The Folly of Commercial Free

I am so damn proud of Philadelphia broadcasters and my mentor Jerry Lee who, if it were not for him, I would not be in radio today.

So, Mark Mays, Lew Dickey and Farid Suleman -- blame him!

Seriously, the latest reason I am proud of Philly radio people is because they are banding together to do some positive things that I think you should take a close look at.

Led by WBEB (B-101) owner and pioneer Jerry Lee they are going to use what's called facial coding to test radio commercials and hopefully make the medium more compelling to buyers. In fact, the participating Philly stations will use new technology to rate the desirability and effectiveness of radio commercials.

Radio has a lot of problems to be sure -- shrinking audiences, competing technology, a generation it has lost to mobile and Internet devices -- but the one problem it doesn't have to have is watering down the effectiveness of radio as a sales tool.

Unfortunately, while CEOs are confusing People Meter results with actual listeners and their stations are declaring "commercial free days" and segments, most of radio's problems with advertisers are self-made.

Hey, there's no reason to sell an ad to a sponsor and then run it back-to-back with seven others just to have a long music sweep that arguably will give you meaningless higher cume with PPM. And there's no reason to have your weakest talent (perhaps voice tracked from hundreds of miles away) recording RAB copy thrown together without a thought about effectiveness.

And God knows there is no reason radio has to sell spots when it can sell solutions. There is a reason most station reps don't go back to advertisers and agencies and ask, "did we meet your expectations?".

They already know the answer.

But all of that is changing and what the Philly stations are doing is vaulting into the future to actually make radio effective for advertisers rather than sell ratings and stupid commercials stacked in sets that don't work.

Jerry Lee's system checks the response of 43 facial muscles when a respondent listens to a radio commercial. Then they use 50 cameras to take the listener's picture every split second until they get 900 photo data reference points for a 30 second spot, for example. The group will target non-radio advertisers -- even better for the participating stations as this is revenue waiting to be counted.

I've heard the number bandied about that this system delivers eight times the return on investment for advertisers. Now we're cooking.

At the NAB Radio Show in Philly last week, so many speakers kept saying that radio revenue would pick up when the economy came back.

I'm not sure about that and I believe I have a lot of company.

That's why when radio is down on its luck, radio people ought to stop with the happy talk and do something positive.

Facial coding isn't the only answer, but it's an example of how the radio industry can maximize the positive cash flow it can throw off. Anything that can prove the effectiveness of radio to its revenue sources works for me.

But that's not the end of it.

Time to come to our senses.

Stop with the commercial free days -- at least calling them "commercial free". Commercials are not swine flu. Listeners obviously don't like them which is why stations pander to their sense that no commercials makes the station more desirable.

As a programmer, I have done "non-commercial" hours on my stations, but in hindsight I would have called them "100% music hours" like my old friend Marlin Taylor used to do when he was programming in New York City.

No reason to "dis" commercials.

It's good to emphasize the quantity of music a station plays but not at the expense of making commercials undesirable.

And while we're on the topic, commercials are undesirable because most of them -- frankly, stink. Yes, even the ones from agencies who should -- well, be doing things like using facial coding or Internet testing to gauge effectiveness.

You can't make great commercials without talent. You can't have great copy without good copywriters. Hell, radio will never invest in this -- and it's a mistake.

And if you could build the best commercials for your paying advertisers then proceed to run them in crowded clusters is the best way to make them irrelevant right from the start. These spots have no chance of being heard let alone having an impact for the client.

So, we've got a lot of work to do.

Keep in mind my students at USC claimed to like the concept of commercials but not the ones on commercial radio. They preferred them one at a time -- not clustered.

And let's not forget that small, local stations -- many of whom know exactly how to make effective commercials -- concentrate on that which is going to get the best response so they have a visible way to show how important radio advertising on their station is to local advertisers.

Look, radio people mean well. They want to do a good job. At the NAB it was apparent that the smaller operators marveled at how screwed up the bigger companies were and how they negatively influence the industry.

So, less voice tracking, more music discovery and better commercials -- now, there's a formula for a recovery that we should all embrace.

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Radio Thrilla in Philla: Lew and Me

I ran into Cumulus CEO Lew Dickey when I first arrived at the recent NAB Radio Show in Philadelphia -- dare I say this during a recession -- at the Four Seasons Hotel.

It turned into a knock-down, drag out fight -- The Thrilla in Philla.

Lew threw a left punch.

I counter punched.

He bloodied my face.

I broke his nose.

We wrestled each other to the marble floor.

Okay ... it may not actually be the Thriller in Manilla that Ali and Frazier fought -- it's just my programmer's imagination trying to live up to your expectations of the Thrilla in Philla on the eve of the NAB Radio Show.

What really happened when Dickey and I talked was interesting and revealing and although I am having a little fun with the topic here his comments were revealing and dead serious. Everything was on the record.

Lew -- the man I playfully call "Tricky Dickey" and "Dickey Do" has his own take and a few nicknames of his own for me, I am sure. We followed up with a lengthy phone conversation after we left Philly.

Round One:

Lew said, "Jerry you're killing me" with a smile on his face hiding a bit of anger, in my opinion. I said, "Lew, you're killing yourself, I'm just reporting it".

No harm done.

Round Two:

Dickey made it clear to me -- saying three times by my count -- that he intended to run Cumulus his way -- that it was his company. When I reminded him that I know that, I added that his employees don't like his company. (See The Inside Music Media poll of Best & Worst radio groups in the right-hand column -- see it here).

I got the feeling Dickey was like Ali saying, "I'll be floating like a butterfly and stinging like a bee".

Hell, I'm allergic to bees.

Lew Dickey and I have known each other a long time. Many people don't know that we have enjoyed a cordial relationship for most of that time especially during his troubles with Cumulus founder Richard Weening. He reminded me of that. I continued with "it's not personal but you're not the same guy I knew then".

Round Three:

Dickey is no dope as far as education is concerned. You may not like him but you can't say he's stupid. Dickey told me that he has a different vision for his radio group. That a handful of advertising categories are the key to financial success and that employees may not like that.

I said that they may not like the way you are treating them.

He went to his corner and came out fighting.

Round Four:

Dickey said the old sales system has to change and it may take new people to make those changes.

I counter punched -- are you telling me that you're going to have to replace your present people to accomplish what you want?

Dickey backed off saying some employees may not want to do what he wants done. That may not be the whole truth -- read on.

Round Five:

I pressed him further and pushed him up against the ropes while he again reminded me that he'll do it his way. Frankly I indicated that that could be the problem. I told him of all the emails I get from his dissatisfied current and former employees who hate working for his company.

Round Six -- a potential low blow:

Yes, I hit him on the chin with Gary Pizzati, considered by some to be the Dickey-designated Hit Man, and Lew let the punch deflect off of him.

Round Seven:

I persisted by saying that if he had such a great vision for his company that perhaps he could do a better job of communicating it to his restless employees -- using some Dale Carnegie skills, perhaps. Dickey admitted that this might be so as he walked toward the door.

