The Prospect of Even More Radio Cutbacks

I have long suspected that this week's latest round of "layoffs" formerly known as firings would not end with the 590 victims Clear Channel claimed.

Now, I'm sure of it.

I'm told Chief Execution Officer John Hogan in a Clear Channel webinar said this is the end of the firings. The good company man that he is -- Hogan said they did their due diligence and this should take care of the personnel cutbacks.

That's why I am convinced there will be more -- because Hogan says there won't be.

But no matter what, the cutbacks and firings are proving to be not enough to save consolidated radio companies.

Clear Channel -- the big daddy -- could be bankrupt by the end of August according to an article in MSN Money.

Citadel is hanging on by its fingernails.

And Cumulus can't cut expenses fast enough to avoid the fate that is awaiting it.

In fact, yesterday Cumulus CEO Lew Dickey came up with a new twist on layoffs.

It's called "Stayoffs".

During a conference call yesterday (but not a webinar like that high tech John Hogan does), Dickey told the beleaguered Cumulus troops that they would all be staying off the job for five days without pay before the end of the current second quarter.

That means now.

No warning. Forget the mortgage payment this month.

This includes contract employees as well. (I'm not a lawyer but isn't a contract a contract?). Anyway, Tricky Dickey mentioned the economy as the reason for their no pay holidays not the fact that he and his family ran up too much debt that Cumulus can't afford the payments.

Of course, one of my readers outdid Dickey.

He suggested that the Dickey boys, John Pinch and "the rest of the corporate micromanagers" take 4 weeks off themselves, without pay.

That way they will "save more money and the company might actually perform better without these corporate empty suits breathing down everyone's neck".

Clear Channel is so desperate to fire people that they never stop doing it.

They have been trimming expenses from the very beginning of consolidation -- you know, a little nip here and tuck there to make the shareholders a few pennies more.

What has changed now is that radio consolidators have no choice -- they've got to cut more employees even if it decimates their operations because there is virtually nothing else left to cutback.

Clear Channel doesn't want any trouble on the way out the door. It just offers its employees nine months of severance if they have at least three years experience and to give them credit, that's not bad. It would be better not to fire their assets, but nine months is at least something.

Fagreed Suleman, the bean counter from Citadel, isn't going to be as generous.

Citadel ABC employees with 20 years of service will likely get only two weeks of severance if they get fired after June 12 -- and that's at Fagreed's discretion. Management gets four weeks.

Fagreed could offer to give up some of his compensation to keep people working for the company, but don't hold your breath.

Here's the outlook for the rest of the year:

1. Some major radio groups are headed for bankruptcy and when they do, it means nothing unless of course you are being paid severance, get a pension or you're a vendor and they owe you money. A bankruptcy judge will make these decisions and they often rule on the side of severe cutbacks with little sympathy for people.

2. Cutbacks will continue except now instead of these major events staged by John Hogan, you'll see smaller cutbacks pruning people where possible. No headlines, just unemployment lines.

3. Cockamamie cutbacks are also in the works. Take a look at what Clear Channel is doing in Cincinnati. They are building a call center which will be used in part to give local police, fire and disaster officials at under staffed Repeater Radio stations across their chain for reporting local emergencies. Rather than pay for people to stick their nose out the door or actually be a part of the markets in which they broadcast, this emergency call center will monitor most stations and will eliminate the part-timers recently hired when that infamous memo went out that all stations will be attended 24/7. I'm told that when the call center is complete, the stations will go back to unattended operation overnights, holidays, and weekends. When there is an emergency, calls will go to the Cincinnati call center even if the emergency is in Minot. As one of my repeater reporters said, "No one was in the cluster here, for example, Wednesday at 5 pm until Monday morning at 4 over the Thanksgiving weekend. Everything voice tracked in advance. Local weather...you gotta be kidding me". On the bright side, at least the Cincinnati Call Center was not built in Bangalore.

4. The reason CEOs are still making unconscionable compensation while they are conducting mass firings is because the radio industry is digging in for contraction. These companies are not going to lose their licenses -- they are going to go into bankruptcy and lose their debt and the financial obligations that they no longer can afford. One reader emailed me a rumor that John Hogan and other company brass were at the NBA playoffs in a luxury suite. It wouldn't surprise anyone if true because RIF (Reductions in Force) don't mean reductions in perks.

5. All radio groups will likely follow the cutbacks although not all will file for Chapter 11. Therefore, radio jobs will be even harder to come by because the industry is going to shrink further.

6. Localism is a sham. One CC employee told me he's getting "Premium Choice" (their name for Repeater Radio) crammed down their cluster. As he so eloquently put it "why would I want to air a 7-midnight shift that isn’t my clock, not my music or rotations, doesn’t use my jingles, and only has generic sweepers I have to manually tag with my call letters in the automation log? I’d rather run jockless format, which costs me nothing".

7. Citadel is waiting for the ABC contractual window to pass (two years from its takeover) to rewrite the rules and apply Citadel draconian policies to the ABC stations and networks it inherited.

8. Regent may not make it -- and it probably doesn't matter. Creditors don't want it back but a bankruptcy judge could eliminate a lot of expenses with which the company is now saddled.

9. Clear Channel is saying it may not use Arbitron ratings in some markets to save money. In the past, John Hogan has used this as a public ploy to win rate concessions. This time I believe him. Who needs ratings on Ryan Seacrest when 100 stations are going to air Ryan Seacrest with or without ratings? The ratings don't matter -- savings do.

So, if you think the cutbacks are over, you may want to think again.

It's no longer about what is right for the radio industry, their audiences and advertisers.

It's about time.

A convict on death row exhausts every option he has to win a new trial or get a temporary stay of execution.

Borrowing this imagery, radio CEOs are the convicts.

And they'll do the things outlined here and more to buy just a little more time. It's like waiting for the governor to call and tell the warden that the execution has been stayed.

But in radio's case, the banks are the wardens and they, too, are broke.

The only certainty is that this radio industry will die needlessly while the perpetrators of the crime (arrogant CEOs and investment banks) are willing to do anything at the eleventh hour to live another day.

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Breaking Down the Clear Channel Firings

Clear Channel President and CEO John "The Chiropractor" Hogan has now completed an adjustment on his patient.

In one day (yesterday) -- 590 people were fired from Clear Channel. Add this to the 1,800 or so that were cleared out in January and all the "little firings" in between and you can see why Hogan has become the CEO (Chief Execution Officer).

And the term "adjustment" is exactly how Hogan described this mass execution of radio talent to the surviving employees in a company letter:

"In January, we took the first steps to adjust our business to the realities that all media companies face this year. Those actions were in response to initial results of a thorough analysis of every part of our business. The actions weren't easy and were necessary to make sure we remain competitive this year, and are in the best possible position once the economy begins to recover. Today, we completed the adjustments based on the final results of that analysis".

Freakin' adjustments!

You may be one of the victims or, like me, know some of them. Yesterday was another sad day in the "Fall of the Radio Industry". So many unemployed -- so few jobs for which to apply.

Adjustments?

As Hogan said, "The actions weren't easy and were necessary to make sure we remain competitive this year, and are in the best possible position once the economy begins to recover".

Well, Clear Channel sure makes firings look easy -- maybe because they show so much insensitivity to the victims. Sorry we're going to have to end your career but it's for the good of the company. So that makes it better.

And this business about being in the best position when the economy begins to recover is bull. They just want to hang on.

When the economy does recover, these faltering consolidators will have to come up with another unbelievable excuse and it won't be the real reasons.

This line I do believe Hogan wrote: "On a personal level, one of the most difficult contradictions technology creates is that increased productivity effectively eliminates jobs".

Talk to Apple or Google and see if they agree.

Maybe for radio, an industry led by misguided managers who got lucky, technology means losing your job. If so, why can't they start at the top?

Here's what I mean by being insensitive. Hogan writes "We have introduced and created a host of resources that help us: make better decisions, serve our customers and audiences more effectively, and lower our cost of doing business".

Who is "we"?

Lee & Bain, the investment suckers who overpaid for Clear Channel?

And this poor rationale for top down decision making explains why each month for the past several years Clear Channel has been losing it.

On top of all of this, the company's obsession with calling firings and cutbacks localism when it depletes and undermines local radio is more than an embarrassment to them -- it's a pox on both our houses -- theirs and the overall industry.

That brings me to Lew Tricky Dickey, the chief barker of the Cumulus three-ring circus.

The buzz is that later today, he will hold a conference call with managers and it's not to say, "we're giving you all raises".

In fact, Cumulus, which perhaps is the best example of minimum wage employment, couldn't wait to get started.

Yesterday, one of my "repeater reporters" tipped us that Repeater Radio has hit Dallas-Fort Worth with the announcement that KDBN-FM (Cumulus) has changed formats to "Quality Rock" and a morning show imported from Atlanta.

