The New Radio Morning Show

The radio morning show at one point in time used to account for between 40-60% of an entire radio station’s annual revenue.

Before consolidation, if a successful radio station did not have a great revenue producing morning show, its owners were leaving money on the table.

Consolidators can be blamed for a lot of things, but they did not ruin this lucrative franchise all by themselves. Make no mistake about it, they’re working overtime to kill it off now.

Think about it.

Services used to be a main component of morning radio – traffic, weather, news, school closings, etc. Most morning talent will tell you that there was a reason they saved their “a” material for the 7 o’clock hour. There was so much else to do while the largest audience was waking up.

Today, a Blackberry or iPhone can get you a forecast from your pocket whenever you wake up.

Traffic services abound. Satellite radio has traffic channels. Auto manufacturers got into the service business with OnStar and similar products.

News?

Well, see – I told you consolidators helped do this lucrative morning franchise in. It’s hard to find a station with a full news team and because most do not cover news the rest of the day, morning news has come down to reading what someone else has reported.

Local news is non-existent on the so-called “local” terrestrial radio station. It costs money to do news. Clear Channel is building news pods to feed local news from an out-of-market location to their “local” stations with mispronounced names, communities and all.

But it is worse.

Radio personalities are being exterminated methodically market by market in spite of whether they get top ratings.

So what owners are doing is cutting salaries of the morning talent and their production team to pipe in a “local” show from some non-local place. Brilliant.

Well, well, well …

I hope the consolidators are having a good time saving money. It doesn’t seem to be doing any good. They are hopelessly in debt and plum out of innovative ideas – except installing spy-cams and the like.

You’ve heard me talk about the new radio – podcasting.

Some are dubious perhaps because they don’t understand the generational and production aspects of doing non-radio.

I’ve referred to a client of mine who is plowing ahead into the digital beyond – broke, but not beaten. Frustrated but not discouraged.

Today, they are building a podcast franchise – note the word franchise – before they even launch. They go live within weeks.

And Friday, they closed a large bank in their market for a significant sum of money that is coming out of – well – radio’s budget. We’re talking $15-25,000 range.

This is euphoria.

Fagreed Suleman gets none of the money. The franchise holder keeps 100%. Overhead is low and there is no debt (that was a low blow, I’m sorry).

Lew Dickey can’t even see them perform because they don't have to work in front of his Spy-in-the-sky station cams.

John Hogan’s slogans are not even welcome unless it is “Less is What We’re Going to Get Without Podcast Franchises".

This morning team was an icon for almost 20 years in their market until a consolidator decided to fire them and pocket the change.

Ironic isn’t it?

Because these folks are now in their former owner’s pockets.

They committed to a one-year program – I wanted to change the way they think about podcasting. We worked for five months before the first podcast was even developed. There was lots to do.

Eventually, these very talented radio people began to arrive at a new approach to their digital reincarnation.

It’s a 35-minute podcast.

Local in focus because they know that the Internet is just a delivery system not the content and it can deliver content locally as well as around the world.

No music.

That alone will expand their audience because these folks are proven personalities. No music royalties – nah-nah-nah-NAH-nah to the record labels who are part of the problem, too.

No radio formatics.

And that was hard to do. You should have heard the first time they did a Twitter or Facebook plug. Now, they’ve developed a new way to talk to people – from their mouths to their listeners ears.

No commercials.

Well, at least no recorded commercials.

And only two live reads – and they are not cheap.

By the way, these live reads are not “fact sheet” commercials that get ad libbed. They are very creative works of art that sometimes get interrupted and started again just as people do in the real world.

So, if there are only two live reads max – and 35 minutes of entertainment – how can this franchise make money, you may ask?

That’s where terrestrial radio is in trouble.

Please sit and don’t hurt yourself when I say this, but this talented team is doing local solutions-based marketing for its first advertiser.

Unlike consolidated radio, these novices offered real solutions to the bank’s marketing problems (i.e., how to appeal to younger consumers).

No sales bullshit.

They did the research. Made calls. Did a proposal and got an appointment with the decision maker. Never at any point did they have to clear this with corporate a week in advance as Cumulus salespeople do.

They asked for a half hour.

Played seven minutes of content right from an iPhone.

The prospect said, “My, how I have missed hearing you”.

That was it.

Anyone can do a podcast and a lot of radio people do, but to build a moneymaking franchise takes a new approach to generational media and selling.

Social networking is being employed to regather their loyal audience.

And ancillary forms of sponsorship are being used to break out of the commercial/content conundrum.

One of the most fascinating things I encounter is the comment, “tell us something positive about the future”. I usually say, just about every day I point to the digital future. Reassure everyone in radio that they are best suited to develop the new frontier.

Yet, some radio people hear it but do not listen.

The consolidators don’t want to hear it.

Maybe they’ll begin to listen now.

Podcasting is the new radio.

This former radio team is proving that advertisers in the middle of a bad economy are happy to support a startup podcast at healthy rates because they are not only bringing quality content to where the audience has migrated, but because they are bringing real solutions to the client.

So, next time you read somewhere that one of the consolidators has discovered the Internet or Twitter or Facebook, I know you’ll smile. You may even laugh when they try to scope down the morning show and offer it as a podcast. That’s a no-no because that’s just repurposed radio not innovative podcasting.

The power of radio used to be services and personality.

Until the three-blind-mice of consolidation decided they knew better.

So as you start your Monday, you may hear more bad news about Clear Channel’s failed attempt to get lenders to renegotiate their debt.

You may hear how bankruptcy looms for them, Citadel and Cumulus – just to mention the big ones.

But the little podcast that could will be starting this week preparing for a sales proposal they (the talent) are making to a supermarket chain in their local market.

A radio advertiser tired of being lost in six minute stop sets.

Anyone can podcast, but to build a franchise takes a new approach to generational media and selling.

Overcoming the hurdles put in front of proven radio talent reminds me of the children’s story, “The Little Engine That Could” which is often used to teach children the value of optimism and hard work – in essence, the American dream.

The story details a long train (radio industry) that must be pulled over a high mountain. Various larger enginers (Clear Channel, et al) are called upon to pull the train but for differing reasons they refuse.

Then a call for help is sent to a small engine (two fired morning personalities) that agrees to try. The engine succeeds in pulling the train over the mountain while repeating its motto: "I-think-I-can".

It is apparent that the future of the communications industry whatever it eventually becomes will be in the hands of the “little engines” not the powerful diesels (consolidators).

The imagery is striking if you read the last lines of the story and see how it parallels the journey to the digital beyond:

Very soon they were over the hill and going down the other side. Now they were on the plain again; and the little steam engine could pull her train herself. So she thanked the little engine who had come to help her, and said goodbye. And she went merrily on her way, singing: "I-thought-I-could! I-thought-I-could! I-thought-I-could!"

My friends, radio consolidators are on the wrong track.

You are “the little engine that could” in the new world of digital media.

And today, I am proud of the success of two of our brethren and hopeful that soon more radio people will overcome the bad breaks of radio consolidation.

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Heads Up On Your Next Big Competitor

There's iPod, iPhone, social networking, YouTube, Hulu, texting, smart phones, filesharing.

Now -- there is something on the horizon that may be coming along within months -- certainly within the year -- that will pose a new threat to traditional media -- radio, television and the music industry.

It's a product that Apple is said to be working on right now.

Of course, Apple is tight lipped about anything in its pipeline, but the huge Apple underground says this product is most certainly on the way.

Maybe in June -- or the other traditional Apple product intro dates such as September or January.

So, I'd like to give you a heads up and discuss the ramifications real and imagined.

The next big competitor to radio, TV and the music industry is going to be what some term the Apple iPad.

That may not be the name, but here's what we're hearing.

It's a handheld unit -- larger than the iPhone or iPod and smaller than a laptop computer.

It may download and play movies on the fly, be a cooler Kindle (digital book reader), display newspapers and magazines (probably in color), contain your pictures from iPhoto, allow you to use your apps and may have one or two other surprises from Apple CEO Steve Jobs such as display PDFs and store college textbooks.

You won't see an FM radio on it.

The New York Times recently gave some added credibility to the buzz that Apple is indeed planning to bring this product to market.