This reminded me of another great Ali quote: "A rooster crows only when it sees the light. Put him in the dark and he'll never crow. I have seen the light and I'm crowing".

Round Eight:

Lew promised no more personnel will be fired. The firing is done. That revelation almost knocked me out but I came to me senses and wondered what he would do if business continued to post 25-30% declines. Just as I was getting off the floor (so to speak) I heard him say that if revenue is off that much in the future the consolidators' bank deals will all have to be restructured.

I hobbled to my corner.

Round Nine:

Now Lew is going for the kill -- he hits me "we're hiring back 90 new account execs". I'm almost down for the count until I get to my feet and ask, "does that mean you'll be hiring back the people you laid off?"

He bobbed and weaved and said Cumulus may rehire some of them but they are more likely to hire new people who could help grow the health care, education and professional services (tax, legal) categories that he believes radio ignores. Just before the round ends, Lew reminds me "radio is getting none of this business because no one is calling on them".

Round Ten:

Cumulus is going to start training its sales people again -- Atlanta, January -- key account people, managers and sales managers. Then he pounds me with the fact that radio has under invested in its people. When I come back with, "isn't that your fault?" He bobs and weaves and brings up a Bain Consulting study that the management company claims to be surprised at the lack of sophistication in the radio industry compared with other Fortune 500 companies.

Now I'm mad.

Coming back with "they must have been pretty professional in 2003 when you were raking in all that free cash flow". All of a sudden they are not professional enough?

Round Eleven:

I'm almost down for the count when Lew says that even the great Susquehanna stations that he bought didn't have the professional sales staffs he was looking for -- judging by his Fortune 500 standard.

What?

I'm stunned!

The ref would have had to call a TKO.

I came away from this sparring between Lew and you-know-who with a post round summary of where I think Cumulus is -- maybe I'm punch drunk but here it is:

1. Dickey is probably right about the major cutbacks being over, but I still think there will be nip and tucks going on to streamline the operation.

2. Voice tracking and cost efficiencies in programming will continue -- he's walking a very fine line on expenses. No big hiring plans in programming.

3. Dickey thinks Cumulus will avoid the bankruptcy that Citadel is sure to face within months. I think if Citadel goes, Clear Channel and Cumulus are the two best bets to follow.

4. Dickey told me he isn't sure whether "this business will grow again" and I told him you can bet on it -- especially if operators like Cumulus continue to ignore the digital future.

5. Lew said radio has been commoditized because of consolidation and I said "whose fault is that -- yours and the other consolidators?"

6. That his compensation has been misrepresented and that the board in their seven-year contract extension was just trying to make him whole again. When I mentioned that making him whole when his people are going broke doesn't fly right, he didn't seem to get it.

In the end, I warned Captain Lew that even if he is right about everything, he will fail if he cannot get his employees to believe in his vision.

That he could have done a better job on communicating his ideas -- he does admit to this.

When I mentioned Gary Pizzati, one of his minions, who seems to rankle men and offend women I heard nothing that is going to make this change any time soon.

So, I predict business as usual at Cumulus.

A tightening of the screws using a top-down management approach.

Everybody is either on board or Cumulus will find new people.

When I mentioned that one account exec who told me he had enough trouble maintaining his list let alone the mandatory dialing for dollars prospecting, Lew said the person I was speaking of probably was a long-time employee.

New account execs replacing old -- because this company is hell bent on getting health care, education and professional services ad dollars.

The Thrilla in Philla between between Lew and JD is not half as bloody as, say ...

Jack Dempsey vs. Harry Willis

Rocky Graziano vs. Jake LaMotta

Rocky Marciano vs. Nino Valdez

Rocky Marciano vs. Sonny Liston

Sugar Ray Robinson vs. Archie Moore

Joe Frazier vs. Sonny Liston

Joe Frazier vs. Mac Foster

Bob Foster vs. Floyd Patterson

George Foreman vs. Jerry Quarry

Mike Tyson vs. George Foreman

Mike Tyson vs. Buster Douglas Rematch

Carlos Monzon vs. Marvin Hagler

Except at Cumulus, I am coming away from all of this with a feeling that the big fight is yet to come and it will be between ...

Lew Dickey and his remaining employees

Career ending for the loser.

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The Radio Convention They Should Have Held

The trades tell us the just-concluded NAB Radio Show in Philly was brimming with optimism and for the life of me I couldn't find one person other than the owners who would agree with that.

It was so surreal -- you know, with a serious industry crisis going on and people running around telling you how good things are going to be -- that I got to thinking on my flight back to Phoenix --what would you do, Jerry?

Now I'm going to have a little fun while I deliver some constructive criticism so I know you are okay with that -- after all you read me every day -- but be careful not to forward this to any radio people who don't get it or are standing close to a ledge or are constipated.

This is the radio show the NAB should have held. My version is the JAD Convention (The "J" stands for Jerry and the "A" is my middle name Anthony pronounced "Ant-knee" back in Philly).

1. Rename the NAB Radio Show the NAB Radio No-Show. The wrong people attended and not enough of the right ones -- people who actually know how to do radio.

2. Let the audience teach and the speakers sit in the audience. The NAB currently has it ass backwards. Too often the wrong people were the "experts" on the dais lecturing to the ones who forgot more than they know. Listening to Mark Mays wax eloquent about how he wishes he had invested more in new media is an example. Okay, Mark -- then how about now? You've had the epiphany, now get the checkbook out.

3. Or Edison Research saying what we have in this industry is an HR problem. They are right, but they are telling the wrong people. Those people, the CEOs, wouldn't listen anyway. They are the problem.

4. Replace the Dickstein Shapiro opening funeral with Randy Michaels. At least Randy ran radio stations and he can make you laugh. If you only get one chance to make a good first impression then ... oops, keep the undertakers and opportunists out.

5. Next year, refuse to give any visibility to a radio CEO who will not pay to send his or her employees to the convention. That's the funny thing. Lew Tricky Dickey earns his nickname by prancing around the NAB acting like a supporter with his small retinue of minions but bans Cumulus market managers from attending saying they need to be at their stations working. And the NAB gives these guys credibility? Shame on them! (I'll be writing about my conversation with Dickey at the NAB sometime this week -- "The Thrilla from Philla").

6. Pay the attendees for going to the Radio Show. After all, with out-of-pocket expenses and many (not all) panels like the ones I just described, the attendees were not only getting a learning deficit but a financial one as well. Okay, I'm kidding. But ... make it free and let sponsors support it. Oh, the NAB can't make a profit from sponsors alone? Okay, then ask the radio groups to subsidize all the employees that they won't let attend because they are presently in bondage. Imagine throwing a radio show and the decision maker who refuses to let his people come -- goes -- and gets star billing. Just sayin'.

7. Put a wrecking ball to the exhibit hall concept. I mean, those poor suckers paid to watch people walk around, eat and drink free food and buy absolutely nothing -- again!