See what I said yesterday?

Once Clear Channel starts gutting local shows to amortize the expense of syndicating just one show, it is monkey-see-monkey-do.

Cumulus is in short pants -- as are the other consolidators. The only reason these companies can't default on their loan covenants is because their investment banks don't want their stations back.

Radio is no longer a growth business. Bankers have no idea how to run anything -- do we need to get graphic here or is the nationwide banking meltdown enough to make the point?

I'm sorry that these virtual monopolies didn't work, but the reason they failed is because their arrogant CEOs ran up the debt to buy stations at prices that were, frankly, never really worth what sellers pumped them up to. Now they can't service that debt and even though they could probably survive an economic downturn (radio always used to in past recessions), the debt they ran up during the consolidation years is killing them.

Thus, the firings.

And the repeater radio -- one show, many cities -- forget local fiduciary obligations to the licensee. This is about survival -- theirs, not their employees.

Yesterday Clear Channel had the nerve to slap its surviving employees across the face by taking away company 401k contributions until such time as they make 90% of their budget for the rest of the year at which point the 401k match will be restored retroactively.

Fat chance of that.

Why?

Radio operators are losing anywhere from 15 to 35% this year. They'll be lucky to end the year with these losses let alone do 90% of their budget.

So the big question is -- why are all the consolidators cutting back budgets?

Some companies like Saga have little debt and others like Citadel are choking on it.

Why are otherwise shrewd people forcing watered down syndicated programming on local audiences when you know, I know and even they know that it will hurt their stations, companies and eventually the radio industry?

Why fire your best assets when they are exactly what you need to compete in a world of emerging new media?

You may not like the answer, but I'm going to give it to you straight.

The banks -- the same institutions that have helped drive the overall U.S. economy into near Depression -- are sticking it to their clients.

Even as I write this, some consolidators are being charged whopping interest rates on their debt regardless of whether they are responsible or irresponsible. And the interest rate increases alone are more than some of these groups can keep up with.

I'm not defending them.

Not making excuses -- after all, radio CEOs were big boys who should have known better.

But so should Chrysler, GM and Ford and the major banks and mortgage lenders that are being bailed out by your tax dollars.

Believe me, Lee & Bain never expected to have a turkey on their hands for $19 billion. They were in it to spin it -- build it, sell it, chop it up into parts -- taking fees along the way and making more money.

They made a lot in fees but are now giving them back in losses.

Greed, my friends.

Not just in radio -- but including the radio industry -- is the reason you're seeing more than a recession here. And, for radio, the timing couldn't be worse.

The next generation -- 80 million strong -- is coming of age and they don't like or use radio. You know what they prefer.

The Internet has prostituted business models.

Think about it, publishing is dead and the dying were the ones who raced to the web to give their content away for free on the hope that they could sell ads and monetize it. News Corp CEO Rupert Murdoch and the publication he acquired, The Wall Street Journal, knew better and continue to charge for online subscriptions -- the exception -- not the rule.

Radio goes online with its content and comes up with ways to cut on-air commercials out and insert Internet spots and still -- there's no business there. They don't get that what consumers want is variety, discovery and control over their content. Not terrestrial formats with new commercials in them.

Few of us will be surprised when Lew Dickey gives the next spoon of laxative to his company.

But the reason he and his compatriots are doing it is because in their ultimate greed, they got caught in a system that screwed them and now they have to screw their employees to be able to keep operating.

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The Next Radio Firings

On the eve of the next round of "layoffs" at Clear Channel, information is beginning to emerge of who may be let go.

There is no way to know for sure, but lately the way Clear Channel works is to follow a well thought out plan.

I'm hearing that some program directors may be in line for unemployment soon -- especially off-air PDs.

That, as one reader told me, "the smaller markets are about to lose their engineers although disguised as an emergency operations center in the event of an emergency it will be an engineering national operations center dispatching contract engineers when needed".

There is some thinking from within the Clear Channel talent pool that Chief Execution Officer John Slogan Hogan may be looking to eliminate at least one more live on-air talent from every station that hasn't been completely decimated so far.

That means many Clear Channel stations will have only one live local show -- probably the morning show on a budget -- and the rest repeater radio from corporate.

Far from the localism that Clear Channel touts (see "Clear Channel's Fake Localism" from yesterday), the next round of firings -- maybe as many as 1,000 people -- will be designed to accomplish just the opposite by making each station less local.

It's getting hard to work at Clear Channel stations.

Even the survivors must be wondering if it is better to get fired than be subjected to impossible workloads. One Clear Channel programmer told me he is working so many hours to make up for short staffing that it is adversely affecting him. Yet he feels lucky to have a job.

I'm also hearing that some Clear Channel employees have decided to take the fake localism issue to their Congressman. This is a shrewd move because you know the NAB is going to be on Clear Channel's side if and when there is a showdown in front of the Obama Administration over local radio.

Congressmen have a great interest in keeping radio stations local. They want to buy cheap time to run election ads. Want to have a free conduit over which they can send messages to their constituents and there are local economic repercussions by allowing large consolidators to outsource jobs to San Antonio.

In this country, there is a big stink over outsourcing to India and of late some of the airlines have recalled their reservations tasks to the United States. That backlash will come in handy in this case where Minot, for example, will see its radio jobs disappear under the cover of slick PR from Clear Channel.

Beyond Clear Channel, there is more trouble ahead as a result of this localism suicide attack that the Evil Empire is hell bent to pull off.

Emmis is in trouble -- big trouble.

You know that, perhaps -- but yesterday they were downgraded into deeper, darker junk bond territory. Officially Moody's downgraded Emmis Communications' CFR to Caa2; changes PDR to Caa3/LD.

Translated into English -- Emmis is on borrowed time.

There may not be reliable data until its next earnings report in July to know how difficult a hurdle this is. Keep an eye on regulatory filings and company releases for any sign of a possible new arrangement with its creditors, or the failure to achieve one.

Regent is going south -- big time.

You may know this but yesterday Standard & Poor's cut Regent's rating to 'CCC' from 'CCC+'.

Translated into English -- death watch.

According to Standard & Poor's:

"Regent's auditors had raised doubt whether the company could continue as a going concern in its 10-K, based on their lack of certainty whether Regent could remain within financial covenant compliance in 2009. The going concern opinion triggered an event of default under the credit agreement".

The options don't look all that good either:

"'Developing' implications suggest that ratings could be either raised or lowered, depending on whether Regent can obtain an amendment and on what terms...if the company is unable to obtain an amendment, we could further lower the rating".

We've dealt with the other major radio chains vis-a-vis the economy and what turned out to be their unfortunate decision to take on debt the way the Titanic took on sea water.

The point is that while the recession clearly hasn't helped these operators generate cash to pay debt and operate their stations, most radio companies were experiencing declining revenue several years ago when the general economy was still healthy.

That is -- radio's recession started when operators began to nickel and dime their stations in order to generate more free cash flow to pay debt. And much of that debt was refinanced by these consolidators at higher interest rates to keep the wolf away from the door.

Every major radio group has cut expenses and fired employees. Not every group, however, bailed out on local radio. The smaller groups may use a syndicated show or two but they are still doing local radio.

That's why Clear Channel is so dangerous.

Trying to operate under the radar so they can cut more employees, they are paving the way for Citadel, Cumulus, Regent and almost everyone else to follow suit.

If a baseball team agreed to play with eight players, your team would probably lick your lips at getting a leg up on that foolish decision.

Not in radio.

When an operator cuts local sales, the competitors start to reduce their local sales presence.

When more syndicated programming replaces local fare, competitors look around for the best syndicated answer to match them.

They never raise them.

And soon, they will have to see them.

The next radio firings are assumed to be the 1,000 or so that are likely to be sacrificed sometime this week by "Less" Hogan.

The unspoken significance is that many people at Clear Channel's competitors will now become expendable to desperate operators.

We have a name for the companies that do not fire personnel when their competitors do.

We call them operators.

We have a name for companies like Clear Channel who reduce their presence in local markets while singing the opposite tune.

We call them liquidators.

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Clear Channel's Fake Localism

I guess Clear Channel CEO John Slogan Hogan thinks he's got everyone buffaloed over his companies disingenuous localism initiative.

Hogan somehow thinks if he keeps saying the word localism while doing everything in his power to reduce it at Clear Channel stations that perception will once again trump reality.

It usually does -- as many researchers will tell you.

But this time, I don't think he's going to pull it off. Let me tell you why.

Of course you already know that the main reason Clear Channel is firing local talent is to save money. And that they need to save money because of the recession -- not because senior management screwed up by taking on more debt than they have revenue to pay it down.

