in their footsteps.

Big mistake at the wrong time.

3. "Non-essential" Talent Reductions in Markets Smaller Than the Top 25-50

You may miss these firings because they are not the big three -- GM, PD and GSM, but it is likely that production, traffic, sales, Internet workers will be rolled into one or two positions.

I don't know about you but the average radio station was never that expensive to run. Everyone was always overworked and underpaid. The biggest salaries went to the morning show personalities (as it should) and then management. There are many ways to handle what some call "non-essential" jobs other than firing people.

And, Lee & Bain may not know this, but as a former PD I can assure you that these positions are not -- not -- "non-essential".

I have had a great respect for traffic directors because of an incident that happened to me when I got my first major market programming position.

Apparently the previous PD pissed off the young and overworked traffic director and on my first day -- a Friday -- she walked into my office at 5 pm (only our second meeting) and said, "here are the program logs for the rest of tonight, the weekend and morning drive Monday". I said "thank you" and she proceeded to rip them up and walk out of the station.

Guess who spent the weekend trying to be a traffic director before the advent of computers?

Still, if it moves and radio consolidators can fire it, they will as the station workforce will fast become depleted.

What more can you expect from number crunchers who don't understand that they bought the wrong business?

How dumb.

Radio was a dynamo as a mom and pop business and fizzled as a big corporate endeavor.

But buyout groups make billion dollar mistakes all the time. They just write them off.

4. Continued Nationalization of Local Radio

On-air talent and program directors will be hard to find in markets smaller than 25-50. That's because the CEOs who can't seem to generate revenue are convinced that they can show profits on the revenue that they presently make.

Of course, they are wrong -- it's wishful thinking.

Nonetheless, we are all familiar with the plans and actions of consolidators that include firing local talent and replacing one, two or three dayparts with programming generated elsewhere.

It's worse than voice tracking -- which was bad enough.

One jock per daypart/per format on the air everywhere they own a station. The local station simply carries the national program. I use the term Repeater Radio because that's what a local station is fast becoming.

Fagreed Suleman is great at firing talent and putting questionable programming on in his clusters. He's no program director or manager. In fact, I don't think he understands how a radio station works -- but that's my opinion.

National programs on local stations.

PDs and operations managers let go because it won't take much for one person to babysit what is sent to them from CentCom.

This ugly and useless strategy will come of age in the months ahead.

If they carry it off, they will fine tune it even more (translation: more cutbacks).

What's happening is that stations are being devastated to help CEOs look better financially. Since they don't seem to understand how a local radio station works, they stick with what they think they know -- how to reduce expenses.

Growth industries invest in growth.

Declining industries fire and cutback.

That's why companies brag about how they are expanding when things are going well for them and swallow their tongues when they reduce their growth.

Keep an eye on radio in the second quarter, third quarter and beyond and see what little impact these "savings" will have on the consolidators' stock prices that are currently in the $1 --more or less -- range.

Watch radio consolidators continue to blame the recession for their problems, but the economy is only part of it.

It's pretty transparent.

Lee & Bain spent billions to buy an antiquated radio company, Clear Channel. They tried to get out of the deal, but couldn't. So, they were stuck with it.

Buyout companies are looking to trim costs, build value and resell to make a profit.

If it is any solace to the people who have lost or will lose their jobs because of these incompetents, they have just guaranteed that their costly investments are going to take gas.

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