8. Pitch a big tent and bring events like Kurt Hanson's RAIN Summit under the same roof (full disclosure: I did a mini-keynote at this year's event so feel free to attack me for this idea). But, the people who attended the RAIN session were new media savvy and there was nothing but optimism in the room for three hours. Try this with the usual "tell them nothing" panel approach the NAB uses.

9. Have the entire show in the Reading Terminal Market -- arguably the best hoagies and cheesesteaks in Philly. Forget the convention center. It's Philly -- eating is more important.

10. Cancel it all together as Lew Dickey and his fellow consolidators do for their people. Then radio CEOs can't embarrass themselves publicly in front of non-employees.

11. Have a convention for everyone who has been fired from radio. Then when Dickey Do gets up to speak, one of the many irate "laid-off" employees will get the long awaited opportunity to stand up and scream out "you lie".

I invite you to add your "improvements" on my Facebook page for a radio convention. Or go to Inside Music Media's website and cast your vote for the best and worst radio group. It's on the right hand side.

We've been having a little fun here with the radio convention concept but it is fair to note that a lot of good people worked hard to put the NAB Radio Show on. You can't blame them. Maybe now that Gordon Smith is going to take over as CEO, the trade group could get real.

One thing is for sure:

You can't have a radio show without radio people.

Period.

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PUBLISHERS URGE MORE PUBLIC AID FOR NEWSPAPERS, BUT H.R. 3602 WON'T SOLVE THEIR PROBLEMS

The push for government support for newspaper continues and this week publishers and their supporters—including the Newspaper Association of America—went before the House Joint Economic Committee detailing how the current economic climate has harmed their finances and arguing for preferential changes to tax and pension laws. They asked to be allowed to extend application of the net operating loss provisions from 2 years to 5 years and for changes in laws to allow them to underfund pension funds for a greater period of time. Both would improve their operating performance and balance sheets.

This is a case of the newspaper industry seeking long-term business benefits to solve a short-term crisis caused by poor management decisions and the recession. The leading newspaper firms and their representatives are making concerted efforts to dupe legislators and the public into believing their troubles are part of the general trends in the industry, rather than the result of management decisions and the financial crisis that is diminishing. If the provisions are passed, the public treasury will be diminished for years to come and risks for employee pensions will be increased.

Newspaper executives and other witnesses were sympathetically treated at the hearing this week, but it is unclear whether they will be able to achieve the policies they advocated.

Another proposal that the commercial firms are uninterested in themselves, but expressed sympathy for, would broadening laws regarding charities to include not-for-profit newspapers. Their support was astute because the House Joint Economic Committee’s chair, Rep. Carolyn Maloney (D-NY), has introduced her own bill (H.R. 3602) to allow newspapers to become tax exempt under section 501(C)(3) of the tax code. Her bill somewhat mirror Senate bill 673 by Sen. Benjamin Cardin, D-Md., that was discussed earlier in this blog (Analysis of the Newspaper Revitalization Act, http://themediabusiness.blogspot.com/2009/03/analysis-of-newspaper-revitalization.html). There are some differences in Maloney’s bill that need to be highlighted.

Under Section (b) of H.R. 3602, companies would qualify for tax exempt status through a 3-part test.

First, companies would have to be “publishing on a regular basis a newspaper of general circulation” to qualify. This provision stipulates no periodicity so it does not limit qualification to dailies, which are experiencing the greatest economic and financial difficulties. This language provides the exemption only to established papers and would thus exclude startups until after they were regularly publishing, requiring startups to initially obtain financing through other than tax-deductible donations.

The language in this first test requires that publications be “a newspaper of general circulation” and this will lead to questions whether it applies to newspapers focused on specific audiences in a community—such as African Americans or senior citizens—or papers providing more focused content—such as news and information for a specific neighborhood or devoted solely to politics or crime. This ambiguity could be used by IRS examiners against some papers and could be used by some publishers to take advantage of a policy not intended for them.

The second provision requires that qualifying papers publish “local, national or international stories of interest to the general public and the distribution of such newspaper is necessary or valuable in achieving an educational purpose.” The provision regarding type of coverage is better than the Senate bill because it does not require publication of all 3 types of news—something not done in many local papers.

The third provision requires that content preparation “follows methods generally accepted as educational in character.” This provision is exceedingly vague and its application is unclear because it does not deal with the content of the paper, but with the preparation of the paper. How “the preparation of the material” follows accepted educational methods would seem to require that the papers be part of an educational activity, such as being linked to training in schools or universities. This would highly limit the applicability of the bill to existing newspaper operations.

Like the Senate bill, Section (c) permits papers to carry advertising “to the extent that such newspaper does not exceed the space allotted to fulfilling the educational purposes of such qualified newspaper corporation.” This would require papers to publish no more than an equal amount of editorial and advertising content. This is lower than the limit of postal service limit (75%) and would force most existing papers to drop about 1/3 of their existing advertising or incur damaging costs by printing more news pages than they do now. This would cripple the finances of any daily paper.

Finally, Section (d) of the legislation permits qualified companies to accept tax deductable charitable donations to support their operations.

This bill, like its Senate predecessor, is likely to have limited affects on the newspaper industry because it will not interest newspaper owners because most of their papers are producing profits and it will preclude their abilities to benefit from greater profits when the advertising recovery occurs.

There is a place for not-for-profit media and journalism, but H.R. 3602 S. 673 will not do much to improve coverage or the overall condition newspaper industry. It is likely to continue to gain support from the commercial newspaper industry, however, because it can be used to provide cover for government policies that they really want.

The Future of Radio with New Media

The attendees at this year's NAB radio gathering in Philadelphia heard over and over again that new media is accounting for more and more of their advertising revenue.

No one seems to know how much of radio's ad pie new media will eventually eat and it appears to me very few of the big bosses (the only ones who are attending this conclave among the major consolidators) care.

Avoiding bankruptcy -- sure, they care.

Reinventing the wheel -- absolutely, they are into it.

Meanwhile, the companies that pander to the radio industry (I could have said sell things to the radio industry), are cranking out happy horseshit at a record pace at a time when they need to get real.

For example, Nielsen saying that radio usage is strong among younger demos -- 18-34 in 52 markets they rate. An amazing and unbelievable (and I accentuate unbelievable) 21.5 hours of listening each week in line with people aged 12+.

And Nielsen wants you to believe their audience measurement with conclusions like this?

Go out and look around -- which 18-34 year old is listening to a radio in lieu of an iPod or instead of texting? But happy horseshit plays well at radio conventions -- to some people, not all.

To those who know something is seriously wrong, they aren't buying this stuff.

Arbitron did no better.

They issued the usual "90% of all people are listening to radio" edict -- well then, damn, why is everything so grim? Are we to believe things are okay while new media is stealing radio ad dollars?

Is it just the recession or what?