Right? (Wink/Wink)

On one hand, it's Ryan Seacrest and company with shows that are being developed not for one local market but as "hamburger helper" for many stations in the chain to reduce operating costs.

How Hogan will get away with championing localism when he represents the biggest threat to it is beyond me.

Thousands of Clear Channel people -- loyal, competent and fully capable of doing local radio -- have been fired. What was their failing?

I guess you've heard that Hogan did a webinar last week for Clear Channel managers on localism. Tom Taylor quoted a Clear Channel employee as saying:

“In January, when my GM returned from the corporate meeting in Dallas and let a few salespeople go, I wasn’t shocked. When one of the victims was our sales manager, I was shocked and surprised, because it made no business sense. After the early April managers meeting (again in Dallas), I learned that I will have to make at least one more cut. But – hey, we’re reinventing radio.”

In the past few weeks Clear Channel launched a public relations blitz that included news releases that were titled:

CC Radio launches unparalleled support for local communities

CC Radio launches plan to improve program quality for all dayparts

It ain't so.

The so-called unparalleled support for local communities is a fail-safe plan that will hopefully prevent another toxic public relations meltdown like the one they had when they missed a toxic freight train derailment in Minot, ND. I know, I know -- the Minot incident wasn't all their fault because the city had liability in their communications set-up with Clear Channel, but hell -- there was no one to look out the station window or listen to the local police scanner to see that something had gone wrong?

And trying to say that they have a plan to improve quality for all dayparts is another insincere way of saying Repeater Radio is better than local. Can you imagine if Hogan actually said "Ryan Seacrest is going to replace that lousy jock we have on wherever? That's why he resorts to fibbing.

It all reminds me of what happens when you see a person wearing a bad hairpiece (only Tony Bennett has a good one).

He thinks everyone else doesn't notice that he is bald -- and most everyone goes along with it. They let the bald guy think they aren't looking at the bad rug and both sides are happy.

John Hogan has a great, full head of hair but it's tantamount to a bad weave job when it comes to localism.

He thinks everyone can't see that he is hiding behind localism to make everyone think that he is not actually in fact firing his local managers, sales managers, program directors, air talent, support personnel and even salespeople in the middle of an economic downturn.

John, we can all see it as plain as day. You can't sweep it under the, well- rug.

The largest consolidator is killing local radio even while it purports to be saving local radio by actually not doing local radio. Does that make sense?

No, it sure as hell doesn't.

And keep in mind that Hogan is not playing this hurtful charade for you and me.

He's running scared because localism is the drumbeat the Obama administration and the new FCC will be sounding off on it in the months and years ahead.

You see, Clear Channel is on the wrong side of the issue.

This is relevant because some speculate that the week ahead or soon thereafter may see yet another round of what Hogan calls -- local radio initiatives -- or as the rest of us would call them -- firings. I've seen speculation than 1,000 more people could be let go.

I hate to see my friends at Clear Channel be abused in this way. They are loyal -- very local. They want to believe in their leader, but he keeps disappointing. The company shows no heart when it comes to employee relations. Yet, day after day, these loyal and talented people go to work to help this offender make his numbers and try to give their audiences the kind of local radio they crave.

More firings in the wake of more lies about localism.

Hogan is simply saying to his employees "Be local and, oh -- you're fired".

But to Congress he's saying quite another thing -- we've got a way to be local without employing local people, airing local programs, fielding a large team of local salespeople or even allowing local managers to make local decisions.

The Hogan conference call last week gave lip service to serving their local communities, but duh -- these local managers already know how to do that.

What they don't know how to do is run syndicated programming and make that the kind of content that will actually help local civic groups and promote good community causes.

Unless, of course, Hogan simply wants them to make localism running 30 or 60-second public service announcements (PSAs) between the syndicated content.

Oh, I get it.

Localism to Clear Channel is more PSAs.

Look, I'm poking fun at all this because it's so stupid. There are lives and careers in the balance here. There is injustice and yes, the fate of the radio industry.

Then, there's the ripple effect upon other underperforming radio groups who look to this giant consolidator and say, "I want what Hogan's having".

A fake localism.

I'm going to just say it.

This localism fraud is the single most deadly blow radio has ever experienced -- even more deadly than consolidation, the lack of innovation, losing the next generation and failure to enter the digital beyond.

I don't have a lot of faith in Congress or the FCC (just look at their records), but somehow I think even they are going to see through Clear Channel on this issue.

And I think Clear Channel knows it -- thus, the major PR effort.

Which is why Hogan's localism will not remain our industry's dirty little secret.

We can all see it even if Clear Channel doesn't want to admit it.

Clear Channel's fake localism is no more than a continuing series of bald face lies.

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BANKRUPT NEWSPAPERS GIVE EXECUTIVE BONUSES

Failure isn’t what it used to be. Bankrupt newspaper companies are following the lead of AIG and Lehman Brothers and rewarding executives with large bonuses. The Tribune Co. is trying to pay out $13 million in bonuses, the Journal Registers Co. is trying to pay $2 million, and Philadelphia Newspapers has already given hundreds of thousands in bonuses to its corporate officers.

Company spokesmen say the bonuses make good business sense by rewarding good performance and keeping executives from leaving the companies. Both arguments are hollow. The first rationale rewards performance in running the companies into the ground and the retention rationale assumes other newspaper companies are hiring and would want to hire the tainted executives.

The issue of bonuses has emerged because newspapers filing for bankruptcy are not liquidating, but using Chapter 11 to create reorganization plans that will allow them to change the terms of the debt and union contracts. They have to seek approval from the bankruptcy court for their expenditures.

It is true that most of the papers in these bankrupt companies are making operating profits, but their corporate parents are losing money. The fact that profits exist are one of the reasons the companies have been petitioning the bankruptcy courts to allow them to pay bonuses. Not surprisingly, company debt holders—including states that are owned taxes—are not too happy with the idea and employees who have suffered layoffs and wage concessions are rightfully resentful.

The bonus debacle is yet another indication that the bankruptcies were created in the board rooms and corporate offices, not by the economic downturn. Poor corporate and management decisions are their root problem.

The newspaper business is clearly hurting because of the recession, but it is not a unique phenomenon. About once a decade for the past 50 years, recessions have played havoc with newspaper revenues, but the industry has survived them. Poor economic times, however, push companies whose managers have not paid sufficient attention to their balance sheets into financial crises and bankruptcy.

The last time we saw such wholesale problems was in 1991-1993 recession. Ingersoll fell into insolvency in 1991 and was broken up after its use of junk bonds for financing backfired. The New York Daily News went into bankruptcy that year as part of the collapse of the Robert Maxwell house of cards. United Press International went into bankruptcy in that recession as well. All three were victims to poor managerial choices made earlier and their positions became untenable in the recession.

History is repeating itself.

The bankruptcies today are the result of companies surpassing their financial capabilities and because executives have exceeded their own abilities to manage the firms. Some newspaper executives unwisely loaded their companies with enormous debt to make acquisitions and others are in trouble because the cumulative weight of poor management over a period of time has finally caught up with them.

Most newspapers, however, are surviving the downturn and will be serving their communities for many years. They are responding to the poor advertising climate with responsibility and thrift--NOT by giving executive bonuses that should be used for strengthening their businesses.

An Apple-Inspired Radio & Records Turnaround

Many if not most of my readers are progressive thinkers based on the contact I have had with them since I have been writing in this space.

People who love radio.

Passionate about the music industry and a shared fascination about new media and the role of differing generational traits that drive today’s music and media businesses.

That’s why I thought you would appreciate some thoughts on Apple’s latest accomplishment.

Apple has exceeded its guidance to Wall Street (although they usually play it coy when making such guesses) posting a 15% increase in profit for the first quarter -- even in this miserable recession.

An analyst for Sanford Bernstein & Company was quoted in Thursday's New York Times as saying “For a consumer company to be growing at 9 percent in this economic environment is a testament that the products are strong and the company is in touch with its customers”.

And there it is.

While we all know there are many differences between what Apple sells and what radio stations and record companies have to offer, there is also much we can learn.

Apple is selling iPods and iPhones at a rate greater than last year. Even their computer sales are only off 3% year to year – and Apple sells the most expensive computers with no discounting.

The radio industry – as much as we love it – really is not in touch with its consumers – their listeners. In fact, radio has not changed much in terms of innovation over the last 20 years and at the same time, because of consolidation and cost-cutting, its product is – let’s say, a bit stale.

The record industry is stuck on the CD, selling $19.95 monthly subscriptions, repealing radio’s performance tax exemption and continuing to cutback on new music discovery.

Apple is upgrading its iPhone – probably in the spring. Perhaps new phones. Almost certainly a new operating system for all its customers that will include the ability to make payments within applications and multimedia messaging.