I am hearing the price will be around $800 -- could be slightly less -- and rebates may make it a few hundred dollars cheaper as a phone contract will be required.

That's a second phone contract in addition to what most consumers have now for texting, voice and/or surfing the Internet.

Verizon is rumored to be getting this franchise or part of it.

Yes, it will look cool. Does anything from Apple not look cool?

It would be a mistake to dismiss this pivotal product as just an add-on to the iPod or iPhone line because it has the potential to deliver another pounding blow to traditional media that oddly enough is trapped in its former shell (an ugly portable radio, a car radio, unremarkable TV set or CD).

While radio happy talkers cheer every time someone like Larry Wilson buys a small station for cash -- no debt -- they neglect to get real over what a radio station in a world without the next generation can amount to.

Certainly, not a growth business.

The significance of all this is that, ironically enough, if you want to be in the radio business, you'll have to include video and text in what you do.

Radio is an aural industry.

It was established before pictures could be transmitted over television.

Way before the Internet, instant messaging and the current day advantages to modern communication.

However, we have 80 million Gen Y'ers continuing to come of age over the next years and significantly enough this generation never had to choose between audio, video or text. They get any one or all three at a simple click or a swipe.

Painfully for a lot of radio people, this means to stay in the game over the years ahead, radio will have to acquire picture, video and text qualities as part of its audio stream.

If you leave it to radio, they'll be saying, "how can you cram pictures into a radio?". That would be the wrong approach in my opinion. It's actually the opposite, you have to use radio talent to create content for new technology.

If radio wants to be around for the digital future, it will have to have pictures, video and text. And since it is hard to get all of this into a traditional radio, the radio industry better get to work fast on a non-traditional radio device.

Or, better yet ...

Become part of this new Apple iPad (for lack of a better name).

In other words, the radio industry will have to port over to the technology that is being embraced by the marketplace.

Radio CEOs would be the worst people to look towards in this context. They will be doing more of the same in the months ahead -- repeater radio, staff cuts, no innovation, no plan to provide content where the next generation lives.

As many of you know, that's a "do not pass go" card if you've ever seen one.

The record industry would look at an iPad as another place to air music videos.

The sad fact is that after MTV, music videos hit their peak. Of course there are many around today but the significance or desire by the market for music videos has waned.

Record labels would be wise to build a strategy around this new product, but not just music videos. That's not a growth business.

Since the device promises to be interactive, this is a great opportunity to use the iPad as a music discovery device.

Label execs hate Steve Jobs so much they can't see straight and this shortcoming may leave them out of the next big thing.

It shouldn't.

Here's a strategy:

1. Radio companies should build content for the iPad -- and not your watered down morning shows or repurposed terrestrial radio content.

2. Use the employees you are now firing (or have fired) who have great skills in production values to build this new revenue stream for you and be ready to get into the iPad as soon as possible.

3. Think interactive and social networking. The iPad will allow for two-way communication and this is a good thing because there can be no future for any medium that doesn't enable social networking.

4. Radio should be reborn but not as radio programming but content that includes video, audio and text that just happens to be supplied by radio talent.

5. The iPad is a canvass and you can use broad strokes to create new content that can be accessed through it.

6. Record labels should turn the iPad into a music discovery machine that can probably also sell music as Apple TV sells and rents movies. I recommend charging five cents for each new song consumers want to discover and want to own. Then see it, hear it, share it and use it on all your devices for one price.

So, the radio industry can continue to lick its wounds and deny that the market for audio-only programming will not be enough to make it relevant for years to come.

The labels can continue to embarrass themselves by trying to find more ways to get consumers who can download free music, pay $19.95 a month for an all-you-can-eat plan that heretofore has proven to be a dud with consumers.

The point:

There is no reason to deliver only audio or only TV on any device.

There is no reason to read a printed newspaper.

If the Internet had been developed before radio there would have been no need to invent radio -- or for that matter television.

Oddly enough, if radio and TV people do not soon conclude that one dimensional delivery of content is so yesterday, they will be stuck in yesterday forever more.

As you'll keep in mind, I'm sure, the day Apple introduces this product -- sound, vision and text are now one.

Maybe not to traditional media executives.

But there is no doubt young consumers are no longer limiting themselves to one thing.

Even the early iPods morphed into video machines and picture books.

iPhones became roving Internet devices and mini-computers.

Laptops, once word processors, are now also TVs for consumers to watch YouTube and their favorite network programs on Hulu.

You can see the evolutionary trend.

But not in radio and music.

And that will have to change soon or call the Museum of Radio & TV and reserve your place in yesterday.

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Handicapping Radio Bankruptcy

Since consolidation the radio industry has always depended on ample advertising revenue to pump free cash into paying debt.

As long as the major groups could keep the money coming in, they could make payments on the massive debt they accrued by acquiring stations at unrealistically high prices.

Now, many of the major consolidators are in danger of defaulting on their loans.

Unlike in better times, they can't get banks to simply refinance the debt at favorable rates (to the banks!).

Of course, the banks also have a problem.

If they cause a default, they could drive the radio group into bankruptcy and risk walking away with pennies on the dollar. Before it gets to that point, you'll see banks extend loan covenants to postpone the inevitable. I say "postpone the inevitable" because any reworked financing packages are simply pumping more venom into the lifeblood of the consolidated groups.

Recently, I asked a financial analyst to do an analysis of the situation for you. He covers media companies for a well-known investment research firm, and spent more than ten years inside the industry. I wanted to get a grip on which radio groups were the most likely to risk bankruptcy and which ones had more breathing room. I asked him to tell it straight -- no need to be politically correct.

What follows is what I learned.

I am not an analyst and the information contained herein is based on the expert's opinion after crunching the numbers. I have added my interpretation of why various radio groups are in trouble -- that part is my take on how we got here. I've also added in Sirius XM and Clear Channel Outdoor for comparison.

The analysis is objective and sound, and consistent with the conclusions our expert draws in his reports. It projects which companies are in the most dire straights over the next nine months:

Debt/EBITDA is a key metric.

It is the level of debt relative to what a company generates in cash annually. Under 4 is okay. Above 6 is stressed. Above 9, alarm bells sound. Tribune company was at 12x when it defaulted. Notice Spanish Broadcasting below.

Leverage Ratios Debt/EBITDA
Current Ratio
CFO/Revenue

Emmis
8.2
2.8
15.2%

Radio One
7.8
0.96
24.6%

Entercom
3.5
1.37
18.3%

Citadel
7.2
2.1
4.4%

Spanish Broadcasting
17.5
2.9
1.2%

Cumulus
6.4
3.5
14.3%

Clear Channel Outdoor
6.2
2.0
29.8%

Cox
3.1
2.2
25.5%

Sirius-XM
-57.7
0.3
-9.2%

By that metric, Spanish Broadcasting, Sirius XM, Citadel, Emmis, Radio One, and Cumulus are in the greatest distress because they have the highest debt levels relative to their ability to generate cash.

However, Cumulus, Radio One, and Emmis all turn higher portions of their revenue into cash than others.

Radio One is having liquidity issues, based on the fact that its current ratio is less than 1. This can be mitigated, however.

Spanish Broadcasting is in a tight spot.

So, if you're handicapping radio groups from most likely to least likely to default:

At Greatest Risk of Default

Citadel

Mismanaged by CEO Farid Suleman. High income producing ABC properties in jeopardy. National programming platform being installed at some stations contrary to local radio advantage. Over leveraged. Squandering its talent to cut costs with more cutbacks expected. Unfavorable refi agreements. Delisted from New York Stock Exchange. Critically low over-the-counter stock price of four cents a share. Loose corporate oversight. Until now, disproportional executive compensation.

Spanish Broadcasting

In spite of operating stations in one of two segments that are least affected by listener declines, Spanish fails to pump cash flow to meet its debt requirements.

Sirius XM

Hammered by recession -- drop off in auto sales that generates new subscribers. Minuscule advertising revenues and they are down. Merger may have compromised content as monopoly emerged. WiFi looms and could kill satellite radio for good. Churn rate on subscribers probably worse than realized. Mel Karmazin's plea to John Malone to save the company from bankruptcy could be very temporary.