Or the findings from a survey Vision Critical Radio conducted that has anointed the new Apple Nano with a built in FM tuner as the most encouraging thing to happen to radio since the iPod.

Isn't the Nano rumored to be replaced within a year by a new product as iPod sales continue to decline at the expense of iPhone sales?

Anyway ...

The survey of 3,000 consumers 18+ shows "encouraging interest in the interactive features of the FM tuner among the younger listeners who are the heaviest users of mp3 players".

The research asked the question "might be interested" and they give you this premature and misleading conclusion.

STOP ALREADY!

Let's get real.

If new media is eating radio's lunch as the bankers told us yesterday, radio cannot be business as usual.

You see, radio is barely involved in new media. They spend nothing or next to nothing on their digital future. Where it exists, smaller radio operators are beginning to generate revenue. They call it non-traditional. I call it non-B.S. revenue.

You can't have it both ways -- is what I am saying.

If anything made my visit to this year's NAB worthwhile, it was that there are so many smaller operators who attended -- and even sent associates -- who already know that what they hear from the so called experts is tantamount to pandering.

Pandering serves no purpose. It's okay to admit a problem and radio has a big one.

No, not that one!

It has lost the next generation.

To regain the next generation, successful radio brands will have to invest in serious new media initiatives while it is improving its local terrestrial radio service.

Radio has five to seven years left as a free cash flow gorilla.

But with 80 million Gen Yers coming of age who prefer and expect content on demand, radio broadcasters will have to become content providers where this generation now gets their entertainment or else they will head into the sunset with their towers and transmitters.

There is nothing to be upset about. No reason to pander to you.

Radio is the most prolific supplier of 24/7 content on the face of the earth -- now.

We can add video.

Create new streams of programming for the Internet and mobile spaces.

Build popular apps that have nothing to do with replicating our terrestrial signals.

For example, a high school sports app that covers every scholastic sports event in your region. Don't look now but ESPN is already testing that concept. They are hiring. Are radio stations?

Same for news -- 85258 is my Scottsdale zip code. Some day I will type 85258 and get a radio content provider who gives me news, pictures, videos etc for where I live.

Music -- well, we're working on that once both sides come to their senses and encourage the use of music by broadcasters in new spaces.

And the social networking aspects are loaded with possibilities.

What we can't do is only 24/7 broadcasting or streaming and call that the future.

The people I stood with at the back of the meeting rooms during the NAB sessions or in the hallways know how to do this.

The handful of misguided and ego-inflated CEOs who have lost their self-respect and are now on their way to losing their radio groups are the obstacle -- not radio people.

Churning out happy talk to pander to people who aren't buying it makes companies look like fools.

The joke is on the consolidators -- not the good and talented radio people -- some of whom I met at the NAB who are shaking their heads in amazement as to how such a good business wound up in the hands of a few bad apples.

The good Apple has a capital "A" -- and they get it. We need to think more like them than the bad apples who have put a serious hurt on radio's ability to be part of the digital future.

(By the way, I had an interesting talk with Cumulus CEO Lew Dickey at the NAB. I will tell you my impressions soon if you check back)

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Banks On Radio Vulture Patrol

By Jerry Del Colliano

(Shown between "Doc" Fuller, left and Barry O'Brien at the Philly NAB Radio Show)

The NAB Radio Show now in progress in Philadelphia is like an old Italian wake -- it lasts three days and is very depressing.

Not that the NAB isn't trying to put on a good show or that those in attendance wouldn't like to hear better news, but this convention is grim this year.

The linchpin for the entire gathering was the Dickstein Shapiro breakfast bright and early in the morning on day one.

The usual suspects were on the panel and the usual listeners were hearing that in essence no one knows what is going to happen.

Radio will definitely rebound, but will it rebound enough -- said one?

New media is definitely taking media dollars from radio but will it continue -- another expert said.

But the real gall came when these bankers were outlining for the poor beleaguered broadcasters in the audience, three scenarios for the future.

One, the banks buy the debt of the consolidators which is quite substantial and they -- the banks -- walk away with ownership control of troubled radio groups. One panelist said that this is not necessarily the worst option because the groups would be free to operate their cash flow business in a favorable climate of little to no debt.

Not necessarily the worst option for whom?

In this case, the banks helped radio finance consolidation, the operators fumbled the ball and it's first down all over again for investment banks who get control of the game. They can run it. Sell off the pieces in a better climate and even keep the people who ruined these groups in place.

After all, it's better to stay close to the enemies you know than the friends who actually know how to run stations -- a sick philosophy that seems prevalent in the money community.

Isn't Michael Douglas playing Gordon Gekko filming the Wall Street 2 just 90 miles to the north in New York City?

The second option according to the experts I heard was refinance the debt -- as Citadel is trying to do -- but that this was not deemed the best option.

Not the best option for whom?

The banks or the owners?

Keep in mind that the banks always make their fees even when they screw up.

The last option was "kick the can" along as best as you can which probably won't work -- according to one Dickstein Shapiro expert.

See what I mean?

An Italian wake.

Where's the good news?

When is the mourning going to be over?

One career radio exec said to me that he was coming away from this NAB with the distinct feeling that investment banks are on "vulture patrol" -- his words -- ready to bend the industry over one more time and -- well, you know -- have its way by supplying one more round of financing in order to wrestle the stations away from bumbling consolidators.

And wouldn't that be a fitting end to consolidation -- at least for the investment banks?

But for the radio industry -- it is the worst possible alternative.

The sooner radio stations are returned to owners who want to buy them, operate them locally and take them into the digital future, the mourning can end -- the body of consolidation buried -- and resurrection begins.

At the Dickstein day starter I was standing next to one of my readers, Ben Downs, General Manager of Bryan Broadcasting that runs a handful of local stations and runs them damn well from what I hear.

All local.

And no voice tracking.

Digital products that are actually generating money this early into the digital revolution.

Radio needs more owners who are operators. Fewer Tricky Dickeys, Fagreed Sulemans and Slogan Hogans.

The investment banking business is on vulture patrol but it could be said by some small market broadcasters that they are actually on sucker patrol because in the end consolidators have no choice but to submit to the banks that hold the answer to their debt problems.

It's a detour -- a time delay -- that hurts our medium as new media emerges.

At the same convention where Arbitron reveals a study that says 90% of America listens to radio, you wonder why everyone is so glum?

But that's why Kool-Aid comes in many flavors and radio consolidators are suddenly very thirsty again.

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How Consolidation Could Have Worked

I never for even one minute thought radio consolidation would work right from the get go.

But, even I didn't believe radio consolidation would have turned out this bad.

Citadel is negotiating its debt covenant to avoid bankruptcy again even as I write this. Clear Channel's solvency is no slam dunk. And Cumulus, the other one of the big three consolidators, has one foot in the grave and the other on a banana peel.

It didn't have to be this way.