Radio offers no exciting new radios (to match no exciting new programming).

It’s as if the industry outsourced the radio to automakers -- content with car radios and nothing else. Of course, the danger is that car radios are fast morphing into entertainment centers of which radio is only one component.

The last cool non-car radio was a Walkman. Not good in this era of iPod coolness.

A tabletop radio is still generally ugly. Look at HD radios. Even Internet WiFi radios are nothing to show off.

Which leads us to HD radio. If the industry ever had any doubts it was out of touch with consumers, just look to the fraud perpetrated on the public by the radio industry over HD radio.

No programming to justify the consumer's price for acquiring the radio.

No commitment from the major groups other than running HD radio ads.

Lousy reception.

Talk about being out of touch.

To turn the radio industry around, the CEOs who are currently running it need to go away. Some of them are nice people, but they've come up lame for a long time. Still, after 12 years of a monopoly and mostly a good economy no turnaround is possible in the radio industry with this same crew of CEOs.

The record labels are just as incompetent.

Their executives just do a better job hiding and stiffing their underlings with all the work of sticking their fingers in the dike. The label execs missed taking Napster out in the beginning – hubris, simply hubris. A humiliation - a settlement was their idea of winning the battle and losing the war. And they still can’t seem to understand that it is impossible to stop piracy.

The operators of popular file-sharing website in Sweden, the Pirate Bay, were convicted of breaking Sweden's copyright law by helping millions of users freely download music, movies and computer games on the Internet. They got one year in jail and almost $4 million in damages. Warner, Sony, EMI and Columbia Pictures think they won when in reality a political backlash now threatens the government.

In my first day as a professor at USC all those years ago I shall never forget one young man standing up and saying, “You can never stop piracy. We can hack anything”. I now believe him.

Apple is priced right.

Radio drops its drawers and has for years when selling ads. It didn’t need a recession for yet another excuse to undervalue radio.

Apple prices are right on the money. When Steve Jobs overpriced the original iPhone he recanted, made a small (and insufficient gesture of rebates) and moved on.

There is no recession in an Apple store.

No “dollar a holler” pricing. Just products that people want to own even when money is harder to come by. My wife finally gave up her clamshell phone – you know, the one she kept to stay with Verizon and avoid AT&T -- to buy a new 3G iPhone. (By the way, Verizon called my home in Scottsdale and left a message that they are ready to wheel and deal to get her back. Too late. She’s hooked).

And what’s up with AT&T?

No one wants to be on AT&T but to have an iPhone we all put up with it – and the excessive monthly fees just for iPhone customers.

The record industry doesn’t understand pricing.

It thinks variable pricing -- charging more than 99 cents for some popular music downloads on iTunes -- is a victory. Well, 99 cents is now too high. Apple is happy to let these fools running the labels dangle in the wind with their poor pricing strategies. Remember, you can load an iPhone with lots of free music – a fact the labels either do not care about or don’t believe.

To turn the radio and record industries around it would take some of the qualities that Apple possesses.

An innovator at the top.

Strong management.

Talented and happy employees who want to work for the company.

A keen eye on changes in generational media.

An understanding that Gen Yers are the changemakers – everyone else follows (iPods, music downloading, Facebook, YouTube, and on and on). Tough for some baby boomer CEOs to swallow.

A sense of fair but adequate pricing.

Rolling out innovative programming and products on a regular timetable.

Let me pause here to emphasize how important this is. Radio does everything by rating periods and billing cycles. You’ll note that Apple always seems to have new products that consumers demand when one product suffers (iPod and iPhone sales make up the three percent decline in computer sales). Next month it will be something else. There is a pipeline.

In radio, even a format change is done on short notice with very little planning or research.

What is in the record industry pipeline?

Exactly.

Same for radio – what is their schedule of innovation?

Their what?

I can appreciate that a lot of radio folks want to just simply will the industry out of its doldrums – shake it and wake it up. But that isn’t going to happen. In fact, I submit that you really don’t want to wake up this group of weak executives. They are capable of even dumber moves than we’ve seen to date.

No, what radio and records needs are new management, new focus and a new way to operate.

Terrestrial radio is dying – I hate to say it, but there is no getting around it.

Yet consolidators are cutting the innovation and firing the innovators they already employ.

The next mistake is happening now but you’d never know it by reading the Cinderella news accounts. Just as the industry took kids for granted assuming they would always listen to the radio, guess what these geniuses are doing to older available listeners who love radio?

That’s right, taking their local shows and personalities away – making their favorite stations less compelling and addictive. Less is less.

And now these same “available” listeners are spending more time online, away from their radios, getting into Facebook and Twitter – oops.

And finally…

There can be no radio business if we’re busy broadcasting over the airwaves that a huge new generation doesn’t receive and a group that can’t sit still long enough to listen if it could.

There is no future without being on the Internet – but not simply rebroadcasting traditional radio stations. That’s not change. It’s more of the same.

No hope without rethinking content.

Apple customers have downloaded one billion applications – paying money for a large number of them. That’s more than the record business can say about music downloads – an addictive growth business.

And when I say radio needs to understand the appeal, embrace the trend and provide an app-based business, what do they do?

Create apps that link to their terrestrial stations.

That’s not change. It’s more of the same.

Everything we do does not have to be 1960’s radio redirected to a new age device. We’d better get over that notion fast before it’s too late.

I know I may be preaching to the converted but you are the ones who will eventually start businesses and fix dying ones.

The media businesses biggest and most fatal mistake was not just making bad decisions as referred to herein, but not taking the time to really know the changemakers in our audience.

Apple does it and look at the consistent results it gets.

Sorry, it’s not cost-cutting. Not consolidation. Not even new technology that will save radio and records.

Look to Steve Jobs, the indispensable one for whom Apple shareholders pray every day:

Think different.

And, if I might add – understand how the changemakers think different.

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Online Radio Listening

Edison Research and Arbitron did a survey recently in which 17% of the respondents said they listened to online radio in the survey week.

That’s an estimated 42 million Americans 12 years or older.

I am not disputing the research from these solid companies – far from it, I concur. But there are nuances regarding online listening that should be discussed.

Radio listeners – happy with the terrestrial signal – obviously like accessing their favorite programming where they live – on computers, WiFi radios, mobile phones and the like. As one of my readers told me last week – too bad no one in the radio industry ever sat down to design a cool multi-functional device like an iPod but called a radio.

Imagine.

What if someone in the industry came up with the iPod design and flywheel navigation of the early iPods – thin, sleek, cool, colorful – and put called it a radio and then added other functionalities later.

That never happened and radio got left off of iPods and most mobile devices because the next generation ultimately decided it liked to be in charge of its entertainment and could live without terrestrial radio.

Nonetheless online listening is an attractive but dangerous destination ahead. I say dangerous because many make the assumption that putting radio on the Internet kisses the boo-boo and makes everything better. It really doesn't for many reasons.

You see, radio broadcasters often see Internet radio as being terrestrial radio delivered another way.

That would be incorrect at best.

If there were a level playing field for Internet entrepreneurs (i.e., royalty fees), they would be seeing that to broadcast to people is so – yesterday.

I’m not saying that there will not be a market for Internet streaming but it will not be as a replacement for terrestrial radio stations.

I see developers building radio stations for advertisers, municipalities and I have a radio friend who is working under the radar and achieving much success selling Internet radio as something other than radio as usual.

Another friend, the outstanding program director John Rook, is so high on WiFi radio that he never misses an opportunity to enlighten others. WiFi radio is its best when it brings you variety, quality – that which terrestrial radio may not deem as legitimate.

But where we have to be careful is to not forget the generational engineering.

You can’t expect an attention deficit young generation to sit and wait for someone to broadcast to them. They have been able to access and play exactly what they want – or think they want.

This is the key.

Content providers of the future should take a page out of Steve Jobs’ play book and try to learn as much about how entertainment and information is consumed by a generation very different from theirs.

Here’s what I’m thinking about the future of new and traditional media:

1. I see Internet stations in places where 24/7 access is experienced now -- public places where 24/7 broadcasting makes sense.

2. But the Internet may become a delivery system for one program a day – at a set time – or occasional programming. It costs next to nothing to put an Internet station up (aside from royalty fees). The Internet is like having a transmitter and no one has to program 24/7.

3. The key will be making whatever is offered so addictive that people will crave it. That’s a high but necessary standard. For example: apps sold by Apple for their iPhone and Touch are addictive – so addictive many people actually pay for them.

4. The radio station of the future is podcasting. Here’s an update on an experimental program I am working on with a radio morning show client vis-à-vis podcasting. Their show (which I will tell you about soon) has no music, does not sound like radio, gets its audience from viral social networking and makes its money from ancillary forms of revenue not dependent on “radio” commercials.

