I can understand how you and I meeting at this place every day have held the belief that terrestrial radio must get into the mobile Internet business.
And I get that we are having a recession – and that there were staff cutbacks (some warranted in the name of economy and some a poor excuse for greedy owners to improve their earnings).
In the last few months every financial forecast for terrestrial radio’s future projects growth only if new media is involved in their strategies. Look no further than the esteemed PwC and BIA Kelsey assessments for radio.
What part of new media as radio's future don't radio CEOs get?
To be fair, some get it.
Unfortunately, too few.
Here are the major radio groups with the best chance to bolster their terrestrial free cash flow by generating meaningful new media income:
At the top of my list is Bonneville – the group that my readers rated best radio group in a multi-month survey last year.
Bonneville, as we speak, is expanding its new media holdings and budgeting somewhat more than the maximum 3% I accuse most radio companies of spending -- not that they are opening their wallets wide.
New media revenue was up almost 30% during the first quarter of the year for Bonneville. Yet it is a conservative company --- also caught in a bad economy – trying to grow new media without investing a lot in cash or personnel.
Looks like Bonneville soon could meet or exceed 5-7% of their total revenue from new media if things continue to percolate for them.
CBS is another company that has embraced interactive almost from the day Dan Mason returned as radio president.
CBS spends about what Bonneville spends – that’s not an eye popping number – but their interest and understanding of what new media means to the radio division is keen.
Like Bonneville, CBS suffers from not enough budget or people to accelerate new media growth but the mindset is there and they are way ahead of Cumulus, Citadel and a lot of other pure radio companies.
Again, CBS and Bonneville budget an estimated 3% of their annual operating expenses to new media.
Oddly enough, perhaps the earliest adopter and most credible new media company is Emmis -- a radio group ravaged by the recession and in the process of taking the company private.
In full disclosure I must say Emmis financially sponsored two of my student projects while I was a professor at USC. I saw close up that they got it and became early believers.
Emmis flew lots of people in to hear the recommendations of my USC students and – if I must say so – would have been wise to blow up their Los Angeles "Movin’ station (which they did not do) to follow the advice of the student study.
Emmis has had a lot of problems in breadth as well as financially, but they are outstanding on the new media front. Too bad the budget does not match the expertise and the potential reward.
But get this.
Some of my readers tell me stories of mom and pop operators who in the tradition of family businesses have turned to their sons and daughters for advice and free labor. These young people are actually doing a lot to help small and medium market, non-consolidated owners build impressive new media platforms along with local radio.
Medium and small markets often don't get the spotlight, but if you want to see interactive generating revenue, don't get dazzled by the major markets.
Local radio is the nectar of broadcasting – the one thing that can’t be an iPod, the one thing that people will crave if delivered in ways to accommodate their current preferences in technology and sociology.
Clear Channel has a new media initiative but imagine what it could be with money and people working to unlock its potential. Mark Mays explaining a reason why he is stepping down as CEO offers finding someone qualified in new media as the next step.
Plus, show this poor guy the money to do the job.
I hope so for their sake and for the sake of the industry because when your number one operator is cutting local programming, eliminating sales people and ignoring the marketplace when it obviously is embracing new media it can lead to no good.
Here’s the point.
Even stuffy financial analysts say radio will never be a growth industry again without new media – maybe the owners needed to hear it from them rather than us.
And new media isn’t streaming terrestrial radio signals, repurposing terrestrial radio content or doing unremarkable things.
It is social networking first and foremost.
Radio was always a social network before the phrase became popular and ironically it is less so since the Wall Street 2 crew took control of the industry.
Is radio ready to create five-minute programs and distribute them independent of the terrestrial signal?
Ready to understand podcasting as a modern morning show on steroids?
Willing to find new talent and build followings around them using delivery systems most radio operators don’t understand?
Can radio execs possibly believe me when I say some – not all – content will bring in revenue on a paid subscription basis?
So let this Temple grad do the numbers for you.
Next year budget 20% to new media.
Hire radio people back and get the equipment necessary to expand new content and new delivery systems.
Not ready to budget 20%?
Then you will be leaving lots of profit and growth potential on the table. You'll see.
One of my readers said he hoped the people who screwed up the radio industry did not get into new media and the mobile Internet.
Nature, as they say, abhors a vacuum.
Someone will do it.
Terrestrial radio companies are already in place to go first if only they could see the importance enough to think it is worth the investment.
For the rest of us, there’s Mastercard -- my Media Solutions Lab will be back January 27 at the Phoenician in Phoenix to help show the way.
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