All the power didn't have to wind up in the hands of a few radio execs worshiping at the feet of Wall Street bankers. There could have been a "Plan B" just in case something went wrong -- like a recession, or an election where elected officials would put the brakes on further consolidation. The consolidators didn't have to borrow so much to buy stations they coveted at artificially inflated prices and astronomical interest rates.

But that's all water over the damn now.

Consolidation could have worked if regulators and legislators hadn't given away the entire radio industry to a few greedy people. In effect, radio consolidation was the forerunner to the greed that destroyed the greater economy.

If you're with me so far, consider how the radio industry could have been deregulated in a more responsible way that looked out for the interest of Main Street rather than just Wall Street.

Imagine if ...

1. The cap on stations that could be owned by one company in any given market was two stations -- you pick them, two AMs, two FMs, one of both. But owners would be free to buy in as many markets as they liked. That would leave a lot of stations to buy in many cities but it would preserve the local feel of radio by guaranteeing that one owner from Texas couldn't monopolize radio in every major market and many medium and small ones as well.

2. If each radio station by law had to have its own general manager, sales manager, program director, chief engineer, etc. No joint staffs that have proven to be no more effective other than to save the owners money. But that was a vicious cycle anyway -- save money at the expense of people, put out a lesser product, cut more people. Wait until you see the next round of cuts that Clear Channel, Cumulus, Citadel and their followers will start making before and through the end of the year. Obviously, lean mean operations is becoming more mean than lean.

3. And if the two stations you could own in a market had to run separately and compete with each other. Just think -- one owner owns two stations, hires separate personnel but can't run the stations from remote locations and local management must guarantee that the two stations they own must compete with each other. No synergies of scale, no national repeater radio. If you believe radio can't afford to be run separately, local and full staffed than you have what exists today -- repeater radio that has no appeal to the next generation and even erosion of listening by older audiences.

Stay with me ... it could have been better yet ...

4. What if at least 80% of the programming had to be locally produced? This would mean voice tracking would be a cost cutting tool but not a deal breaker for the audience. Imagine the weekend shows and special programs that enriched radio in earlier years. It's pure fantasy that radio had to voice track to save money. Radio never overpaid its talent and there was always plenty of it waiting to work in local radio.

5. If public affairs and/or news programming were once again required to hold a license of the public trust. That in and of itself would set the standard for local radio in the age of responsible consolidation.

6. And if license renewals were mandated every three years with owners having to substantiate that it served the public interest, convenience and necessity instead of having their licenses rubber stamped by some bureaucrat without regard to whether the licensee lived up to its fiduciary responsibilities.

7. And in return if broadcasters were guaranteed that no so-called Fairness Doctrine would be imposed on license holders because the very setup of consolidation as I am describing it would further guarantee that enough voices would be available for listeners to hear all sides to every issue.

8. And consolidators get to keep the profits from all the stations that they could legally own so long as they were run individually and not from remote Siberia.

Bet lots of companies would of gone for this deal even if the "operators" we wound up with (wink/wink -if you get my drift) would have stayed away.

Bet the radio owners under this type of "consolidation" would have stayed out of debt because responsible consolidation means having to have the skills to operate the local licensed stations not just the ability to talk bankers into financing the acquisition of more properties.

That means an industry with more groups like Bonneville and Cox and fewer scorched earth operators like Cumulus, Citadel and Clear Channel.

And a radio industry that wasn't dying before its time.

And one poised with talented people who would have figured out how to take the greatest content providers in the world and also direct them towards the Internet, mobile and social networking.

And my idea of responsible is not the only one that would have worked better.

Yours might, too.

But the one that didn't work was the one radio has been saddled with for 13 years with no hope of relief any time soon.

What a pity.

Management guru Peter Drucker always said consolidation doesn't work.

What makes radio CEOs smarter than Peter Drucker?

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Generational Radio Changes

It used to be that when I went to the beach I saw -- and heard -- boom boxes blaring local radio stations. And those stations were great! Young DJs having fun on the radio.

Each year it is becoming harder to find a visible radio on the beach owned by anyone -- of any age.

The world is changing and I wonder sometimes whether the people running the radio industry are as interested in this important fact as they are trying to save their own necks.

As I warned a long time ago, Citadel seems on the brink of some type of bankruptcy reorganization despite the fact that it made a minor debt payment last week and held off the big filing for a few more months.

But Citadel will likely not come up with the $150 million it needs to stay clear of loan covenants by January 15th. Bankruptcy is a foregone conclusion by those I consult on Wall Street.

That means more layoffs are likely in advance of the new year and a court will probably have to get involved in sorting out the results of Citadel's fiscal mismanagement.

Maybe some stations will become available at realistic prices this time.

Clear Channel and Cumulus, the other two big boys are not far behind in bankruptcy.

Yet, most of the people who are running stations and/or who have run stations know that it is long past the time to look to Wall Street when Main Street is exhibiting so much meaningful change.

While these good former employees may be on the beach (so to speak), they still know how not to drown which is more than can be said about their employers.

So I thought you might be interested in my generational observations on the beach that are perhaps a microcosm of this monumental sociological change that is being ignored by radio's biggest owners and the companies that mimic them.

1. iPods, not radio, are the apparent prevalent source of mobile music entertainment these days. I observed young people walking together with all of them listening to their iPods as they strolled on the beach -- not talking to each other. Even older people had iPods where there were music listeners. Jogging with iPod buds in their ears was more common than running in the surf and listening to the ocean. Maybe there is an app for ocean sounds -- oh, there is!

2. No radios were witnessed in a week of bumming on the beach. Keep in mind that I was at Long Beach Island after Labor Day, the traditional time young people return to school in the east. Oh, no radios by older people as well.

3. Cell phones were on everywhere. Blackberries, iPhones, smartphones, cell phones -- boy, have we ruined a getaway. Me, too. I stood in the surf and made notes on my iPhone for business, personal, the book I am writing about unlocking human potential and notes for these pieces. When an idea came to me, I walked back far enough away from the water (in case I dropped my iPhone) and punched away at notes. I would then walk back into the surf awaiting my next "capturable" thought. I know, I wouldn't go on vacation with me either! I used to use a legal pad. Everyone was on the phone as they are seemingly everywhere else. Forget the sunset or the ocean sounds, no exemption from a cell phone. My wife observed one young girl staying back while her friends went into the water up to their knees. She was texting. Texting never stops.

4. I usually visit the Inlet Deli where my friend Mike Anderson's daughter, Jennifer, used to work when she was a teenager. What clue did the young gal have that I was over 40 (other than the obvious) when I bought three newspapers to read on the beach. Used to be you couldn't find a paper unless you went early in the day. Now, you've got plenty to wrap fish in because fewer people buy them (some habits are hard to break even for a cellular Renaissance man). I observed some people reading books (older), and not one person reading a paper on a calm day. I saw some older folks using a Kindle on the flight to Philly, but that's another story. Why read when we can connect, see and hear?