At Risk

Emmis

Best assets in largest markets that are (and previously had been) adversely affected by the local economies. Failure to heed CEO Jeff Smulyan's plea to take the company private may have missed the opportunity. LA rental of FM property to a Mexican broadcasting company cuts expenses and generates revenues but doesn't demonstrate future growth potential. But it still turns out free cash flow and lots of it.

Radio One

The other ethnic segment that has strong radio listenership even among young people. Local stations killed by the economy. Lackluster planning for this crisis and failure to articulate the future makes it a hanger on.

Cumulus

Like the other At Risk companies, Cumulus turns higher portions of their revenue into cash. Failed vision at the top. Company run as fiefdom at the expense of the overall good of the company. Weak executive oversight by board of directors. Compensation out of line with performance and shareholder value. Hunkering down without a growth plan to assure investors Cumulus has a future.

At Least Risk

Clear Channel Outdoor

The outdoor business is weathering the recession better than radio. In a digital age, there appears to be a market for capturing eyeballs and profit margins can be high for businesses that have relatively fixed costs.

Cox

This company may be the radio cream of the consolidation crop. Family interests wisely want to take the radio group private on a paltry offer to shareholders. The buyout may not happen but just knowing the Cox family has the cash to bail out the division if needed is some consolation.

Entercom

Not impressive in most ways but the Field family -- again, there's that family feeling for radio -- has managed to stay out of immediate trouble. Their debt does not raise a red flag and while the group may be operated without imagination or an eye toward the future, it is no Citadel by far.

Saga

While Saga was not included in the chart, it is on par with Entercom and at least risk. CEO Ed Christian bought up a lot of little stations while the big boys were leveraging themselves to get the big ones. Now Christian has the last laugh because although he is affected by the recession like everyone else, Saga has a very limited and manageable debt ratio. It's safe.I hope this analysis has been of help to you in getting a real time grasp of the financial risks ahead for some of the large radio groups.

You've noticed that we couldn't analyze them all today. Regent is not in the mix but has a lot of trouble and could be in bankruptcy even before the At Risk groups above. CBS Radio was hard to include because of its many ties to Sumner Redstone, his problems and overall parent Viacom.

And Clear Channel -- well, that giant is a topic in and of itself and we've devoted a lot of time in this space to tracking what they do even as a private company because other consolidators tend to follow their lead.

You get a sense as to why the radio industry is really in trouble once you analyse the numbers and circumstances surrounding consolidation.

Group owners would have you believe the recession killed them -- just as they blamed the Internet revolution, iPods, Gen Y, music file sharing and the FCC for not allowing more deregulation.

In reality, it is bad management and bad strategic planning that is killing radio.

1. Consolidation was fueled by purchasing radio properties at prices that were absolutely overpriced with no precedent to justify them and no lack of credit to stop them.

2. Owners proved to be very bad operators once their assets were put together. The most they could do is cut expenses and try to mingle operations. In the end, they snuffed out innovation at exactly the time when the Internet and mobile devices were taking off. Had they let their local stations innovate as part of a big consolidated group, operational results would have been better.

3. Bad decisions like propping up bad technology such as HD Radio, useless and wasteful industry campaigns such as Radio Heard Here preaching to the converted and untimely squabbles over People Meter, satellite radio and other issues helped big owners lose perspective on what really counted. That is, local stations, with local staffs producing local revenue.

And finally...

4. No Plan B -- no exit plan. Consolidators fully expected to have their way with consolidation and get out with bigger profits. Instead some are on the brink of financial collapse and the others that survive will be hurt for years by an industry that inflicted more damage on itself than any competing medium could do.

Like it or not, this is the way it is. There is something valuable about seeing and accepting reality in radio. One benefit is -- perhaps some companies can now begin to look to the future.

In any case, that is our hope.

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The Local Radio Crisis

There is disturbing new research out that confirms what we have all feared -- that as consolidators move away from purely local radio, listeners become more dissatisfied.

I say disturbing because the study I am about to mention was taken before the recent move by radio consolidators to further blur the line between local personalities, shows and news and national syndication ("Repeater Radio").

Michael Saffran, one of our radio brethren and an adjunct professor at Rochester Institute of Technology conducted the research with 830 in-tab respondents in Binghamton, Buffalo, Dallas-Fort Worth, Ithaca, Middlesex-Somerset-Union (NJ) and Rochester.

Keep in mind that over 50% of the sample was between 35-54 years old -- presumably a group of "available" radio listeners not easily lured away by an iPod or smart phone.

Almost 40 percent of those surveyed expressed their satisfaction with local radio programming as "not at all" or "very little". Some 14.8% expressed satisfaction "to a great extent". And remember, these are older "available" radio listeners.

So let's cut to the chase.

What's eating the audience about local radio especially because we know that consolidators are in the process of amping up their efforts to deliver "Repeater Radio" to their local markets as a cost-cutting initiative.

• Listeners want music from local bands and local artists.

A whopping 78.1% of respondents report perceptions about the amount of music by local artists and bands aired on local radio stations as "none" or "very little". That's over three-quarters of all respondents.

Radio CEOs think I'm nuts when I encourage them to tell the record labels to shove their licensed music where the sun don't shine. Stop being afraid of repealing radio's performance tax exemption. It will be like chicken soup -- good for you.

And this research shows that the older leaning survey base wants what radio companies in their infinite wisdom do not want to deliver to their audience -- local bands, local music.

I've heard arguments like, "nice idea, Jerry, but as a former PD you know that you can't get ratings without playing the hits". Maybe we need to rethink what is a hit. Steve Jobs now makes the hits when he picks an obscure artist to be featured on an Apple TV commercial.

The Big Four labels don't have a monopoly on new music. In fact, they aren't even in the new music discovery business. They sell CDs and publish music.

Yet, if the 35-54 year old audience overwhelmingly craves local music on their local stations, can you imagine what younger listeners want? After all, they walked out on radio's stubborn decision to play the same 30 "hits" over and over again. It may have worked for previous generations, but times have changed and the next generation has it's own Victrola -- the iPod.

I wish someone would shut me up and try this:

Have a music discovery weekend -- one weekend.

No Rihanna, no Kanye, no Lady GaGa. Give them a rest. Go find local artists and bands and play them from 5 am Saturday morning until midnight on Sunday. Cut the usual radio b.s. out at the same time and make it sound real. See how fast the word travels.

They want local music and local artists.

• Listeners want live, accessible radio personalities.

More than 75% of the respondents in the Rochester Institute of Technology study said they were occasionally unable to contact a radio dj via telephone and 50% were "never" or "rarely" successful.

This is radio's inbred shameful secret.

At local radio stations there is no one there -- in more ways than one.

Hell, I can't even get through to Big Jay Sorenson when he's doing a great job Sunday night on CBS-FM in New York because no one answers the phones (and believe me, I've tried).

Who do we think we're kidding?

We've become legends in our own minds -- sure of what the audience wants even though radio research studies for years have been saying the same things. And that was before consolidation.

I'm afraid this one is on us. All the financial failures are on Fagreed, Tricky Dickey and John Slogan Hogan and their pals.

Listeners always wanted to be able to talk to the jocks.

When I did the Drake format for Paul Drew in Philly, listeners were able to call in and get the jock on the phone. I even found a few listeners sitting in my car when I left to go home. Scary. Maybe? But the audience craved contact with the on-air jock. I learned to lock my car, but I also learned that listeners want to be connected to radio people.

Consolidators have sanitized that one, too.

We've got lots of ways to direct our listeners to someone other than the person playing the music. And don't get me started on texting. Radio stations by and large don't understand how to use texting in a way consistent with how their audience uses it. It is not a blatant promotional tool even if you think it is. To them, it is social connection.

Someone needs to be home.

That brings us back to the ludicrous move by consolidators to empty the radio station of local talent, play only what Ryan Seacrest plays and call it the hits. Well, I've got a lot of research in my files (and you may have in yours) from years gone by that warn us to make radio personal, accessible and local.

Hell, I still do everything like a radio program director.

You can reach me -- and hundreds do every day. I'll answer as soon as possible. No stock phrases. Direct response. I respond to email, Facebook, Twitter, skywriting -- you name it just as I tried to stay in touch when I worked for Paul Drew.

Most successful radio people did the same thing and they'd be happy to testify about it.

