Judgment Day for Radio CEOs

We tend to judge radio CEO’s today by whether they are not as bad as the others instead of whether they are better than most.

Too many have gotten away with less than stellar results and they somehow still have their jobs and apparently think they should be given a free pass for their dull performance due to the recession.

What if these happy talkers were held accountable for the predictions that they are trying to sell Wall Street, advertisers and their own employees?

I thought it might be nice to put it up here on the Internet for all to see – that way if they turn out to be correct we can all give them their just dues. On the other hand, if they are flat out wrong when all is said and done, then they should be held accountable.

My comments are attached so I’ll play by those rules. Will they?

Jeff Smulyan/Emmis

Radio functionality on iPods and iPhones will revive the radio industry with those who embrace new media.

I can see how Smulyan thinks that being able to easily get radio broadcasts on a cellphone would create the next Walkman revolution. And if he turns out to be right, he was able to ignore how the next generation – 80 million strong and coming of age – are using media in an entirely different way.

Smulyan totally ignores the fact that attention spans are declining and with that generation it may be entirely obsolete to listen to 24/7 broadcasting. It’s an on-demand generation -- raised on their own playlists and their own devices like chat, texting and social networking. All these things are radio competitors – at least for listeners time.

I’ll go as far to say that making an iPhone a radio won’t even impress older listeners who are also taken with new media and other attention depriving alternatives.

The iPod Nano became an FM radio recently. Will pausing and tagging be the killer app? Let’s see if Jeff was right a year from today. Was it a boon for radio or a bust?

But it’s also another year lost.

Peter Smyth/Greater Media

In his "Corner Office" monthly blog, Smyth declares the recession over and says “we’ve survived”.

Keep in mind this space is for his employees even though the trade press reports Smyth’s comments as news almost every month.

Peter makes an impressive argument: business is slowly returning; tough times have made radio folks better business people; much-missed automotive advertising is coming back; the real estate market is stabilizing; credit is becoming available as bankers and lenders are thinking that the worst is over.

And I think he’s right about the bottom.

But no analyst who studies radio for a living is predicting or revising previous predictions that it will be a long time – if ever – before radio revenues will post a plus year. Some analysts say beyond 2010 if it happens.

Smyth is giving us a pep talk – and that’s not bad. What is worrisome to me is that here is a radio CEO who didn’t mention advertising spending on new media, the Internet, mobile space, social networking, generational media – not a word.

And that’s how radio got into the mess it's in. Not because of bad people – quite the opposite. Radio possesses exactly the kind of people who can do both traditional and new media. But Greater Media and just about everyone else has been firing talented managers, salespeople and on-air personalities.

So, I hope a year from today Peter Smyth can get our accolades for marking the return of prosperity to radio. Everyone knows 25% revenue declines will improve. But I’m doubting any radio company that has no presence – spends virtually no money – in the new media space will ever be a growth industry.

Lew Dickey/Cumulus

Debt-ridden groups will turn their debt over to lenders in the form of equity and “it will be business as usual”.

That’s what Dickey told me when we bumped into each other at the NAB Convention in Philly. In other words, Citadel will get their debt purchased and be none the worse for it. Bankruptcy will be avoided.

Maybe it’s all wishful thinking as Cumulus also has trouble staying up with its debt covenants.

If Lew is right and the big “C”s (Clear Channel, Cumulus and Citadel) escape unscathed from bankruptcy, I wouldn’t exactly show up in public bragging about his prediction.

Thousands of careers have been terminated. Radio has become less local for one main reason – to save money. Sales forces have been terrorized (with Cumulus leading the way) at a time when the industry seems to be chasing sales categories like health care and services more than this growth industry has been returning the love.

In a year from today, if Dickey is correct and Cumulus, Clear Channel and Citadel are still left standing – especially after all the damage their CEOs have done to radio – it would be a tragedy. Dickey will have to celebrate in private.

I think Dickey's competitor, Citadel, will go into bankruptcy when it can’t meet its $150 million debt obligation in January and then anything can happen.

It is ironic, radio – even in a recession – is pumping out lots of money that would be profit if not for the unmanageable debt radio CEOs allowed themselves to take on.

A company like Saga that has hardly any debt comparably speaking winds up paying the same price as the overspenders -- in other words, even a responsible approach to debt doesn’t pay dividends for Saga in this screwed up world of banker-run radio.

Station values are between three and four times cash flow.

No group invests even 5% of its operating budget in new media as if radio is sitting out the biggest Internet phenomenon since the industrial revolution.

Local programming has become compromised.

Sales staffs have been decimated when what they need is to be expanded.

The People Meter is being used to unfairly represent drive-by hearing instead of actual listening – a strategy I predict advertisers will not appreciate once they figure it out.

Until a CEO speaks intelligently and candidly on these and other generational issues that will stick in the craw of radio, I’m going to consider every pep talk a diversion from the real problem.

Radio has been cursed with the wrong leaders at the wrong time.

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