How To Save Radio

Last week I mentioned an idea that, in my opinion, could save the radio industry from itself.

I have since run it past all types of radio people who have encouraged me to put it out there publicly.

S0, I'd like to share it with my readers not only in the U.S. but around the world to get your input and see if you would like to hitchhike on the parts you like.

At the onset let me say that I am not at all trying to be arrogant when I use the headline "How To Save Radio". There are lots of ways. Good local radio is one. Listening to your quite capable employees is another.

But unfortunately none of the good ideas are coming from consolidator CEOs. So please accept this proposal in the spirit in which it is suggested -- an idea starter at best and a short vacation from the Grim Reaper at worst.

If you look at today's radio industry, it has very little to do with content or for that matter sales and marketing. I know it doesn't take a genius to see this, but it's worth mentioning.

As we have discussed in this space previously, the original plan for radio consolidators was buy as many stations as possible and sell them for a handsome profit. There's nothing wrong with that except that they skipped the operations part. And now, when faced with no market for radio stations, increased competition, a lost next generation, unmanageable debt service and more, consolidators find themselves having to run stations for which they have no ability or talent.

That's why radio stocks are penny stocks.

Why every group from Clear Channel to Salem is firing people.

Why innovation has ground to a halt.

Why the digital future has been put on permanent hold ("with no music playing in the background", either).

Why everything that radio does today is not as good as it was even a few years ago and certainly not as good as it was before consolidation.

Why the listener means nothing to Wall Street-enabled consolidators.

And advertisers mean next to nothing when all we sell them is spots and not solutions.

I guess this is my way of saying that consolidators have found themselves in an industry for which there is no way out.

Continue to fire people, hurt your content -- lose your available audience to ho-hum programming.

Let cost-cutting mandate national programming instead of tried and true local radio with local personalities, news and salespeople -- and you're in the network business. And, that's not a great business.

Persist in avoiding the digital future and you'll continue making catastrophic deals like the recent NAB sellout to SoundExchange over radio streaming royalties.

No next generation -- no future.

That's why I believe that consolidators can neither run their stations nor can they sell them.

Here's another fine mess consolidators have gotten themselves into.

The tragic part is that the radio industry has been dying a slow death for years as the financial squeeze has forced the likes of the Mays family, Citadel's Fagreed Suleman and CBS to cut into the backbone of radio programming.

A small, greedy handful of radio CEOs have done in 12 years what their predecessors could not do in sixty -- tank a perfectly viable business and fail to prepare it to adapt to the digital future. After all, without a move from transmitters and towers to digital devices, radio would die anyway eventually.

What radio has going for it -- even at this moment is:

• The best trained and most talented on-air, management, programming, sales, marketing and support people. President Obama likes to use the term "shovel ready" for his plans to turn the economy around. In radio "shovel ready" is a shareholder shoveling up the horse manure put out there by radio CEOs. But their talented staffs -- ironically, the ones being fired in great numbers are "microphone ready". No industry -- even new media -- has this stable of talent rarin' and ready to go.

• Strong brand names that are sure things for conversion to new media. You think the only thing all-news WINS New York can do is terrestrial radio for old listeners? Not by a long shot. They are a strong brand that can be redirected to other platforms. You think making repurposed podcasts of over-the-air radio content available is the digital future? Not in this world, it isn't. Brands like news, classic rock, top 40, easy listening -- if they are strong locally with loyal audiences they are money machines for new media, mobile content, Internet and WiFi-driven initiatives and so on. Not just radio on the cellphone. Jerry Lee's B-101 in Philadelphia could "be 101" in content other than a streaming radio station. I'd bet on it.

• Studios, talent, training ready to create, sell and market new products with the people already employed by operators. You see why it bugs me that they keep firing talented folks?

• A ready-made sales force that knows how to build relationships in a world that is not at all like Google. Radio is not Google. And with devoting some money, training and commitment to these talented sales managers and reps, radio possesses a ready-made, almost fully trained content marketing sales force.

Since consolidators have proven they cannot operate the stations they bought and since they have no chance of selling radio stations for anywhere near what they paid, I am proposing the Del Colliano Plan to make radio consolidation more like retail real estate.

Consolidators would be, say -- like the Scottsdale Fashion Square.

They become the landlord of radio stations they purchased and must pay debt on. The stations themselves should be rented to "retailers" who know how to operate them. That's you, your friends and mine.

I know.

You're thinking the FCC might not allow the licenses to be bandied about in such an irresponsible and commercial way as to jeopardize their commitments to their community of license.

You're kidding, right?

Since when have consolidators cared about serving their communities -- unless of course by communities you mean investment banks?

Let me go on.

So Clear Channel puts 800 or so stations up to let. Then you -- and your friends -- can find investors to pay the rent, invest in programming, hire sales people, pay for operations and, yes -- pay your landlord, Clear Channel, their rent.

Clear Channel uses the rent to pay their debt and take a fair share of your profit. They don't have to waste it on John Slogan Hogan's salary or Mark Mays' private plane.

Plus, people who know how to run radio stations can get back to running them. They will have to earn enough to pay their "rent". And the lessor has the right to demand a percentage of income based on your sales.

Hey, I'm going to wait for John Hogan to call me.

Actually, real estate baron Sam Zell knows that I'm speaking the truth here. Too bad he doesn't have many stations. He could lease them.

Leasing isn't entirely a new concept -- Radio Disney entered into long term agreements to use low powered AM stations to spread its kids format across the nation.

So, let's say a group of my Scottsdale Study Group radio pals got together and invested in funding the rent to, say, CBS' KOOL-FM in Phoenix. We do a long-term deal -- say ten years with a renewable clause that allows us to continue operating the station. CBS gets the money and shares in our profit. CBS is out. Operating the station is now our problem.

My God, I know so many of you could handle this one and succeed -- especially if you don't kid yourself into thinking that only your terrestrial signal matters. In other words, if I were involved I'd get it in blood that my partners would do podcasts (other than station content), new streams, mobile content, social networking monetization and more.

Could you imagine Mickey Luckoff running KGO without Fagreed Suleman interfering 24 hours a day? Then, Citadel gets its rent and even profits in Mickey's good fortune but you get rid of Fagreed because he is the problem.

So is Mark Mays, John Hogan, Lew Dickey and the rest of them.

The concept is -- radio people running radio.

Consolidators doing what they do best -- lying to investment banks about refinancing their investment.

And they can have fun, too.

Say, CBS rents out all its stations and services the income, profits in part from future success -- they can turn around and sell their group to, say, AT&T or Verizon as a cash streaming business. Just as they would a shopping mall that was fully leased and profitable.

There are some current and ex-radio people standing in the wings waiting for multiples to come down so they can buy a few stations, but why saddle yourself with debt when you can lease from the Citadel Radio Leasing Company.

Well, you get the point.

Take radio out of the hands of incompetent consolidators.

Design a system that allows professional broadcasters, managers and sales people to afford to run radio stations. Keep people employed.

Everybody wins when professionals get back to running America's radio stations and inept consolidators are managers of only their debt service. And it's even better than leasing a mall -- no tangible expenses. Just debt. (Although they sure have a lot of that).

Or, you can just leave everything the way it is.

Fagreed trying to be Jack Welch.

John Hogan trying to be Tom Freston.

Lew Dickey trying to be Harry Houdini when his next debt payment is due.

To consolidators I say:

Rent stations to the talent that you are currently hogtying or firing and you will turn out to be geniuses.

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