One-third of all the topics I write about come directly from that input. And I learn from my readers (as I learned from my listeners what they wanted to hear and why).

None of this has ever changed in spite of the fact that radio consolidators have created a giant disconnect between the local audience and the stations they overpayed for.

A few days ago one of my readers asked me to make more suggestions on how radio (and the record industry) could improve based on some of the criticisms I have pointed out.

So let me do that now.

What's the take home pay?

The most powerful radio stations not only appeal to the audience, they reflect the audience. In fact, they are the audience.

There are many such stations in radio's past. You've probably got your own favorite example but one case study I think you'll be interested in was how WMMR-FM in Philadelphia took an audience and grew with it musically and socially.

Now if John Slogan Hogan is still reading this right now -- stop! I'm not mentioning your name any more today. This is about the rest of us and how we relate our stations to the audience and how they pay us back with loyalty.

WMMR-FM was owned by a media conglomerate -- Metromedia, John Kluge's little radio and TV empire. And when I say little I mean he had to abide by the 7-7-7- ownership rules.

WMMR was a middle of the road adult music station by day and then at night (back in the Sixties), management let a guy named Dave Herman go on the air and break format, play what was then called progressive rock and what to their surprise did they find -- an audience.

Eventually, the station went all-progression rock.

It toked when anti-war listeners smoked. It passionately protested the war in Vietnam even if their chairman and CEO may have been for it. They got involved in the civil rights movement. Grew local artists and bands who in many cases then found a national platform but they were started in Philly.

There was no hype.

No contests.

Tickets and music stuff but nothing that would be offensive to the emerging hippies. Meanwhile, at sister station WNEW in New York future hippie Mel Karmazin was working as a salesman.

The entire station reeked of incense -- for good reason.

The receptionist (they had them then) looked like a hippie who was living in a commune.

They didn't repeat music like their top 40 competitors WFIL and WIBG did.

Their jocks were non-personalities but when I say that I don't mean to imply that they were not personalities.

The station had a long generational life span and it is living off some of the residue of those early days even today when I'm sure no one in the station understands what made it so special.

You know that I am not telling you to run out and switch to progressive rock.

Or to not repeat any music during the day.

No. No. No.

I am saying radio needs to be local. Stations need to find and reflect their audience, their causes and their technology. There will have to be a digital blueprint today -- transmitters and towers are not the only way to reach an audience.

Gen Y, for example, wants to know everything about the artists of their time. They want them to have causes. Green is a favorite color for obvious reasons. They are connected through a social network and a station the nature of which I am describing must have their own special social network not just use Twitter to show they're cool.

Radio listeners have been asking us for decades to listen to them.

We got out of that habit.

And today, consolidators listen to bean counters and investment banks. Local radio stations are "assets" not "franchises". They can plug anyone in and they think it is radio. When in reality, they are only creating stations from hell.

The ones that drive listeners from the radio.

We cannot control them, but we can control what we do.

So, if you have the ability to still make decisions without getting fired, give it some thought. I'm available for brainstorming or consult a mentor that you know who can help you unlock the ideas I know you have -- the things that made radio addictive.

It is still possible.

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Radio Is the New Macy's

Turnabout is fair play.

Consolidators have screwed employees out of their jobs.

Now, advertisers are screwing radio stations out of previously agreed upon rates.

What do you expect when there is only one rep firm for the entire radio business?

And that rep firm is owned by Clear Channel, the largest radio group.

And Clear Channel is owned by a group of clueless private equity companies named Lee & Bain.

What you get is radio advertising anarchy.

And that's what is happening -- chaos, disorder. Perhaps you've seen or heard.

GEICO, one of the largest radio advertisers, negotiates its lowest possible rate with Katz for station buys across the country.

Then, after the deal is done, the buying service -- Horizon Media -- bullies Katz into giving up an extra 5% discount on top of the agreed upon price to complete the deal. It's like a boxer throwing a left upper cut after the opponent is knocked out on the floor.

What's worse, that squeaky clean Warren Buffett's Berkshire Hathaway owns GEICO and should know better. If anyone would tell him.

Or that Katz should have slammed the door and said, "no further discounts".

Perhaps it has something to do with Clear Channel's own interests. They are operated by a PE group that thinks long-term is as soon as possible. And perhaps by the fact that GEICO/Horizon chose Clear Channel for its Cause Marketing campaign last summer.

Four flights of 10 and 15 second radio spots donated by GEICO that ran in the top 25 markets with an online component and some public service ads thrown in by Clear Channel.

No matter what money, if any, changed hands, Clear Channel obviously has a previous separate relationship with GEICO and again, its rep firm, Katz is radio's only rep now.

Boar's Head tried the same tactic -- except they wanted 10% off radio's best price. That's a lot of baloney.

The RAB swallowed its tongue -- you know, radio's advertising bureau.

Katz has turned a deaf ear to radio executives and group heads who didn't cotton to having their rates beaten up after they were agreed upon. But you don't see any of the victim stations saying or doing anything about it.

This is a seminal moment for radio.

Now that the big cat, Clear Channel/Katz, has allowed its stations to accept double discounting, there may be no turning back.

And there is no getting around the fact that the speed of the leader determines the speed of the pack.

The number one consolidator is deciding for everyone else that discounts after the sale are now on the table. They have less to lose because PE firms are not long-term players.

This is what the demise of competition gets you.

Zero -- that's spelled "0" -- group heads have taken a public stand against double discounting.

We've already told you the RAB sees no evil, hears no evil and does nothing to help the integrity of radio rates.

Now, the law of unintended consequences has kicked in.

No competition.

One rep firm.

No radio CEOs with balls.

Advertisers and their illegitimate cousins, media buying services, sense a dying business and a weak resolve in radio.

Add to that potential conflict of interest by Katz parent Clear Channel and you can see double discounting is the new rate negotiation.

First, take a beating on the price.

Then, take an additional 5% or 10% off that beating.

Bastardizing radio's rate structure is going to hasten the industry's demise.

From now on, how can you charge full rate for any advertiser?

And any advertiser that henceforth pays full rate is a damn fool. Just send your buying service in to negotiate with Katz. Make your best deal. Then, take another discount at the checkout counter. Just like GEICO.

What has radio become, anyway? Macy's.

Consolidators have been looting radio for 12 years now.

But everyone has been comfortable with looking the other way. Well, congratulations -- you've now established a new paradigm for radio advertising.

Less Is More Radio Rate Reductions.

If any of the sorry consolidators who piss and moan all day long had any guts, they would run an ad in the Wall Street Journal and Ad Age -- an open letter to Warren Buffett.

By all accounts Buffett is a decent guy. He probably would respond and make it right. The bad publicity alone is not worth 5% off previously agreed to rates. And that would stop double discounting dead in its tracks.

Hold the RAB accountable -- the problem is if you don't like the way the RAB is handling things don't look in the mirror because just about everybody is on the RAB board. Not exactly an exclusive club. Translation: everybody is the problem.

Never in my wildest imagination did I see the radio industry becoming the mean-spirited employer of as little talent as they can get away with.

Or the unwitting fool that allowed Katz to swallow the buy.

Which leads me to this rhyme based on "There Was An Old Woman". Let's substitute "consolidator" for "old woman". Go ahead, use your imagination.

There was a consolidator who swallowed a 5% lower buy,
I don't know why it swallowed a buy,
Perhaps it will die.

There was a consolidator who swallowed a Katz,
Imagine that! to swallow a Katz,
It swallowed Katz to catch the 5% lower buy.

There was a consolidator who changed the course,
It's dead—of course!

If the radio industry thinks it got away with screwing its longtime employees to cut costs, wait until you see the screwing they're in for when advertisers can cut their advertising rates after the deal.

It's what happens when an industry is run by people without ethics.

Groucho Marx must have foreseen radio consolidators when he said:

"Those are my principles, and if you don't like them... well, I have others."

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Repeater Radio

My old mentor, the radio program director Paul Drew, used to tell me about an idea he had where a campus would be built for a national radio company in Southern California -- he cited the weather and abundance of talent for his choice of the location (not in that order).

PD (as I called him) believed that great radio could be done in one location allowing for many economies of scale and yet providing customized local programming to individual stations in their markets.