5. The medium will become the transmitter not the message. The message is what experts or talent come up with. We’ll no longer be able to hire an “air staff” because we’ll have to discover talent to aggregate in ways that are most marketable. Believe me this is exciting. When my morning show clients first crossed over to podcasting it was like a near death experience. Now they don’t want to go back.

6. You may want to sit for this one. It is entirely possible that some forms of entertainment may disappear over the years and decades ahead because they no longer fit into generational media. For example, few could argue that listening to drama or a variety show on terrestrial radio would have much appeal to today’s available listeners. But in the early days of radio – before TV – and in another era, that was the attraction. We change – evolving one generation at a time. This is not bad. It’s just different.

I hope that traditional radio always has a place in our world but it may not.

However, the tried and true formulas that are well-known by seasoned radio managers, programmers and talent will still apply to whatever comes next.

As we see radio CEOs fumble around as they try to force their radio into a generational breach, you see what you get.

Let’s think it through and learn from mistakes that only become failure when we stop trying.

You can bet that radio will no longer be 24/7. You may not like that prospect, but if you want the habits of the next generation you can see the signs on the horizon.

Actually radio consolidators who are ruining their stations by cutting off the life blood -- talent and local shows would have been wiser to cutback by programming only 12 hours a day (or less) of local content but make it compelling. Rerun the good stuff. That would have been better than importing national programming.

If you are inclined to fantasize about radio returning to its former position of power and might after the recession, you've got lots of company.

Radio can only have a future if it adapts to the sociological changes of this new generation (the change makers) and stakes out property where their live -- online, on the phone and through social networks.

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PERFORMANCE PROBLEMS SHAKE MYSPACE

The high hopes that News Corp. had for MySpace when it paid $580 million in for the social networking site in 2005 have never been realized and appear more elusive than ever.

Consequently, MySpace co-founders Chris DeWolfe (who is CEO) and Tom Anderson (who is President) are being pushed out of their management roles in major shakeup of the company's leadership.

The move is signals News Corp’s concern over the site’s declining market share and poor returns.

In the past three years Facebook has surpassed MySpace in total number of users worldwide, but MySpace has managed to remain the largest site in the U.S. and has 130 million users globally.

In 2008 the company had estimated advertising revues of $585 million, with the bulk coming from its ad-sharing deal with Google. But it will take a long, long time for News Corp. to recoup its investment at that pace. That revenue problem is compounded because Google has been unhappy with its MySpace deal and is unlikely to continue it at present terms when it expires next year.

The shakeup at MySpace underscores the value creation challenges that online media face. Services are typically offered free to generate high numbers of users and then these are used to create audiences for advertising or as a market for up-selling enhanced services. Although the audiences are attractive for some advertisers and some types of advertising, online advertising is not yet as effective as television and print advertising for most brands and retailers.

DOES ONLINE NEWS STILL NEED OFFLINE TIES?

When the Seattle Post-Intelligencer ceased publication in mid-March it continued www.seattlepi.com as a web-only publication. It employs 20 persons, making it one of the largest online staffs of any local Internet news organization.

Although it has a much smaller staff than the print edition did, the site continues to cover local news and sports, provides national and international feeds, and features local bloggers. In many ways it is what many observers have called the future of post-print journalism. It is well recognized that print is an expensive way to convey news, information, and commentary so observers argue that the Internet is the answer for community informational needs because the public is increasingly getting their news there anyway.

It is still early days for forming a definitive view of how dropping print may affect online demand, but the P-I’s situation gives a unique opportunity to observe effects. In February—before the print edition closed—the website had 1.8 million unique visitors. In March, that number dropped to 1.4 million unique visitors. If these initial results hold true over time, it would indicate that print still provides some important reputational and marketing benefits to online activities.

Those interested in the online future of journalism should be watching the Seattle situation with interest in the coming year.

Texting and Radio

The number one obsession of young people nationwide is text messaging.

We are beginning to see some significant trends that are worth keeping an eye on:

1. Text messaging continues to grow at a rapid pace. Texting is the Holy Grail for Gen Y. Nothing is more a part of their lives. Most would even do without an iPod before a cell phone because of its texting capabilities. Radio is not heard here.

2. While Facebook growth is slowing among young people (after all, they are already there), it is growing rapidly among the over 30 crowd. You know that because some of you have only recently taken the Facebook plunge and for those who were early adopters, you have seen the number of people your age now discovering and liking Facebook. (Friend me on Facebook!)

3. Facebook usage is 30 minutes a day at a minimum. Don’t go by my daughter or her college friends. They exceed that by a ton. I’ll bet your kids or young friends do as well. It is fair to assume that older people may increase their time on Facebook as a means of staying connected or getting reconnected – and that means less time for them with traditional media. There's also a report that indicates that the average person now spends ten hours a day in front of some type of screen).

4. Twitter seems to have been discovered by a slightly older group. Not the kids in high school or college although they seem to be warming to Twitter now. What’s not to like – 140 characters to say it all. If you’re on Twitter, you see Twitter bugs who really live every moment of their lives on it. That’s funny to me. The older generation used to call these same kids self-absorbed. What do you think telling someone you’re going to the health club or what you’re watching, eating or doing on Twitter is?

5. Radio is making it easy for listeners of all ages to adopt new media because instead of making programming more compelling and addictive, radio is becoming less compelling and more vanilla. Consolidators may really need to curb their expenses because of the huge debt payments they must make, but this couldn't be a worse time for a bad strategy.

6. The definition of entertainment is changing – you may not like it or agree with it – but it is changing. Suddenly, computer video games may be getting pressure from handheld devices such as the iPhone. Apple apps are worth paying for. CDs and music downloads apparently less so.

7. I’m writing this on a plane and I have a Kindle with me – my wife is reading Michael J. Fox’s new book in the next seat. My friend, the beautiful and talented Geri Jarvis made me dust off the Kindle I got from my son as a birthday present last year to give it another chance. I’m liking it. So, more competition for traditional media -- initially, at least with older consumers. Books and reading may actually make a big comeback. Boy, the librarian at my alma mater, Springfield High School outside of Philadelphia, is jumping for joy.

The world is in a constant state of evolution and with regard to the music and media business – there is no exception.

What worries me is that we are not tracking the technological changes the way we should and we most certainly are not understanding generational media. Without that grasp, all our decisions and investments in the future are suspect.

Back to texting.

Radio people use texting to engage the audience – and I guess that’s okay. Nothing special. Texting is the competition because it is how young audience members choose to spend more of their time. It is not a great tool for radio stations other than to replace the telephone as a means of communicating with the radio station.

Sit down and talk with these young folks – they are addicted. No 12 Step Program has been devised that can wean a young person off text messaging.

So, you may say what do you want me to do – radio can’t be texting. It can’t rival texting in the eyes of young people.

All true.

The digital future requires us to:

• Be present where the audience resides (on the Internet, mobile space and social networks).

• Find new ways to attract audiences and offer programming that cooperates with their tastes and habits not ours. Steve Jobs is a master of this at Apple.

• Respect generational differences because to not factor in the next generation’s ability to be in charge of their mobile programming options to suit their shorter attention spans is to live in denial.

In radio we are often content to ignore the outside forces that affect radio programming.

It was unthinkable ten years ago that radio stations would go silent in any great numbers. And yet you see hundreds in the past few months sign off the air.

AM is the first victim -- the long-predicted demise of AM channels is happening regardless of whether the AM band still has excellent programming. That's why I say, future broadcasters will have to be where their listeners live and that's certainly not on AM frequencies.

FM stations will also go silent in greater numbers as listeners turn to other forms of digital entertainment. The strong will survive, of course -- but as the FM dial weakens, even the strong stations will be living in a place that fewer key demos will frequent.

Internet radio is not the heir apparent to AM and FM. It is a delivery system that is best suited for creative new programming. However, as I have mentioned previously, the generational engineering needs to be directed at the increasingly short attention spans of young listeners. To think that streaming terrestrial radio or even 24/7 Internet radio to an audience that clearly is telling it wants short form programs that they can start and stop is to create a non-growth business on the hottest delivery system ever devised.

Apple applications and apps for other smart phones cooperate with the inevitable short attention spans, hands-on entertainment new young audiences will want. I was visiting an Apple store in Cherry Hill, NJ yesterday and found the usual large crowds (even in a recession) and constant excitement about new apps.

I personally added Shazam and Aroundme on the advice of a young Apple employee. Both were free but now that I tried them, I would have easily paid 99 cents for each. Shazam, as some of you know, identifies music with killer accuracy if it senses music (in restaurants, in the car, anywhere). Then you can buy it on one click from the iTunes store. Aroundme is a wonderful app that uses GPS to tell you where restaurants, hospitals, retail stores, parks and much more are in relation to your location.