5. I was able to monitor the Eagles-Saints game Sunday -- all day -- on my iPod and the Jets fans who shared this beach located equidistant between Philadelphia and New York were also snagged peeking. The Giants fans were free because their team played Sunday night -- unless they wanted to know how other NFL teams were doing. And during the USC game, I got the urge to throw my phone into the sea -- don't ask.

6. For two days the weather was so bad on this barrier island that there were predictions of tidal flooding, high winds, etc. When I turned to Harvey Cedars emergency radio station -- you know, the one that would lead an evacuation over the only bridge that connects the island with the mainland -- they had minimal weather information and mostly public service announcements. Local radio stations did better, but weather and emergency info on demand took the day -- smart phone apps and Harvey Cedar's own municipal emergency site that it did keep current.

Many of my readers confirm or enhance observations like these when I write about how massive the sociological switch is from traditional media to online, mobile and social networking sites.

What is worthy of note is that although the next generation lead this socio-techno change, Gen X and even baby boomers are also modifying their habits. They want it when they want it as well -- on demand.

All this doesn't seem to worry my programming, managerial or sales friends who are being forced to do radio the big "C" way (Cumulus, Clear Channel, Citadel).

They know that radio people have all the skills necessary to do better terrestrial broadcasting for the available audience as well as port their skills over to new media.

Their bosses may not know or care right now - but they know.

To borrow a salty analogy: they know the wisdom to fish where there are fish.

We can do this -- and will -- once bankruptcy kills off one or more of the reasons the radio industry is failing to respond to generational media changes currently taking place.

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7 Ways to Save Radio Now

The new National Association of Broadcasters CEO is going to be introduced to his constituents this week at the NAB's annual Radio Show in Philadelphia.

There is little time to waste righting the ship from the ravages of radio consolidation.

I know what you know about Gordon Smith, a former Republican senator from Oregon but if Bonneville's Bruce Reese had an influence in this choice -- after all, Reese headed the search committee -- then I am willing to cut Smith some slack and wish him the best of luck.

At the same time, I've got some suggestions for Smith -- a man whose roots are in radio -- that his new agenda at the NAB should embrace.

There is no time for business as usual.

I know. I know.

Associations are all about maintaining the status quo and protecting the shortsighted members for whom the CEO works.

But if Gordon Smith chooses that road, there will be no NAB in the next ten years and if one remains, it will be one that has been rendered powerless.

So here are seven suggestions as to how the new NAB CEO can save the radio industry and with the NAB's Radio Show this week, now couldn't be a better time to have a public discussion on priorities.

1. Negotiate with the record labels to gain advantageous rates for any terrestrial radio station doing new media projects

My friends in the music industry are having radio for lunch. They are just better at lobbying, better than radio at rallying the cause for more royalties. The RIAA and MusicFirst Coalition have already offered to work on a compromise with the new NAB head.

Look, I will always believe that radio deserves a free pass when it comes to the performance tax exemption because it has given the labels a free ride in publicity from which to sell its products.

But ... that is increasingly looking like a lost cause.

A growing segment of the public doesn't back radio's position. Even though the NAB has been able to hold a slim lead in arm twisting among Congressional representatives, it's about even with members of Congress backing the performers demand for repeal of radio's exemption.

If Gordon Smith decides to fight until the last person is standing on this issue, it will be like Custer's Last Stand. Radio is going to lose the battle over more royalties, sad to say, so it's time to negotiate for a sweet deal before the industry only gets to pay more tax. That is, if you agree with me that royalties are coming to a radio station near you, then get something back in return.

What?

Low, long-term and very favorable rates for terrestrial broadcasters who want to start new content streams on the Internet -- rates separate and apart from other interests. This is one of the places radio operators will have to go for their future and now is a good time to nail down low rates and favorable conditions that will give broadcasters an edge over other competitors in that space.

2. Build strength through small operators

Past NAB CEOs have kissed the butts of the "big boys" for too long.

Look around, the "big boy"s are going down. Radio may very well be redistributed to smaller operators who want to make a last ditch try at terrestrial radio and new media together as a business brand. What a great time for the NAB to embrace the needs and concerns of these small or medium operators who are going to have to mop up the mess Clear Channel, Citadel, Cumulus and some predecessors have left for them.

3. Encourage small ownership

The future of radio -- if there is to be one -- is in smaller companies doing local radio well -- and whether they know it or not -- also doing original content as webcasters, mobile content providers and social network engineers.

Gordon Smith should lobby his former associates in Congress in whatever way would be helpful to give a break to small and medium operators stepping in to save radio. This means tax breaks (I'm sounding like a Republican) and government oversight but not heavy regulation (I'm sounding like a Democrat).

Loans for locals looking to preserve local broadcasting in smaller markets.

4. Do not oppose some deregulation

I can just see this scenario coming -- the first Smith press release from the NAB trying to fight deregulation.

Consolidation as it was implemented was wrong and didn't work.

But if the NAB comes out in favor of the status quo (which is likely), it will not be cooperating with the inevitable which is that either radio stations wind up in the hands of smaller local groups with some responsible oversight or it won't last the way it is configured now.

What we have now is unacceptable and if the NAB espouses that, the NAB will be unacceptable.

5. Fight against the so-called Fairness Doctrine

No Fairness Doctrine -- not now, not ever.

It won't be needed if the NAB fights for local operators because these stations will guarantee that enough local voices will he heard on every issue.

This is non-negotiable as as tenet of our industry's valued and hard fought freedom of speech.

I expect Gordon Smith to lead this fight for as long as it takes and keep in mind that freedom of speech is always under attack -- unfortunately.

6. Get podcasting royalties that are favorable as podcasting is the next radio

Look around, no boom boxes -- just iPods and mobile devices. The next radio will be podcasting and right now podcasters can't even play music without going broke in a confusing set of rules pertaining to music on podcasts.

If podcasting is to be a key element of radio's future, now is the time to lead the fight for fair, low and long-term rates to kick start the industry.

7. Pitch a big tent to become the National Association of Broadcasters and Content Providers

There are 80 million new listeners coming of age in the next generation. It's fair to say they are not big radio listeners -- they are mobile phone users, iPod owners and social networking devotees. Radio is morphing into other things and this is as good a time as any to welcome in new media to create one strong association for like-minded media interests.

If you feel as I do that the appointment of Gordon Smith is a good time to reset the agenda for the interests of the real radio industry and not just more of the same for consolidators, then feel free to forward this piece to your friends and associates.

And make these and other priorities known to the new NAB -- after all, it's your trade group. Why not show them who the boss is?

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A Manager Grades Clear Channel

One of the great things about living in this country and being broadcasters is that we have freedom of expression.

And since the Internet has come along, we have seen so many diverse views on almost everything that it takes Google to help us search all the content.

Here in this space, I have written about my love for the radio industry and its people, disdain for consolidation and its mismanagers and concern that the best content providers ever are missing the digital revolution.

Some days I try to use humor.