I understand he took the idea to a couple of CEOs at the time -- back in the 1990s -- and received no traction for the concept.

Funny, isn't it?

Drew was light years ahead of the greedy owners and they were telling him how important it was to continue to do local radio.

That was then. This is now.

One of my readers emailed me that "almost all CC stations have satellite downlinks at their transmitter sites...installed in the past year, after the buyout. We are told these are 'backup' systems. They're designed to allow programming to be sent direct to transmitter".

OMG!

In other words, forget my worries about Ryan Seacrest coast-to-coast. Now a major group could put him on the air directly -- without passing "Go" (as in "Go ask the general manager") -- and run it all from, say -- San Antonio or wherever.

Of course, you can see this coming.

While big companies like Citadel and Clear Channel are becoming distributors of only a handful of radio shows across their platforms, they are not above messing with the minds of their remaining employees.

Talk radio stations already turned over their local balls to syndicators and networks a long time ago. After all, who wants to hear a local show?

Excuse me?

Who wouldn't want to hear a local talk show. Lots of Philly listeners like to tune into the local attorney turned radio host on WPHT Michael Smerconish but in Philly where else? I don't have enough room to type all the local talk shows that were on the air and should be -- or the ones that have yet to be tried.

As a result, talk radio is stuffy, boring, old and tired. Otherwise, it's great, right?

No balls.

By the way, young people don't like old blowhards talking about politics or their bigoted ways. So even this strategy will dry up as each year goes by. Sorry, but you've got to have the next generation if you're going to be a growth industry. No getting around it.

Now the "CEOs-Who-Will-Not-Be-Denied" are hell bent to do the same thing to music radio.

They have this idea that Ryan Seacrest will work in just about any market. Hey, I don't buy it. LA -- yes. You're stretching beyond.

But they are not going to stop at Ryan Seacrest. These mad scientists will create a small stable of interchangeable, vanilla music shows that they can send up to the bird and down to the uplink and put it on the air at their whim. They're hell bent on making voice tracking look like the good old days.

The brilliance of this strategy is that it will sure as hell cut expenses.

Who don't know that -- to borrow a Philly phrase.

But it will also kill off audience because as radio becomes a "repeater" not a local station, there are fewer reasons for local listeners to become personally involved with the talent, the station, the advertisers -- you get the point.

But let's not stop there -- the crazed radio CEOs aren't going to.

Imagine a station with no manager.

Hell, we've practically got that now when one GM oversees three stations (as if that were really possible). Using my math, we have one-third of a manager at each station that opts for this approach.

So what's better than one-third?

How about zero -- none, nobody.

Just someone in the master control of their fantasy sending programs to this uplink and others to that -- no manager is necessary.

In fact, neither are people.

Mark Mays, the arrogant patrician that he is, had the unmitigated gall to send his employees an email this week saying that focus, resilience and determination will get the company through the recession that will also defeat their competitors. What an egotistic thing to say. Doesn't Mark Mays have anything to do over there?

Let me understand him.

We're firing you in record numbers. Doubling and tripling up on your workload. We're replacing your local talent. Dictating how each station will run from Central Command and you want to cheer me up?

Dr. Kevorkian could cheer Clear Channel employees up sooner than Mark Mays.

Because Clear Channel, Citadel and the other dying radio companies are already planning their exit strategies -- and they don't involve their employees.

It all reminds me of Bernie Madoff -- you know, the Ponzi scheme fraud who ripped off a lot of people -- millionaires and billionaires who should have known better. But they saw dollars not security.

What did Bernie Madoff do that is similar to what radio CEOs are doing to their people?

Before he screwed investors out of their money, he made them beg to get F@*Ked. Beg to be part of his investors group. He disarmed them by telling them to take their time and try it out with smaller sums of money thus creating a misleading atmosphere of safety and security.

This same mentality seems to be in the radio industry where another reader of mine pointed out yesterday that he used to work in a factory before his radio career. When he started -- well, let me let him say it:

"Radio was like a club or a team to most of the employees. From the small markets to the larger markets I was a part of, there was always that winning attitude and team work mentality. Today, coming to work at a radio station is so similar to those days I was at the factory. No one gives a damn anymore. Attitudes are in the toilet, the team has disbanded and we all hate our employer".

The entire demise of radio weirds a lot of us out.

It is totally dysfunctional -- devoid of honesty or candor.

Silent and shameful.

Over the holidays another reader thanked me for my insights but lamented how depressing it all was. I wrote back that the depressing part was done by the radio CEOs. I was sadly just calling them out for it.

What you are witnessing right now is full throttle ahead for the implementation of Repeater Radio -- local towers kidnapped by a shameless group of failures (hey, I'm just judging them by their stock price, now -- nothing else) who are just looking after number one.

If they wrote a book, they'd call it "Radio for Dummies" because their strategies are destined to fail and take down an entire industry only because their government allowed these clowns to monopolize all the best signals and markets in the first place.

I don't care if the Obama Administration shakes things up -- re-regulates or de-consolidates -- it's too late.

Repeater Radio is what you get when only a handful of people do all the thinking.

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The Shrink Wrapping of Radio

Less Is More is getting ready for the next phase.

Any day now -- and certainly within weeks -- don't be surprised to see your number one radio group, Clear Channel, give radio a glimpse of the consolidated future.

Again.

Clear Channel has led the way -- or should I say, bullied its way into recreating radio in its own image that harkens back to the old moniker "Cheap Channel" back in the Mays days.

I don't know about you, but way back when consolidation was getting started I was somewhat surprised to see Lowry Mays and his Texas Sue-Boys wind up as the industry's top consolidator. Not that it matters now, but had it been almost anyone else, radio might not have come to current precipice -- the make it or break it year for radio.

You might think I'm talking about make it or break on the bottom line.

I'm not.

Green ink is a long way off -- analysts agree that radio would be lucky to break even anytime soon. Nationwide we could see an almost ten percent drop in revenues by the time Dick Clark's New Year's Rockin' Eve gets fired up. Next year, it promises to be even worse. Hey, in the Phoenix market, radio is off a whopping 36%. This is major.

No, the make it or break it in 2009 will be whether anyone of major influence in the radio industry can figure out how to preserve, if not create, saleable brands that someday may be worth something.

As CBS is finding out, there isn't a big market for suckers -- I mean, buyers -- for some of their smaller market properties at the customary inflated multiples. And if you think that CBS is the only group that would like to unload radio stations, think again. Fagreed Suleman at Citadel has a bunch of stations that would drive his company's 17 cent stock way up over, say -- 50 cents!

You hear about all the people out there keeping their powder dry like former Citadel chief Larry Wilson, but so far all of this is pure speculation. They have been smarter than the rumor mongers will give them credit for.

Look, the wallet is willing but even people who love radio are too smart to buy now. Why make that misstep -- station prices are likely to go even lower, much lower after what radio CEOs have in store for their industry in the year ahead. And, let's not forget the recession - a double whammy.

My friend George Johns, the very able programmer, reminds me that with all the mistakes large consolidated companies are making by gutting their stations, they are vulnerable to anyone with the guts to step up and do radio right. An interesting thought.

But time is running out.

And 2009 will be perhaps the most significant year because at the present rate of destruction, radio stations are nothing more than spot carriers jammed into regional, group syndication or network programming.

Some have even likened this to the age of radio networks -- you know, NBC's Monitor, and the like. But I see it a different way. Then, networks spent money on putting content together. They had news bureaus. It wasn't done on the cheap. And most affiliate stations were local with local assets, local news. Network news and programming gave them more. More was more back then, I guess.

Now, see the future.

Fagreed signed MSNBC's Joe Scarborough to do a show on his WABC, New York and it fits his model -- throw anything up in the air and syndicate it to the rest of your stations. Fire local talent, save their salaries. Make the show available for other damn fools who are willing to take his two-hour version or customized one-hour and forty five minute version. (Sometimes, I wonder about my old friend Rick Sklar, the legendary programmer of WABC when it was a "local" New York Top 40 station with a "national" reputation. He must be turning over in his grave. Today many stations are "national" with a local reputation to live down).

Fagreed is a serial syndicator.

Imus saves him money in New York only if he can put the cranky, has-been on other Citadel stations -- then off to those damn fools I mentioned earlier.

