Companies propped up by hubris and investment capital and overleveraged are doing some odd things.
And then there are seemingly free strategies that may cost their companies money in the future.
So here are a few that we can learn from:
XM as an Active Stock
Now that is the work of the greatest radio salesman of all time, Mel Karmazin.
Let me explain.
Wall Street is gushing all over Sirius XM because his previously conservative “guidance” to analysts has been exceeded for the third time this year. Either analysts are dumber than we think or they just play along.
So Sirius XM suddenly earns a “buy” rating as these lemmings are impressed with the conversion rate from those who had free trial satellite radio subscriptions to paid.
Or as the great salesman was quoted:
“That percentage rose from 44.3% to 46.7.%" making the just-ended second quarter "the best quarter of gross additions, deactivations and net additions since the merger of Sirius and XM in July 2008.”
Keep in mind that this is a company that was knocking on the door of bankruptcy not long ago.
And if that doesn’t put it in perspective for you with all this talk about Sirius XM on the “most active” list, the day it earned that status their stock went up just six cents to just one dollar. One buck. Yesterday Sirius XM closed at 97 cents.
Sirius XM is a virtual platform in the mind of its great sales CEO Mel Karmazin.
Grade: F for effort. A for Karmazin.
The NPR Rebrand As Everything But Radio
Only a newspaper executive like Vivian Schiller (NPR’s CEO) could waste the time and effort on distancing NPR from its real name National Public Radio.
What NPR was good at was accessing new media platforms and all that was done by radio people who preceded Schiller’s regime. No name change was warranted. Many called NPR "NPR" and some still called it National Public Radio. Whatever the expense – whatever the negative value of distancing radio from its radio roots, name a benefit that equals the risk?
Let’s call this dust up “Mourning Edition” and name it after Schiller’s bad strategic move.
Grade: F like in if you just put your name “radio” on the paper, you would have gotten an “A”.
Clear Channel Engineering Like The Culligan Man
Clear Channel is apparently tightening the screws on that non-essential art of engineering, you know, keeping the station on-the-air like it's supposed to be.
"Requests for non emergency repairs, new equipment, etc, will be sent from PDs, managers, etc., to corporate engineering on the official CC corporate engineering discrepancy form. Corporate engineering will determine the best course of action and will dispatch people and resources as needed."
It appears local market engineers no longer have control – that’s surprising, isn’t it? No one else at local radio stations these days seem to have control of anything in the era of bean counters.
In essence, as one of my readers pointed out, local engineers have become repair people. This also apparently eliminates the regional Directors of Engineering.
This wouldn’t be to save money, would it?
You can expect more engineering layoffs once this is in place and perhaps the model will eventually be one engineer bouncing around from market to market when there are emergencies.
Can you imagine what would happen if groups like Clear Channel would put their minds to innovating content the way they brainstorm for ways to cut operations to the bone even if it threatens the very signal on-the-air.
Grade: A for innovative way to save money and hurt yourself.
New Ways to Pay Morning Talent
Tom Taylor had a great piece recently about a Clear Channel experiment to come up with a new way to pay morning talent.
As I remember it, a so-called 30% test was being imposed in at least one market. That is, if the budget for the morning show is more than 30% of the revenue, there must be cuts made.
Tom reported that he has heard of some two-person morning shows getting cut down to one personality.
This idea of tying paychecks to revenue sounds like a Lee and Bain kind of thing – the mentality of an investment bank stuck with being an operator. And it’s oh so dangerous because half of anything is still half – isn’t it?
Here’s a better idea f0r Lee & Bain:
If your morning show brings in 40% of the station's revenue, sign those people to a long-term contract and keep your costs down just like sports teams do when they are operating under an expense cap. Spread the talent expense over a longer period of time while preserving that talent to attract audience.
If your morning show team brings in 50% or more of the stations revenues, get with them and their entourage and find out how to grow the shows popularity and invest more money (sorry, I know that hurt).
Under 40% revenue coming from the morning show, let the local manager have one year to fix it without interference from corporate. If they fail and you haven’t butted in, you can fire them. Most good managers would readily accept this responsibility (but remember I said "haven't butted in").
Under 25% revenue coming from the morning show means you’re carrying Don Imus or some other free import. Stop it right now and do something local.
Grade: Clear Channel’s idea “F”. My idea “A”.
One final thought.
It has been my experience that hands-on operators when allowed to work in an atmosphere of approval and acceptance can come up with more marketable innovative ideas than a handful of CEOs or bankers.
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