Some days I can barely hide my outrage about what the biggest consolidators are doing to ruin a perfectly good radio industry. Often I try to share what I have learned about generational and new media.

I get a lot of email and love every bit of it. You make me think, suggest story ideas (about one-third of my pieces are inspired by readers) and express differing views all in good spirit and kindness. In fact, you have also given me great ideas like doing face-to-face media solutions labs (more at the end of this piece).

It is so much fun I never want to take a day off. I’m on vacation for two weeks but not on vacation from this space. I have an understanding wife. I’m enjoying my beloved Jersey shore currently ahead of the NAB Radio Show to see old friends and make new ones. I'll do a keynote for my friend Kurt Hanson, a person who saw the digital revolution coming before most of us.

Maybe I’ll even get to see Lew Dickey at the NAB so I can ask him why he has changed so much in the 15 years I have known him. Before consolidation, I never saw the side of Lew that we are all seeing now.

Recently I got an email from a Clear Channel employee that I thought was so enlightening that I wanted to share parts of it with you.

Keep in mind that this is one person’s opinion. I have redacted information that could put this person in jeopardy because as much as we enjoy free speech in our country, radio's three consolidation bullies have more hot air in them than those bloated balloons on the floats at the Macy’s New York Thanksgiving Day Parade.

Also keep in mind that John Hogan, while I disagree with him in his stewardship of Clear Channel, did get elevated to the top post and whether you and I agree with him or not he has been employed and rehired for quite a number of years.

Here’s the email from a Clear Channel executive -- excerpted with permission -- with my thoughts interspersed:

“One thing you should remember about CC is that it is still full of great radio people who know what to do. Great supervisors like Dave Crowl for example is an excellent leader”.

Amen to that. Clear Channel's great assets went far beyond licenses, transmitters and towers and many excellent people remain at the helm in spite of layoffs and cutbacks.

“The article you did recently on the "rate increase" directed out of San Antonio is a bit off; This is one region, the George Toulas region, he said in a meeting in Dallas that he was challenging us not to go less than 15% below last year Average minute rate. Where he screwed up was when he put some of us who were not up that standard in a group and during a conference call said 'Apparently some of you weren't listening'. I will tell you in this environment, we all are listening very intently...Most of the company and fellow managers think this is just completely crazy. Just like the "synergy" idea where we sold billboards and signs in Amphitheatres and the horrible LIM (Less is More) idea that did nothing positive”.

It seems consolidators love the idea of pressuring sales – not just Clear Channel. The more they apply the whip, the more they think the troops will respond. Here is yet more evidence that the concept being applied does not work.

“The big regional guys like Toulas, who came to CC out of retirement, are all competing for big bonuses and the recognition of beating another region. Its not working, less than half of the CC stations actually beat their market revenue last month”.

It is always helpful to keep in mind the hidden goals of the executives who hold the whip in their hand.

“Premium content stations; Nothing but horror stories on ratings and everything else, stations have switched to it then switched right back to local when they heard it. Dramatically changed some stations with no regard for history etc. We pulled it off of our … station when the jocks all sounded like they were from up north, just crap thats (sic) all it is, might as well go satellite”.

We’re seeing some push back by Clear Channel on its "national is local" initiative – most notably in Detroit where CBS’s talker is eating “The Fan” for lunch. Clear Channel dumped ESPN Repeater Radio and hired back local hosts. There is hope that they will come to their senses.

“Since the Bain takeover, decisions are difficult to get the ok on, most of the time your e mail or call is never returned or returned very late. Its not their fault, no one can handle the load these guys are taking”.

“Locally, where I had two sales managers for four stations, and National guy that worked out of another market, plus a DOS. Now I have one sales Manager, I handle National and no DOS…plus half the sales dept I used to have. If the number one seller in this market wanted to work for me, I probably couldn’t hire them”.

Less is more will never work when fewer sales people are expected to sell greater ad contracts. John Hogan earned his nickname "Slogan" from "Less is More" although it may wind up being the epitaph for his Clear Channel years.

“I do believe that their is a light at the end of all this, most of us believe the true operators will come back and then perhaps we will enjoy going to work every day”.

There is a future but not with just terrestrial radio alone. Terrestrial radio is a good business for the next five to seven years if debt service doesn’t eat up all that free cash flow. If owners can buy properties at lower and manageable multiples they can run radio for a profit.

But a growth industry radio will never once again be.

Unless …

It gets a mobile, Internet and social network strategy and invests at least one-third of its operating budget into developing this digital space. That's at least one-third of a budget that consolidators can barely spend on the status quo.

Wait until you see the firings that are coming in the next few months at Clear Channel, Cumulus and probably even Citadel -- they can't make their numbers and all three risk running into their loan covenant agreement. People used to challenge my assertion that bankruptcy awaits them the same way they challenged my disdain for consolidation. Now ... well, even the happy talk places are being forced to get real.

Sorry. Don’t want to say it, but it is true.

But -- there is hope on the horizon because the likes of Slogan Hogan and his crew and the screw ups at Citadel and Cumulus will not be present for the digital future.

Radio people will.

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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 paid...so 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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New Cumulus Commission Cuts

The Dickey Dynasty is at it again – snip, snip, cut, cut – all in an effort to save their bacon from bankruptcy.

This time, CEO Lew Dickey has a new trick up his sleeve and it’s one he’s apparently convinced will work well. Nevermind that Dickey has no real radio sales credentials – he’s gone and done it anyway.

Cumulus is cutting sales commissions and they are doing it in the same mean-spirited way that Dickey Do has been running the once proud and promising Cumulus assets.

Here’s the deal according to some Cumulus troops who the company apparently failed to bind and gag enough to keep them quiet.

1. Cumulus is apparently holding back commissions in some markets – whether this is legal or not could be tested if and when an aggrieved account executive quits and hires an attorney.

2. Commission changes are now reportedly being held back in many if not all markets. Some real fine market managers fought the good fight while others caved to save their butts.

3. Local direct commissions are now 20% -- down from 25%.

4. Existing accounts are now 16% -- down from 20%.

5. Agency remains at 9% but agency business is being funneled to regional sales managers. It appears that the fortunate account execs who have been able to keep their clients is in situations which are considered make or break. In other words, if Cumulus fears the client will scream bloody murder. We have seen some evidence of that where Dickey Do & the Don’ts have had to alter their grand plan.

6. Some AE’s now selling in the 3rd quarter are at risk of not making their numbers – after all the content has never been more watered down and we do have a recessionary economy. Nonetheless they are feeling the pressure of Atlanta – an obvious offshoot of cutting commissions – and fear for their livelihood. Even though an increasing number of Cumulus employees have told the company to shove their jobs, many have families and have little alternative but to put up with policies made on the moon by bosses who have never been astronauts – so to speak.

Cumulus is not the only radio company fooling around with commissions.

Clear Channel is playing tricks with its sales force bonus structure – but that’s for another day. The point – when radio needs the best effort from their sales people, misguided consolidators take away their career-long incentives and replace them with a higher hurdle to make money for themselves and their families.