Forget that Imus is an east coast acquired taste -- and I do mean acquired.

KABC just dumped talk show host Larry Elder and it could be that Curtis Sliwa, the totally New York personality, may be his replacement in La La Land. I can tell you LA isn't going to buy Curtis Sliwa, but Fagreed doesn't care. Fagreed buys him and that's what saves money.

Clear Channel may have made its name on Less Is More, but Fagreed's Citadel has built its reputation on Cheap Is Chic.

CBS has been cutting back in management. Duplicating responsibilities. Plus axing big name morning shows (although I am told that was not the reason for John Lander's demise in Boston).

For CBS it isn't about Less Is More or Cheap is Chic, it's Two For The Price of One 0r where you see one, you get two (or three) -- jobs! (As an ex-Metromedia man this reminds me of the old inside joke about Metromedia's outdoor company then known as Foster & Kleiser. The joke goes, "where you see F you see K". Think about it).

So Christmas is coming in a little over a week. More firings are ahead -- with or without severance pay. And, don't even mention Sam Zell to Tribune employees. When he went Chapter 11 he stopped paying compensation to the folks Tribune talked into buying out their contracts through early retirement. Screwed. And this guy is strapped right now, but as you know, I think the play he was looking for was in radio before he screwed up in newspapers and local TV. After all, he's got 20 odd ex-Jacor employees playing newspaper for now. Interesting that he's opted to continue to pay their salaries -- the salaries of all those radio people with nothing to do in his dying newspaper empire.

What's so insane about all of this shrink wrapping of radio is that after the consolidators get finished with screwing their talented employees, they're ready to screw themselves. (Don't worry, they already screwed their stockholders).

That's right.

The old saw "be careful what you wish for" will most certainly come back to haunt this bunch of not ready for prime time players -- who sit around and pleasure themselves by syndicating.

I can say that because this final indignity is the worst of all.

If radio was anything, it was a group of local stations that had a clear and marketable "brand". What would Fagreed's predecessor, the WABC Top 40 station, for example, have been without Dan Ingram, Cousin Brucie, Chuck Leonard -- you could go on and on -- and the rest of its brand leaders.

Nothing.

And that's what these desperado's who call themselves radio CEOs are going to wind up with after they finish their strategy of gutting local radio.

Nothing to sell to suckers who might have been willing to pay a lower multiple and give it a try the right way.

Nothing to stream on the Internet -- you're kidding, right? With what radio CEOs are forcing their stations to do, who is going to want to hear Curtis Sliwa on the Internet -- or Joe Scarborough or Don Imus?

No one from the all important next generation, that's for damn sure.

Nothing upon which to build local podcasts, mobile content or extended branded programming.

Nothing.

So as radio as we and our listeners know it comes to the end of its long nightmare, what radio will amount to -- I'm so sorry to say -- is nothing.

During the year ahead, the only hope I have is that some brave board of directors somewhere in this industry grounds its private jet and replaces its CEO with a swashbuckler from today who is reminiscent of the pioneers who built radio into the business that Wall Street coveted 12 years ago.

One last chance -- that will probably never come in this critical year of 2009 -- unless or until the overseers of radio's destruction are stopped in their tracks.

The clock is ticking.

As they say in the old "Beat The Bomb" radio contest, say "stop" before the whole thing blows up.

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The Wal-Martization of Radio

How's this for radio's recession strategy?

Cut spot costs and make long-term deals.

Turn radio into the Wal-Mart of the media industry. Always open. Always the low price.

That's some of the advice that consultant Jack Myers wrote recently in an interesting piece called Seven Strategies for Rebuilding the Radio Industry.

Myers is calling on the two largest consolidators, CBS and Clear Channel, to immediately announce dramatic cost reductions for 30-second commercials while maintaining prices for 60. Start with the pitch that stations are open to two and three-year deals so that marketers can lock in the low rates.

Gee, I thought they were doing that already?

In fact, if there was a knock on radio even back in the glory days, it was -- to use the colorful language of sales -- that they dropped their pants on rates too much.

In 2002, right at the peak of consolidation greed when Mel was stuffing Infinity stations with more commercials than a human could consume, Clear Channel was also out selling by fax -- cheap spots if you fax us back.

I don't know Myers, but I like to hear all kinds of ideas when it comes to media. He wasn't always a believer in radio running its business for advertisers. In fact, five years ago Myers said it was the other way around -- when he gave the advice to run radio for listeners.

I like that better.

Perhaps it would be useful to explore the other side of Myers' proposal.

For years, I have been saying raise prices, cut inventory, run commercials alone (out of long sets) and employ the use of live read spots.

In fact, the answers that this group of bandidos running radio groups wants to hear is simplistic thinking like -- more spots, fewer spots, whatever.

So, let me make it more complicated.

Radio listening will never return to previous levels -- at least not without the next generation tuning and they have abandoned ship. The radio industry needs to deal with that reality and find a new place in the marketing mix. The days of jamming spots into a hot clock will no longer work -- for the station or the advertiser.

So, how about a different idea -- getting results for advertisers -- not selling cheap spots.

Radio has become a routine boring commercial machine -- using its least talented air staff to record spots, written by its least talented writers (usually sales folks) 0r worse yet generic copy. Music and sound effects that mean nothing. Critical ideas that don't connect, motivate or inform. There are exceptions but too few of them.

And we wonder why radio advertising is down?

Look, if radio did what I am going to outline, the world would be having a recession and radio would be getting rich helping marketers get out of theirs.

Some of what I am going to recommend comes from my work with the next generation -- a distracted, attention deprived group of great people who are not influenced by radio in any way from music discovery to advertising.

Here's the Radio Gets Results approach for which, as you'll see, you won't have to sell cheap ads:

1. Put the best possible, preferably local programming on the air.

Local talent can sell local products. The majority of radio revenue will come from local -- as it always has.

2. Run no more than 12 units per hour -- a unit is any length up to 60 seconds that the client wants -- not what you want.

If they want a 60 -- same price. If they want a 10 -- same price. If they want 23 and a half seconds -- you get the idea. Listeners don't run a stop watch on commercials. One unit per stop set -- did I say that? Young attention spans like the interruption of music to a commercial and back to music.

3. Raise the rates.

Start from scratch. How many units per hour, per daypart, per day do you need to have a profitable month, a profitable year. That is your price. If your ratings are higher, factor that in, obviously. If you have no competition, factor that in. Different rates for different parts of the day based on advertiser desirability.

Years ago when I started Inside Radio as a faxed publication, there were no faxed publications. I had no idea what to charge for a little ad on the bottom of the page. So, I figured -- what would make this venture more than worthwhile. I said, "$1,000 an ad per day" and three ads a day, that's $15,000 per week. Do the rest of the math.

The prices went up as the popularity went up. The front page eventually sold for between $2,500-$3,000 many days. Now you see one of the things Clear Channel paid for when they bought it. (My subsequent competitors sold the same ads for a few hundred dollars or as an add-on to their print publications -- which strategy was the best?). Same for radio. Price the hour and then chop it up in 12 units max (less is less) and go sell it for what you need to make it worthwhile.

4. Triple your sales staff.

I lost you at #1 , didn't I?

Better to lose you at #1 than at #4 because this is a must. Look around. Everyone in radio has cut its sales staffs -- and Myers, by the way, is suggesting that strategy and more spending cutbacks as the road to recovery. Well, it hasn't worked so far and the analysts on Wall Street say radio may never come back from its decline.

Ready to try this idea?

Triple your sales staff. Oh, pay them. And don't take their accounts away. Train them -- constantly. And, even give them paid vacation if you value them.

Oops, I lost Farid.

5. Get those dirty thoughts out of your mind -- I know you have them, Farid -- that you can cut your sales staff further (remember when you said that) because half your business comes to you.

No -- you go and get business. You make people believers. You show them how you can solve their problems so they can sell products and services.

6. Don't run spots.

7. Run testimonials and campaigns using your local talent.

Myers points out that some of the best local personalities have a long history of being the commercial spokesmen of significant local accounts. One mentioned was Howard Eskin at CBS' WIP in Philadelphia, a market with which I am familiar.

