Radio: Cumulus Offering Punitive Pricing

By Jerry Del Colliano

Okay, I'm supposed to be on vacation at the Jersey shore just before the NAB Radio Show in Philly but everything reminds me of the state that radio is in.

Take this sign commemorating the massacre at Long Beach Island in 1782.

Makes me think of the massacre at Clear Channel, Cumulus and Citadel that has ruined the lives of thousands of good and talented people while depriving loyal listeners of the excellent local product we know we can offer them.

Back in 1782, the sign says, "That night while sleeping on the beach, Steelman (a patriot militiaman who captured a British vessel) and his men were massacred by Tory raiders led by John Bacon".

The Massacre of radio in 2009 and the "ramp up years" preceding it, happened when the Dickeys, The Mays family (later Lee & Bain) and Citadel's forefathers fell asleep at the switch and put thousands of people on the beach. You get the imagery, I'm sure.

Now almost weekly, we learn of draconian policies inflicted by these companies -- of late, especially Cumulus and Clear Channel -- that defy logic.

Example ...

From a Clear Channel worker:

"These sales tactics have been in place with CC for over a year. Dialing for dollars! ..... the sales team at CC Austin have had quarterly campaigns (one day sales) or what they refer to as a call to action in order to generate bucks to make goals. The sad things is that the CC Austin sales team, which by the way, includes KASE 101 one of the cash cows in the CC barn has had their commissions cut way below any of the numbers you are talking about Cumulus having. 20%... give me a break, that would be a huge incentive for these people."

"Try not making your goals at 8%... try working in an environment where you are selling across the cluster and competing for what was once sacred ground, accounts that the AE's developed on their own are now open for who ever can sell it gets the cut or in this case the split. You have to share the business with another station in your building. Granted, if it is new business you can own it but you have to watch your fries because that makes you a target. It is hunting season in the building and everything is fair game".

Worker against worker. Stress that is impacting the health of the sales force. Desperate consolidators.

You've heard of employee pricing -- you know, when automakers offer any consumer the so-called price their employees would pay to buy a car?

Well, in radio, we now have punitive pricing -- the price salespeople must pay if they don't sell new accounts at the level their bosses require.

Look at this ...

"I am a former Cumulus sales rep (who thankfully escaped) but still have friends that have not gotten out yet. In the major market I worked in the agency commissions is 5%. Also, Cumulus recently instituted a new business requirement wherein AE's are expected to put 3 new accounts or $9,000 in new business per month on the air. Any AE's that don't fulfill this requirement will lose one of their billing accounts. AE's that don't generate any new business in a 4-month period are subject to termination. It's sickening..."

And a former Cumulus manager tells me ...

"Told you a new screw the employees plan was coming. I don't think that's all of it. Q4 is not pacing well for many CMLS markets. . . and Q1 will follow!~ I am amazed there isn't a "Class-action suit" against these numb-nuts".

Because the corporate pressure is so great as Citadel, Cumulus and Clear Channel try to avoid running afoul of their loan covenants that -- as incredible as it may seem -- they are asking their people to sell more for less. Only John Slogan Hogan could appreciate that "less is more" sentiment.

This just in from another one of my "Repeater Reporters" at Cumulus ...

"We are to take any deal at any price we can get till the end of the month. its a fire sale!!!!!

Radio consolidators are pushing the envelope and may be asking for trouble as one well-experienced radio manager writes...

"These "employees" (slaves) need to anonymously get together and visit the state(s)' wage and hour division, as well as someone from the U.S. labor department. From my own experience with departing employees, one can only "holdback" wages and earned commissions for documented reasons. A good labor law attorney can make life miserable for these Cumulus jerks, and if the group is big enough, the cost can be minimized. Even in cases where the employer is acting in good faith, the government on the state and federal level want wages and commissions they can collect the taxes ! When an employer plays games with earned
commissions, then the government(s) miss their piece of the action"

Things are so wacky in radio right now -- no one is watching the future.

Please re-read the last line. Please.

No one is watching the future.

What about the app-driven free/premium Spotify music service when it comes to the U.S. by year's end -- threat or not? Or the dilution of personality radio in favor of voice tracking. Or the effect of podcasting as it grows with ex-radio personalities. Or the new Apple tablet that is rumored to be in the pipeline as the next entertainment device to rival the iPod or iPhone. What effect on radio?

I see Clear Channel Radio President John Slogan Hogan did a good thing the other day when he appointed two new directors of social media in Chicago. They’ll be responsible for using new media and social networking to extend the station brands across online communities such as YouTube and Twitter.

But they still don't get it.

Extending station brands is only doing half the job. Building new brands for new technology -- that's what Hogan is missing.

CBS is closer to getting it.

It will promote the man they fired Adam Carolla on his podcast and link to it on station websites and sell the podcast's advertising inventory. Carolla will then create an online station called “K-Ace” shortly that will be a conglomeration of archived Carolla comedy and music.

But imagine if CBS sat Carolla down and invented a new mission using his talents and CBS' clout.

So, it's raining here at the Jersey shore, tidal flooding, the beaches are eroding -- same as radio.

A downpour of poor sales and human relations tactics, a flood of "stoopid" backward looking policies and erosion of the industry we love.

The consolidation CEOs -- are de facto industry leaders -- are making fools of themselves while embarrassing all of us.

So, here's a positive plan of action:

1. Set sales goals but don't micromanage. Autonomy and the feeling that employees are given the tools to do their jobs are more important.

2. Let stations control the pricing based on ratings, the competitive situation and marketable personalities -- not corporate. If that's a problem, remember, when sales goals are set professionals know how to meet them and that includes whether or when to raise rates. Encouraging salespeople to drop their drawers on rates never works.

3. No need to increase commissions -- you've got professionals working for you, but restore the previous levels so they can make a living and take the money issue off the table. And recall that misguided policy of docking salespeople for not bringing in the amount of new business you think they should. The reason companies like Cumulus are about to meltdown in the next two quarterly revenue periods is a direct result of policies like this.

4. If consolidators can't be nice to people, at least don't be "not nice". Read Dale Carnegie's "How to Win Friends and Influence People". Best book I have ever read. More valuable than an entire Harvard education -- my opinion. Doesn't mean the consolidators can't run their own show -- just that there are lots of human relations principles in the book that even Dickey Do, Slogan Hogan and Fagreed Suleman can implement.

5. Innovate by doing things like John Hogan did when he appointed social networking directors except instead of charging them with extending radio's brands (which is okay, but not the entire mission) require them to come up with new products for new Internet and mobile devices that are concocted by radio but are not traditional radio.

Lew, John, Farid -- come see my keynote at the Kurt Hanson NAB summit in Philly. I'm going to get you excited about the future of radio people in the growth business called new media.

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