What I'm sensing is that we in radio need to be in the app business -- now. And no -- no -- no I'm not talking about an app to put your station on an iPhone. That's radio. Apps are the gateway to programming content that we can monetize in ancillary ways and grow in popularity through social networking.

Podcasting is the business that most cooperates with generational and technological preferences even though -- truth to tell -- most radio folks have a hard time seeing it. The company that offers 1,000 podcasts can be the next Clear Channel (maybe I should reword that -- you know what I mean).

Texting and radio?

Texting is a warning shot being fired by the next generation that tells all of us including the radio and music businesses that audiences want to be involved, in charge, constantly interacting and addicted.

Reread the above and devise a game plan that accomplishes more of those goals and you will take step one into the digital future.

Texting is not the message.

It's not entertainment in the traditional sense.

It is a diversion that will peel more and more listeners away from other media as young audiences redefine what news, music and talk and text really are.

So texting is not just an alternative to the telephone.

It is the telephone to a new generation.

And putting an FM chip in the telephone is not an alternative to terrestrial radio.

It is still radio -- lumbering on for a generation that clearly doesn't have the time or interest in sitting still to hear it.

And someone will have to reinvent radio -- probably in a form we do not recognize -- if it is to survive beyond the Museum of Radio and Television.

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Flirting With Radio Listener Implosion

You know the radio industry really has it wrong when it doesn't even know what time it is -- that is to say, what time it gets its largest audience.

It appears new People Meter results show that 3-4 pm is actually radio’s most listened to time of the day.

Of course, morning drive is still big. But as it turns out the second and third strongest listening times are 4 to 5 pm and 7 to 8 am. In other words, two of the most listened to hours are in afternoon drive. This information comes from Research Director, Inc.

As many of us predicted the big bad People Meter that lots of radio CEOs were previously fighting seems to bring more good news than bad to radio every month.

The excellent Research Director analysis shows hourly radio listening consistently strong as it pertains to audience. We are speaking of radio’s actual available audience here – not declining levels of listening based on rival new media competition -- that is another issue.

The reason radio has a problem with all of this is because the consolidators barely invest in good morning programming when all of a sudden they find out they’ve got a bonanza of potential listeners in afternoon drive -- perhaps larger than they expected.

Holy Ryan Seacrest!

I guess we’ll soon find out that cost-conscious consolidators can't get away with committing these two cardinal sins: gutting morning drive and eliminating afternoon drive.

Back when radio was a national addiction, listeners were treated to talented morning show personalities or teams with full-service programming regardless of format.

Then, on their way home from work or school, they had a different breed of cat known as an afternoon personality. (For context, one of the last great one’s was the late CBS/WOGL, Philadelphia PM drive jock Big Ron O’Brien. God, he was so good in an era of so much watered down radio. An old Drake jock).

Program directors know how important dayparts are -- even afternoons.

It’s their bosses who turn a deaf ear to programming for large and loyal audiences in different time periods. Today, the corporate strategy is to use filler feeds, regional radio, national syndication and stuff in exactly the place where they can save the most money by cutting back local salaries.

May I take it further?

Nighttime used to be a very different offering on many stations because smart PDs knew that things changed in their cities. Format-by-format they made adaptations to listener preferences and availability by time of day. A CHR station may be going whole hog wild and crazy in the evening but an AC station might be doing love songs or Quiet Storm.

Same with all-nights.

Far from the waste management of voice tracking that programming midnight to 5 am has become, stations turned their sleepy-time hours into bastions of listener loyalty. I don’t have to mention names here. My readers will do it with loving recollections of WBZ, WOR, WKBW and on and on.

All this latest data suggests is that consolidators are suicidal.

They have so backed themselves against the wall of debt that worrying about maximizing daypart listening is so alien to them.

Hell, they just want to dodge the next breach of loan covenant.

Are you nuts?

But seen in context, this realization that listeners prefer certain dayparts – thank you People Meter – emphasizes the missed chances the radio industry had to build loyalty and brand viability.

Instead, non-local, voiced tracked, bland radio is now the strategy of the day. Listeners may be underwhelmed.

Young people have escaped to their cell phones and Internet streams -- can you really blame them? If I were their age, I wouldn't find anything compelling to keep me addicted to radio. They listen when they want and how they want -- to what they want.

Which brings me to my anecdotal observations that terrestrial radio had better wake up and smell the Starbucks latte in the afternoon.

The next generation has no morning drive.

It’s show time when they want it to be show time.

They stop it. Start it. Explore. Share. Delete – all at will.

What you’re witnessing here is the very last example of a medium that was able to get listeners to listen on radio's time schedule.

Don’t get used to it – those days are over.

That’s why it is a sin to hasten the loss of appointment listening especially in an era that is going to lose audience as rapidly as it lost sales.

I think it’s fair to say that radio’s programmers didn’t take their non-AM drive listeners for granted.

Their owners did and we are worse off as we search for a meaningful place in the digital future.

With NAB CEO David Rehr welcoming convention-goers to the NAB in Las Vegas with stickers that say "I Matter ...when it matters most" you can see the disconnect between reality and fantasy.

Fantasy -- radio matters to a lot fewer people than it used to and it would matter more if stations provided local music, news, weather and community service. Saying it doesn't makes it so.

What matters is that listeners are attracted to local personalities -- they don't have to have expensive contracts, either. The disconnect here is your lobby group sloganeering again while the opposite is true.

Radio Heard Here -- the industry's multi-million dollar embarrassment being offered to stations to play for their existing listeners should be retitled "Radio Herd Here" like in a herd of elephants stampeding to advertise to the converted. The disconnect is that in reality "Less Radio Heard Here" would be the truth.

When the NAB CEO tells the assembled multitude that the Internet is the next frontier for terrestrial radio, he's either dumb (which I doubt) or a well paid spinmeister (which I -- well, never mind).

The Internet is a delivery system for new content -- it's not radio's bitch.

One of my readers wrote yesterday to request more on how Internet radio can be local. That man is the one I want to hire. Delude yourself into thinking the world wide web is at radio's beckon call, but it's the other way around.

The Internet is like a low cost transmitter that never has to be signed off the air because it's too expensive to fix (hint/hint to Citadel's WARM, Scranton, PA).

It works best when it's local.

No national Internet operation has become a dominant radio station - even Pandora -- because the secret is in being local.

So for the many who already understand that local begins in the morning, peaks in the afternoon (according to PPM) and has special niche listening opportunities at other times of the day -- you get it.

For the cost-cutters and debt holders they call broadcasters today, continue to believe your own spin.

The next generation has moved on and in the next few years watch what happens to your so-called loyal available adult listeners when they don't have the great local personalities and uniquely programmed dayparts you're methodically eliminating in the name of the economy.

It's called listener implosion.

And it's coming soon to the fools who cry poor mouth while their listeners cry foul.

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The Evil Empire Strikes Back On Localism

If you take a close look at the style and substance of how Clear Channel rolled out its Repeater Radio platform last week, you’ll see a lot more than the obvious.

Sure, cutting local radio expenses by firing people and mandating corporate programming will save money. The jury is still out, of course, whether the strategy will save Clear Channel enough money to improve their bottom line.

What’s more telling is the lengths to which Clear Channel has gone to portray the moves as listener-friendly, locally responsible and consistent with high quality programming.

Of course, they aren’t -- but it has suddenly become important that Clear Channel look over its shoulder to the one thing that can throw a monkey wrench into their best laid plans.

Congress.

In a letter dated April 15 widely circulated on the Internet and purported to be from Clear Channel President John Hogan to Henry Waxman, Chairman of the House Committee on Energy and Commerce, Clear Channel lays out its defense.

I cannot attest to the legitimacy of the Hogan letter – he does not include me on his distribution list – but I am told from insiders that the letter is authentic. Let’s just say if Hogan didn’t write it, he should have because the concerns are all legitimate.

Just the thought of that letter inspired this.

Beyond the self-serving language that talks about how Clear Channel is responding to troubled times (recession, stations going silent and boiler plate about its new Repeater Radio) Clear Channel is attempting to be proactive.

Congress and the FCC could cause trouble for Clear Channel’s parent buyout company Lee Partners and Bain Capital Partners.

Here’s what has Clear Channel playing defense:

1. Local programming variety. In the letter, Hogan talks about the increased programming options that will be made available to audiences. Of course, that is not true. In reality Clear Channel’s Repeater Radio concept funnels programs to local officials who are supposed to have the autonomy to select what goes on the air. (I wonder what would happen if a Clear Channel manager decided to pass on the syndicated stuff and hire a new live staff?).