Myers points out Eskin is the only radio endorser of Rolex watches through Bernie Robbins Jewelers -- meaning WIP gets the only buy on that product. And Eskin is a long time spokesman for Lexus of Cherry Hill. I lived and worked in that market for a long time and I will confirm that when I think of Lexus of Cherry Hill, I think of the controversial sports talk host Eskin.

8. Map a second stage plan -- once you've done 1-7 and are making lots of money -- to do campaigns for clients based on actual audited responses.

If radio did this, it would have gone belly up a long time ago because frankly, they don't care about responses -- just running spots. You don't have to be a dj sitting through a six minute commercial set to know these ads ain't working because nobody is hearing them and if they are, they're not buying what's in them because -- they all sound the same.

Offer the bank on Main Street a deal where they pay a retainer on future success and then if you bring them x number of leads to open a new account between this date and that, the bank pays the station an additional $x for each lead.

Who could turn this down? It's money in the bank for the client.

(We haven't done a lot of this because, radio doesn't do a good job of selling -- it does a good job of bombarding listeners with mindless commercial clutter that has no tie-in to their programs or talent).

9. Pre-test elements of the campaign for your clients.

Look to the things that WBEB-FM in Philadelphia does online to accomplish helping the advertiser. Research stuff. Myers, by the way, wants you to end research and pocket the savings.

10. Don't drop your rates.

Myers also wants you to stop competing station-to-station and band together to sell the medium's strengths.

Isn't that what consolidation allowed owners to do -- take five or six stations and show advertisers how potent they can be together as a medium?

Of course.

And, it didn't work! You don't need five stations to move product or sell services, you need one good one.

Myers also wants you to merge your multiple station sales staffs into one -- my God, that's awful.

Guess I just got Farid's attention back?

Myers' solution is lots of same-old, same-old as far as I am concerned. Similar strategies have failed for radio.

Stop with the fantasy about Google being able to sell your ads without having to pay live people and automating commercials the way Google runs online search.

There's something at the end of this rainbow that makes trying this ten-step strategy worthwhile -- although I'm not holding my breath waiting for takers.

If radio can move product and sell services at a favorable rate to the advertiser and the station, it never has to go away -- providing that it prove tangible results. Then there will always be a future for commercial radio -- online, on-the-air, on the mobile phone -- wherever.

That's why you've got to develop local content, employ smart local sales people and think in terms of the advertisers' interests not yours.

I'm not trying to sound like the Dalai Lama of Radio but...

Think about your advertisers' recession not yours -- and all your work and effort for them will come back to you as financial nirvana.

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Great Radio

Over the weekend one of my Jersey buds, Big Jay Sorensen sent me a Facebook message to say that he was going to do a shift Sunday night on WCBS-FM in New York as one of their "radio greats".

CBS-FM is my favorite terrestrial radio station so it doesn't take much to get me to listen and I was thrilled for Big Jay -- a yeoman radio guy who loves what he does. Jay has had some bumps in the road of late -- as a lot of my radio friends have -- but I knew he'd be a killer when he turned the mike on.

Great radio. A hot personality that wanted to entertain so much that it came through the speakers -- even on my Mac where I listened from out west.

Great jingles as always. Great voices. A great format. A local feel. Love of the music, artists and era. And, if I may say it -- fun. You couldn't help having fun listening in.

The music is challenging because CBS wanted to mix the 60's and 70's with the 80's -- a delicate balance to say the least. The Tokens and Heart in the same hour -- it's tough. But it isn't a deal breaker and the new CBS-FM format is attracting a younger audience and great ratings.

Once the bickering stops in New York over Arbitron's People Meter, I'll bet you CBS-FM is the number one station. It has returned to the market elite so they are close. It just needs a few more adjustments and they are there.

But this is more than just about CBS-FM -- a station that owes its rebirth to one person -- Dan Mason. You may remember the former CBS Radio President, Joel Hollander, saw fit to kill the format and the $40 million in annual billing that went along with it for "Jack" -- the station that plays what it wants. Well, Jack laid an egg in New York. Tough New Yorkers never bought into a station that didn't play what they wanted. Anyway, CBS-FM was loved. The listeners rightfully punished the company for leaving them without an oldies station.

I realized as I was listening to Big Jay that future generations will be robbed of their CBS-FM whatever that could have been. In the day, there were stations like WCBS-FM in every city. They were characterized by their ability to sell lots of records, loved the artists, cared about their audiences and had fun on the air.

You know I am not saying that the next generation should listen to CBS-FM. But the radio business got out of the radio business in the late 1980's when innovation became imitation and the idea became prevalent that teens would always be waiting to become the next 18-24s and then 25-54's.

This turned out to be wrong.

It's that mindset that became ingrained in the would be poobahs who eventually became today's radio CEOs -- the ones who hijacked a great industry and turned it into their own personal version of monopoly.

There are few Park Places left (CBS-FM is one).

They no longer can pass go and collect $200.

And I'm sure as hell not going to give any of them a "Get out of Jail" card. These shortsighted individuals are how we got into this mess in the first place.

Back to great radio.

Don't get me wrong. The students I came to know while teaching really don't want radio. They listen when they are in a car or when there is nothing else. It's like using toothpaste to them. It gets the job done but isn't something they live for.

No.

I want them to have their own CBS-FM.

I want them to experience what it is like to have this seamless stream of all good things music, news, personality, contests, local involvement, love of artists and -- fun -- always on, always good.

And maybe -- just maybe -- there is a connection between the demise of radio as we are experiencing it today and consolidators' inability to invest in the product.

Today, there is only one entertainer in music radio -- and that's Ryan Seacrest. Two in talk radio. Rush and Hannity.

Okay, I kid. But you know what I'm saying.

The poor owners don't have the money to run a real radio station with live local personalities and all the goodies that people love. But wait. CBS isn't exactly going broke running CBS-FM in its reincarnation. Boy, it sure sounded good to hear them giving away $1,000 a day from now until Christmas. I know it's New York and they can afford it, but $1,o00 is chump change in the Big Town. Still, CBS has found ways to make good radio on a budget.

I have been fortunate to learn from some excellent programmers. One of them is Dick Carr who programmed and then later managed WIP in Philadelphia when it was the number one adult station for years. Dick does a great big bands special now -- and when I say great -- I mean the kind of show that my young students would like because production values are high and it is just that good.

When Dick Carr ran WIP he built the station into a monster on the back of personalities, the number one news operation in the city (better than the all-news station at the time), music that was right on target even without research and -- Cash Call.

Cash Call -- you know, every hour the jackpot goes up until a random phone call to the metropolitan area found a listener who knew the Cash Call total -- 2,459 dollars and sixty one cents. It was always 61 cents because the frequency was 610. His audience used to listen all the time so they knew the amount of the jackpot -- and the entertainment wasn't too shabby either.

Unlike the radio that followed, Cash Call was synonymous with WIP. No one could equal it because no one was committed to it as WIP was.

Dick Carr was smart enough to never drop the contest. It was always on. No listener got tired of it and winning money never went out of style. Today, Cash Call is when Citadel's Farid Suleman gets a call from his accountant in which he learns he'll be making $11 million a year as CEO.

Dick Carr's way was better for radio -- as subsequent events have proven.

But here's the killer.

One day, a competitor of Metromedia, then owner of WIP, bought a crummy little station called WPEN and decided to hire away as many WIP personalities as it could and go head to head.

They spent $60,000 on a jingle package that droned on about something to do with "Warm and Wonderful". It made you want to buy Depends -- and they didn't even make them back then.

There was WIP -- raided, exposed, up against a rival who was giving away bigger jackpots of cash in a similar contest -- this had to be the end.

But it wasn't.

Forget that WPEN's signal at 950 was quite inferior to WIP's with a clear channel 610 frequency. Unfortunately the tombstone of many a manager will be engraved with "here lies so and so who had a great radio career until he tried to turn a lousy signal into a great one".
But I digress.

With all that competition and all the billboards and promotion you would have thought WIP would be a goner.

Actually it was the other way around. Seems that adult listeners liked their WIP personalities on WIP. I learned then and forever more that radio is a joint venture between great personalities and a great radio station. One without the other is not possible.