But it gets worse.

One brave Cumulus soul tells me what they witnessed (I used “they” to disguise gender because Dickey Do is on a holy jihad against anyone talking about their policies):

“All A/E's were asked what they Honestly expected to bill in September. No Fluff, just straight numbers. After taking the tally, our cluster was short by about (redacted to protect the Cumulus employee) of our must hit for the quarter, per Atlanta. The M.M. and G.S.M took the (sum), divided it out among (the) A/E's and said in addition to what you told us you will bill, you have to ALSO bill this extra… If you don't hit this total number, we will hold back commissions on one billing account in September. They then handed out the added amount and the customer in jeopardy to each A/E”.

For the account execs who recently had their agency business ripped from their hands there are some glum faces at Cumulus.

From the Dickey Do point of view, Cumulus is trying to save money.

No. Not trying.

Have to save money.

Cumulus is dodging their loan covenant restrictions like the other major consolidators beginning with the letter “C”. They overpaid, under strategized, mismanaged and now they apparently are whipping the race off to their imposed finish line even if it kills the horse.

I’ve always said that it is hard to keep the human spirit down. You’ve heard me say they couldn’t keep people behind the Berlin Wall and eventually people who are oppressed rise up.

One Cumulus Dickey rebel wrote recently:

“I will say that you are a (sic) underground must read for all of us. We don’t agree with everything lock step, but your (sic) a straight shooter. It's un-spoken policy that if the Market Manager see's your stuff up our laptop's, it will take our ass a week to catch up with us we will be fired so fast”.

Dickey Do and the Don’ts are taking it personally.

Their employees are frustrated and have nowhere to turn. Few report on business instead of the bad business practices that are being utilized by Cumulus, Clear Channel and Citadel.

When sales people have to spend almost two selling days (in hours) dialing for dollars in so called Cumulus “CSOS” telemarketing calls instead of good old fashioned meet and greet sales calls, you can see that this is headed nowhere good.

Cumulus employees should stay safe and do what they have been doing all along – giving 100% effort to the company. But they don’t have to like it.

And because a few brave folks have spoken up, we can all learn how not to run a radio sales operation.

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The Power of Incentives for Radio & Records

By Jerry Del Colliano

You're asking, okay Jerry -- if Lew Dickey is really screwing up at Cumulus right now making it the Worst Radio Group -- tell me how he could do better.

Or at least, how I can avoid being like Cumulus.

Okay.

The good news is that there is a better way to motivate, stimulate and operate -- a fairer way that would ensure that the radio industry would be up to the challenge of new technology and changing generational needs.

This morning, I'd like to share with you the "Power of Incentives" inspired by Dan Pink, author of books on changing the world of work.

I'll be narrating these points as I look at the decaying radio and music industries and I believe you'll do as I did -- come away with a better understanding of what went wrong and what it will take to make it right again.

Is that positive enough?

For Pink it all comes down to three words -

Autonomy.

Mastery.

Purpose.

Pink can obviously prove that what Dickey Do, his brethren John Slogan Hogan and Fagreed Suleman are calling management is really mismanagement.

But you may be surprised by the solution. You may come away with a different view on how to manage, budget and motivate even if the three biggest consolidators in radio do not.

1. Research shows that it takes three and a half minutes longer to solve a problem with incentives. That's right. Dickey is right and everyone else is wrong, right? Not quite. The research Dan Pink cites shows that these traditionally known incentives did not work as well as no incentive at all (Cumulus, Clear Channel, Citadel) because they are contingent.

2. Carrots and sticks may have worked in the past -- although there is a carrot shortage at the three biggest consolidators -- but today they not only don't work but do great harm. Is that possible? Can an incentive-based approach actually be worse than a Dickey-based approach?

3. Traditional rewards may still work where there is a clear set of rules and a clear destination, but such an approach tends to narrow our focus and restrict our possibilities.

4. Most problems don't have a single set of rules or a single solution. Teach in college labs as I have done and it doesn't take 20 minutes to see that you can't impose rules and restrictions on the next generation. Try it at your own peril. Therefore "If-Then" rewards no longer work. See, Dickey Do is way ahead of his time. Stop mocking him.

5. Once a task calls for "even a rudimentary cognitive skill", a larger reward led to a poorer performance. That's what MIT, Carnegie Mellon and The University of Chicago discovered in this research sponsored by The U.S. Federal Reserve. In eight of nine tasks examined across three experiments, higher incentives led to worse performance. Even the prestigious London School of Economics weighed in: "we find that financial incentives can result in a negative impact on overall performance."

I know what you're thinking, where's all that good news you promised us?

The new approach is based on doing things workers like and desire because they are interesting and important

Isn't that the way it used to be in radio before it consolidated, adopted Wall Street's management policies and killed off individual incentives?

I don't know about you but I was not overpaid as a program director. I wasn't even adequately paid. But the general manager rarely came into my office -- let me do what I wanted and sure as hell still held me responsible. Most times he heard contests, promotions after they went on-the-air and new air personalities after I hired them.

Could it be that we had it closer to right before our Harvard grads like Dickey came along because if we are to believe Dan Pink, the new consolidators need to get back to old school quickly.

Autonomy, mastery and purpose are the three new benchmarks of worker productivity and happiness

Paying people an adequate wage that remove the money issues that plague workers is only step one. Then, even though it may appear counter-intuitive to today's managers, you turn them loose and give them autonomy. Freedom to make their own schedules, to work on other things outside their own area of expertise.

Imagine giving a programming person time to fool with sales presentations or new types of sponsorships, or promotions or even what type of work environment the station could adopt.

Radio had the future in its hands.

The so-called Results Only Work Environment -- no schedules, show up when they want or if at all as long as they got the work done.

What good program director doesn't want to be out in the community listening to the station she or he creates and inspires (at least, before consolidation)?

Mastery means the desire to get better at something that matters.

Do you know any programmers, sales manager, account execs, talent, support staff or almost extinct engineers who don't want to make the radio station better? Same for the record industry? Their bosses sop up the bonuses and over-the-top compensation while I could name a handful of record execs with great ideas that actually could make an impact while cooperating with the inevitable -- technology and sociology.

Purpose is a yearning to do what we do in the service of something larger than ourselves.

Every time I hear of a long suffering radio survivor proceeding to do public service in the community after putting up with low pay and abuse at work I get more proof of what I already know -- that radio and record industry people yearn for something larger than themselves.

So even though the Dickeys, Hogans and Sulemans don't offer much in the line of incentives, we now learn that if they did it probably wouldn't matter.

Of course, if they offered autonomy, mastery and purpose perhaps they wouldn't be months away from bankruptcy.

Radio and records had it right. Their Wall Street inspired consolidators got it all wrong.

Knowing the difference? Priceless.

If you have 18 minutes here is Dan Pink in action. If you like it, please forward this piece to your friends to let them know what we do here in this space every day.



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