2. Clear Channel is also playing Congress for a fool by saying they are offering new programming formats (erockster, Pride, Smooth Jazz, slow jamz) across a number of distribution platforms including the Internet that Congress does not currently regulate. And what’s new about those formats?

3. “Our stations must continue to meet the needs and expectations of their local communities” – there it is! The set up for rationale that couches cutbacks, firings and nationalization with higher minimums of service for all their markets. I never knew Rep. Waxman to be that dumb, and I never knew John Hogan to be that smart.

4. Hogan tells Congress Clear Channel is reacting proactively to FCC issues regarding the Localism docket. The compliant Hogan says, “we read, we considered and we listened and now we are implementing the proposals we think make sense”. Or as I call it, selective ass kissing. We’re with you and we’ll pick out the stuff we want to do.

5. What Hogan failed to say is “get the Depends out” – because you can imagine the imagery of what they are going to do if Congress and the FCC actually look past the spin to what Clear Channel is really doing – breaking the commitment they made in hundreds of local markets to serve the public interest.

6. Clear Channel is pinning a gold star on itself for implementing Local Advisory Boards which the FCC is considering making an industry benchmark. But Hogan’s nose starts to grow like Pinocchio when he says some markets are already doing LABs “where our local staff regularly works in partnership with community leaders to ensure our stations continue to serve the community in a meaningful way”. Say what?

7. He says they are expanding and improving their commitment to local programming. I noted that he didn’t mention Ryan Seacrest who they just announced will do another hour of “repeater power” to further corporate cost cutting. Is local commitment running ads from the Ad Council? Local groups? I get it – you provide California programming in Cincinnati and local folks get to have public service announcements for free.

8. This is so painful for me – do we need a time out? Here’s the part about “a number of Clear Channel stations already showcase, new emerging unsigned local artists or artists who have signed with independent record labels”. See, Hogan knows the FCC’s Localism docket is concerned with this issue so presto/change-o and Clear Channel is suddenly compliant. It’s an out and out lie – let’s just say it.

9. And you had to know that Hogan is bragging about the warm body initiative referred to as three levels deep so if anything happens in a Clear Channel market while they are busy saying one thing but playing national programming, some minimum wage worker (untrained, I’ll bet) will cover news, call the boss, go on the air, run a set announcement or panic. At least they’ll be panicking locally.

Boy, wouldn't you like to testify in front of Waxman’s Committee and tell him the fabled “rest of the story”?

But for now, sleep easy.

John Hogan is the Alexander Haig of this radio assassination – he’s in charge.

Pro-active.

Full of bull, half-truths and spin.

Clear Channel has gotten away with gutting its stations, firing people, turning its back on local audiences, violating station licenses and finally, this.

But now, the Evil Empire strikes back.

It is so used to having its way that it is taking what it perceives as their perceived intent of the FCC Localism docket and making it practice.

If it is seen for the arrogance that it is, someday Lee & Bain (Clear Channel’s owners) may be held to the same standards as everyone else – once the FCC decides what those standards will be.

In the meantime, send the Depends to John Hogan – but hold the Twinkies.

He's scared hitless.

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Silent Radio

The other day I heard that a very small AM station here in Scottsdale was going silent.

The owner apparently would rather pull the plug than sell the license to his employees and didn’t have the money to keep it on the air.

Funny thing is – I never heard of it.

I guess my Scottsdale Study group buddies who have lived here a long time are holding back.

But yesterday when I got the news that WARM-AM, Scranton, PA was calling it quits it got me to thinking.

There have been hundreds of licenses returned to the FCC this year for numerous reasons including the economy but also because it’s hard to be in the radio business these days.

Citadel owns WARM and they had a situation where they apparently had transmitter repairs that the company could not afford. What a great excuse to fire everyone and get the lights on the way out.

There was a time – not long ago – when the owners of a station that had a catastrophic event such as transmitter problems found a way to stay on-air and rebuild as fast as humanly possible.

Citadel went off the air.

Stayed off -- and about a week later, I’m told, announced their verdict.

Silence.

Silence is golden to consolidators who get to take another losing asset off the books, but it wasn’t always like that.

The loss of a radio station is obvious to its employees and city of license.

As my friend Joe Benson tells me (he worked for WARM's competitor WAEB back in the days of rock and roll), this mega-giant deserved better than the Suleman shuffle.

WARM once had a whopping 63-ratings share in Scranton-Wilkes Barre. "The Mighty 590" was home to "The Sensational Seven" and its powerful 5,000 watts reached a huge area in the upstate Pennsylvania area near Philadelphia.

WARM carried Phillies baseball for all Northeast Pennsylvania fans to hear without the crackle of tuning in to a more distant Philly station.

WARM was thought of as the “WFIL of Northeastern Pennsylvania” -- quite the compliment to be compared to a legendary rocker. Most recently it had been running Scott Shannon’s “True Oldies” and when it was formerly owned by Susquehanna, a fantastic operator, WARM did news and talk.

If Susquehanna had remained in the business, this station would not be going silent.

Only bean counters do things like that.

Radio people overcome the obstacles that face them and exercise the fiduciary responsibilities as keepers of their FCC licenses.

It irks me that whenever we have a cutback, a downsizing, a mass firing of radio people, it’s usually covered as a business story. A monkey business story, maybe – but that’s not the real news.

People lose jobs.

Cities lose their beacon.

So I’d like to suggest that we don’t fall into that trap. Try not to see the increasing number of stations that will be returning their licenses and signing off as inept and antiquated. In fact, it’s quite the opposite.

Whether on AM, FM or Internet streaming, the WARMs of the world have shown us the template for whatever local “radio” could become.

Here’s what WARM meant besides cash dollars.

1. Upstate Pennsylvania used to be the AAA minor league for Philadelphia radio and other markets. Area stations discovered, trained and supplied great talent to the larger cities when they were ready for prime time. George Gilbert went from WARM to the legendary WIBG “Wibbage” when I was a boy growing up in suburban Philadelphia. A former WARM news director, Gene Burns became a talk show host on WCAU in Philadelphia and Gil Gross went off to ABC’s KGO in faraway San Francisco. The station started many careers and fed talent to other stations. Today, pretenders such as Farid Suleman and John Hogan discover talent – by looking for cost efficiencies and “promoting” a major market personality to take the place of local talent.

2. Stations like WARM fed the music machine. Philly promotion men like Matty “Humdinger” Singer would trek up to northeast Pennsylvania weekly on the Schuylkill Expressway and the northeast extension of the Pennsylvania Turnpike and twist the arms of tomorrow’s big market PDs to play a wider variety of his label’s hits. No fool, Matty would show up at Jay Cook’s office at WFIL and mine at WIBG and bring sales and listener response to records for which he was seeking major market airplay.

3. Local stations that surrounded major markets would often buy jingle packages (with fewer singers, of course) that were identical to the ones on their big market neighboring stations. I went to Temple University with Steve Burger who went on to run Nationwide’s stations – a real class act. As a student, he worked in Atlantic City on-air practicing to be the next Dan Ingram and splicing a cheap version of WABC’s jingles with which to practice on the air. Smaller markets then got the benefit of proven formats and local personalities who played a larger variety of music that their big market neighbors did not.

4. Audiences depended on local stations like WARM and WAEB – and the many more we’re losing weekly – because they knew these stations were committed to their communities. They didn’t voice track a guy with balls that he could only carry around in a wheelbarrow from some alien big city. They let a teenager grow into his voice, appear at local venues, answer local phones, do local news and keep an eye out for the welfare of the community. Today’s consolidators don’t get this.

5. Often after their big city careers concluded, some locally-grown radio people returned to their roots to manage, program or entertain on these important stations until a ripe old age. In other words, the cycle was complete and radio folks had a place to return home. Today, they are the homeless of the industry – discarded and disrespected after all their years of work. Their egos were never too large to step back down to “the minors” because radio’s minor leagues were the most fun you could have in the radio business.

Look, I’m the last person to get nostalgic about saving AM stations or even failing FMers. This is not about the old days being better.

It’s about losing our way.

I always say the future is where the audience is – on the Internet, on their iPhones, smart phones and mobile devices. And there’s no getting around it.

That’s where radio must go or it will become a relic for the Museum of TV and Radio.

But this isn’t about the demise of an AM or FM station. It’s about the death of a system that invigorated and serviced local communities, gave managers a chance to learn their craft, talent a chance to practice on-air sometimes experimenting with proven formatics from nearby major markets and spreading new music in a way that predated how social networking does today.

Radio stations going silent are not just a news story.

Not just a victim of greedy consolidators who never grew up at a WARM for if they had, chances are they would not have run their radio companies into the ground once they made it to the big time.

Lew Dickey – Dad helped you get your job, not working your way up from a small station somewhere.

Farid Suleman – Being Mel Karmazin’s bean counter for all those years didn’t give you the wisdom, empathy or know how to run the ABC and Citadel stations you struggle with today.

John Hogan – Being Randy Michael’s buddy turned out not to be the qualification you needed to run the largest radio group in the world. A little humility, the kind we tend to get at small market stations, goes a long way. This is true because you would know radio doesn’t need yield managers to improve sales if your roots were a little deeper in small market broadcasting. And you know “dollar-a-holler” pricing in small markets doesn’t work, as small market folks eventually learn.

The radio industry is in deep trouble when they prefer national programming over local to save money.

When they install “quality programming” shills at local stations under the guise of improving local radio.

When making local and immediate a liability instead of the mission.

Or, as in this example, local stations like WARM lose their voice because their corporate bosses never had the opportunity and honor to intern and learn at a small market station.

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THE WILD AND WOOLLY WORLD OF CABLE, SATELLITE AND BROADBAND MARKETING

Increasing competition among cable, satellite, and broadband suppliers, combined with slower growth in consumer uptake because the industries have reached maturity, is leading to aggressive marketing efforts to wrestle market share from other companies.

If the leading companies followed classic marketing strategies, they would be offering consumers better arrays of networks and services, better customer service, and/or better prices in efforts to attract more customers.

Instead, many of the largest competitors have been engaging in acts that harm customers and consumers by using illegal and deceptive marketing practices and strategies designed to unwittingly wring greater revenue from their customers. Although the companies apparently think there are benefits in behaving badly, their marketing practices are increasingly getting them into trouble.

Aggressive telemarketing—which has always offended consumers—has landed a number of leading firms in hot water. Comcast and Direct TV have just admitted charges and are paying fines to the Federal Trade Commission for violating telemarketing rules by ignoring the federal do-not-call list. The FTC has also filed a suit against Dish Networks for similar violations.

Companies tend to advertise heavily when competition is high and ads for cable, satellite, and broadband services have helped the revenues of thousands of television stations, newspapers, and magazines across the U.S. Unfortunately, the veracity of advertising claims in cable, satellite, and broadband services has been widely questioned by consumer groups, governments, and other competitors. In recent months Bright House Networks filed a complaint with the Federal Communications Commission about the practices of AT&T, the National Advertising Division of the Council of Better Business Bureau chastised Cablevision for advertising claims after complaints from Verizon, and Verizon itself has been sued for misleading claims by NJ Division of Consumer Affairs.

The industry also sought to market different levels of broadband Internet services to customers and planned to charge different rates for users—a strategy that would allow them to advertise a low price even when many customers would have to pay a higher price based on usage. Plans by Time Warner, Comcast, Frontier Communications and other firms to offer tiered service plans have now been dropped after complaints by customers and legislators.

Cable and satellite firms have traditionally been mavericks and rogues in the media industries and many Internet service firms followed their example. Even though the industries have matured and the number of players has been significantly reduced through mergers and acquisitions, the wild and woolly world they created is still evident in their marketing practices.

We can only hope they will learn to become good corporate citizens—or at least firms concerned about their own reputations.

Clear Channel's Repeater Radio Sham

Clear Channel's latest managers meeting has produced the industry's biggest bait-and-switch plan to nationalize and regionalize its programming to save money.

The company is burning through cash at a record pace and the largest radio consolidator, now owned by Lee Capital Partners and Bain Media, has resorted to selling snake oil to the public, federal regulators and lawmakers.

Under the guise of producing better radio, Clear Channel has announced a quality improvement plan.

As Inside Radio put it, "CC PD's to Focus on Quality".

That's really odd because Clear Channel PDs had no problem focusing on quality before now.

It's actually the other way around: The new owners are too focused on the bottom line.

After all, they built the company the Mays family put together on expensive credit.

To listen to Clear Channel, there must be a quality problem now. At least as part of their latest scheme to demean their workers to justify more cutbacks.

The bait-and-switch that Clear Channel is trying to sell to the public is basically this: we cut back local programming and at the same time announce an empty shell that it touts as increasing local public service programming and outreach.

If you're looking for more smoke where the sun don't shine, consider this news account:

"The multi-point programming initiative gives PDs a newly-created analysis tool to assess which air talents are delivering the biggest audiences. PDs also get new content options to plug into their line-up. Clear Channel also announces it will expand public service efforts, including establishing community advisory boards".

The facts are PDs will have little say over these decisions. They've been lamenting a loss of control over programming for a long time but with all the corporate cutbacks many have had to go along with the company's misguided plans just to keep their jobs.

"A newly-created analysis tool to assess which air talents are delivering the biggest audiences."

They're kidding, right.

Bill Drake is laughing in heaven right now where he is no doubt counting down the musical history of the Ages (in order, of course -- as we "Drake PDs" know).

The new content options Clear Channel PDs get to plug into their lineup are Ryan Seacrest, Steve Harvey, all things Premiere Radio Network and whatever they're told as long as they don't hire local talent.

Hell, the company has gone nuts. It employs so-called yield managers to do what the best employees in the business who work for them already know how to do.

And if you're wondering why newspapers are going out of business, take a look at this cream puff piece in The Denver Business Journal that couldn't be written any better if Radio President John Slogan Hogan did it himself.

It's a sham.

Bait and switch.

Brother Love's traveling salvation show.

All rolled into one.

Let's cut to the quick here.

Lee & Bain know nothing about running the almost $20 billion company they overpaid for. John Hogan knows next to nothing.

It's all about saving money because if you read my piece yesterday (scroll down one), you'll see that no one wants to own radio stations. The market is dead. Lenders are getting screwed and they can't even opt to take their borrowers down with the threat of bankruptcy. They don't even want the stations back.

Clear Channel has been quite transparent about the real intent of their plans all along.

National or regional programming that the Big CC PR Machine is going to say listeners want more than local radio. Now, that's pretty damn self-destructive.

As we said a few weeks back, Clear Channel has a plan in place to make sure there is a warm body on duty at every studio site -- looking ahead to possible FCC objections to turning their local broadcast licenses into a network that has basically nothing to do with the local city of license.

Mr. or Madam Congressperson -- check five years ago and compare with today -- are your radio licensees making their audiences any better off today for cutting local programming and firing local talent? Go ahead, document the changes.

Is this what a license has become -- a license to steal local radio stations from the public airwaves?

And that's exactly what Clear Channel is trying to get away with.

You know what happens next -- the bottom feeders, Citadel, Cumulus, Regent -- and the others, will likely follow in lock step. Some groups have already panicked into slice and dice mode because they are bleeding red ink.

So, look...

Is Clear Channel capable of being honest about anything they do?

If they want to do Repeater Radio why don't they just have the balls to admit to it. After all, it's their plan, isn't it?

If they have to fire more people because they can't operate their company profitably even with the mega monopoly they have, why not step up, Mr. Hogan, and say so?

Why insult everyone's intelligence by saying your local programmers need a new quality program?

Why force national programming down their throats while calling it more options? Hell, most PDs if not all will opt for local given the choice.

Why try to mislead the federal government by having a low-wage employee sitting in a studio somewhere so when tragedy occurs in some of your markets you have a defense for not having live local employees to handle it?

Why lie about your managers having the autonomy to make decisions? As The Denver Business Journal news item says, "Managers will have the latitude to choose content and talent for their stations as a way to generate more audience and ultimately advertising dollars".

They don't.

And they haven't had the autonomy they needed to run a local station while Hogan and his crew are playing chutes and ladders with their assets.

It's one thing to say, it's our company and we'll do as we please.

Quite another to expect anyone with half a brain to believe one word of the dribble Clear Channel is trying to sell the public.

Maybe they don't like the negatives of Repeater Radio.

Maybe they like Regional Radio or No Brainer Radio.

If you want to see why a handful of cluster f#@ks have fatally wounded a business, look no further than the latest charade which is tantamount to nothing more than playing monopoly with themselves.

So knock yourself out.

Former and present Clear Channel employees and others who love radio can't stop you, but they're waiting for the day all hell breaks loose in one of your local markets --- the ones Hogan thinks are better off with national programming.

That minimum wage body you've got in the potential hot seat is going to earn their money as your only defense for stealing radio licenses and making a mockery of them.

In time, Clear Channel will self-destruct.

I say, self-destruct because no one could harm the Evil Empire more than their own actions.

To Clear Channel employees out there -- many of us admire the hell out of you for giving so much and putting up with such nonesense because you are professionals.

Every dog has its day and your day is coming.

Clear Channel guaranteed it when it nailed down Repeater Radio yesterday.

I don't know one radio person who would have picked John Hogan out of a lineup to run the world's biggest radio group.

Let's start there -- the speed of the leader determines the speed of the pack.

How about a quality improvement program to hire new management?

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