Many others proved it along the way. Bill Drake. Ron Jacobs. Paul Drew. John Rook. Rick Sklar. Bill Tanner, Buzz Bennett, Jim Hilliard. Innovators like John Sebastian. Formatic experts like Todd Wallace. I could get carpel tunnel if I typed everyone's name. What a great problem to have.

Ever the student, I learned in the employ of Dick Carr that great radio was this marvelous mix of elements aimed at a target demographic -- in WIP's case -- adults.

Today, great radio is an exception, not the rule.

Personalities are not valued -- they are being systematically eliminated from their stations for budgetary reasons.

Contests -- you're kidding right? You think consolidators are going to give anything away. It wouldn't be accretive for the shareholders -- you know, the ones they stuck with 25 cent stock.

News -- stop tormenting me! There is no local news on too many radio stations. Shame on them -- listeners like local news.

Jingles, production values -- this industry is either too cheap or too sophisticated to think investing in these things is worth the expense. Foolish little control freaks.

Fun? You try having fun when almost every owner is in firing mode. Have fun when your PD is running three other stations and is barely qualified to program one? Or as one of my readers told me recently, he was doing mornings quite successfully and then his station fired the PD and told him to take the job -- with no experience. He didn't want it, but what could he do? Now, the ratings are in the toilet. A great morning jock -- not so good a PD.

I'm saying it took more than poor financial management on the part of today's radio CEOs to ruin a good thing.

But I never forget that what went wrong with radio happened long before consolidation. When you listen to a throwback to the golden age such as CBS-FM you realize how much we've lost.

There are many people in the industry who could have done whatever the next CBS-FM would have been for Gen Y. But they never got the chance. And the next generation never got their chance to hear what all the excitement was about.

Even WIP couldn't be killed off by a competitor. It died when listeners migrated to FM.

By the way, in case you're wondering -- how did Dick Carr position his outstanding radio station on and off the air?

It's simple. He just called it what it was.

Great Radio 610.

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Why They Don't Fix Radio

It's not that radio CEOs are stupid.

They're not.

Yet you wonder, how is it that almost everyone but these CEOs know that radio is headed in the wrong direction?

Take radio stocks.

The cream of the crop at closing yesterday was CBS at $7.66, Cox at $4.91 and Saga at $3.31 -- and that's not saying much. Then, it gets uglier.

Beasley at $1.30
Salem 88 cents
Entravision 87 cents
Cumulus 85 cents
Entercom 66 cents
Emmis at 39 cents
Citadel at 21 cents
Regent at 19 cents
Spanish 17 cents
Radio One just 13 cents

Westwood One is only 15 cents and Sirius XM a quarter. I still can't believe these prices! When Clear Channel sent me to academia for four years back in 2002, radio was a thriving business. But there were ominous signs on the horizon that the men at the top ignored.

Obviously, Houston, we have a problem -- now!

I'm sure most of us would agree on that, right?

So why do the boards of directors turn their heads the other way? Why are the same CEOs entrenched at their embattled companies? A lot has to do with the chummy way the companies were set up.

But there's something else.

Radio revenues have been declining every month for over a year and a half with the larger markets leading the downturn -- all this, by the way, before the economy tanked. Even the better performing smaller markets now feel the pinch. Of course, the recession has a lot to do with it, but radio started its recession well before everyone else.

And there's more.

When Clear Channel's Mark Mays says "Merry Christmas" with the promise of more stringent cost cutting measures ahead, we know that the ten years of clipping and nipping at radio's essentials didn't work then and won't work now.

Never mind that the product is watered down even for those older listeners who still want to listen to radio. Forget the next generation -- radio has.

Every group -- consolidator, independent operator -- even Rick Buckley -- has let people go to pair down expenses. I understand economics. You can't spend more than you take in (unless you are the Federal government). But these "economies of scale" are like putting an anorexic on a diet. Death is imminent.

Don't the big boys know this? Why don't they fix it?

When stations start doing what Beasley is doing and offering advertisers "one day" sales blitzes in exchange for cheap prices and multi-month commitments, can you say desperation?

And Beasley is not alone. Hell, back in 2002 when I was publishing Inside Radio, angry competitors of Clear Channel used to send me one-sheets that some Clear Channel stations used to fax to advertisers to sell them cheap -- really cheap radio spots. That was then, when radio was supposedly a booming business.

Doesn't anyone know that prostituting your prices because you can't sell ads -- let's just say it because that's what it is -- never works. I know a lot of smart sales people who could help radio stations right now. Jim Taszarek, my neighbor out here in the desert, is one of them. And we all know a lot of good former and current GMs who have their hands tied behind their backs.

Why are radio companies not getting help when they need it? Why are they dropping their drawers?

In fact, radio companies are cutting their sales forces back when they actually need more sales professionals.

Doesn't anyone know there is a problem here?

Major market radio stations have a program director opening but almost always the poor PD running one or more stations elsewhere in the cluster takes on yet a third station so the company can save money. We're not talking Ajax Communications here. It's CBS. Clear Channel. All of them.

This is occurring with startling frequency now -- one person for more than one job. I don't know if my friend Joe McCoy, the WCBS-FM programming legend, remembers a phone conversation I had with him many years ago when I asked, "weren't we considered a genius when we programmed one great station in our lives -- not three at the same time?"

We laughed.

Prematurely, it turns out.

It doesn't take a lot of great programmers to know that one station is tough enough to program let alone whatever the company heaps upon you to save money.

Don't they know this?

Everybody and their uncle is on the Internet.

There's Facebook, MySpace, Pandora and on and on. Listeners who previously walked around with portable radios are never without their cell phones now (hint/hint). A new generation has arrived and radio ignored them. Now it's payback time. That Millennial generation was not raised on radio. They want the Internet. Their cell phones. Free music downloads. They look to each other not to djs as their music authorities.

Of course, the folks at Sleepy Hollow (Radio CEOs) must know that the Internet has arrived. But no -- they obsess about satellite radio -- satellite frickin' radio! Their professional association aka The NAB spent millions last year fighting -- you guessed it -- satellite radio. Maybe the Sirius stock price of 25 cents a share scares them.

Radio's idea of the Internet used to be putting up web pages with their jock's pictures. Of course that won't work today.

No jocks.

Just link directly to Ryan Seacrest's home page. The more "hip" (if I may use an unhip term) radio companies think the Internet is simply another channel for airing their terrestrial format. Great for at-work listening. Boy, did they miss the point.

When will they ever learn?

One more thing.

Once upon a time everyone knew that radio was local. Even in the days of network radio, the national programming appeared on stations that were very local to their communities.

You know -- and I know -- and hell, the listeners know -- that radio works best when it is local. Yet money losing CEOs have themselves convinced that they have no other option but to find ways to take one program and amortize it over many stations.

Starbucks announced a few days ago a 97% decrease in profits. That was due to the costs of closing stores. Yet if you listen to what their CEO said, the plan was to take the hit and implement a strategy for the long-term.

Long-term -- when have you heard that phrase in radio lately except maybe to describe the kind of unemployment insurance some of their ex-employees are on?

Why do we know -- why do the listeners know -- and even some advertisers -- that radio is not dealing with its many, real problems?

Listen, you don't have to look any further than Main Street to see the same behavior. Stores that are closing because they couldn't get up the courage or resources to respond to their competition.

I have seen it in academia as well where major communications schools are still -- I repeat still -- teaching radio, television news (a dying art to say the least if you follow all the local news programs that have been cut over the years) and journalism (presumably newspaper with a wink and a nod toward online -- whatever that means).

It is my belief that the human condition is that we want things to remain the same or revert to the past -- better days.

But the lesson -- why good, smart media executives keep making God awful decisions -- is this...

We don't do what we need to do until we hit rock bottom.

The sports team that just misses the playoffs thinks it's only one or two players away from competing again. Often, they are wrong. One season later when the bottom falls out, the franchise bites the bullet.

We don't answer the bell until we hit rock bottom.

And that's a scary thought when the rest of us -- those without $11 million annual salaries and private planes -- already know we're there.

Which is why you can expect more of the same in 2009 -- until the pain is felt by those who are inflicting the hurt to this industry and its people.

It's not like you can turn it around at some point once the Great Enlightenment arrives.

The next generation is still lost.

Radio listeners are still aging.

The Internet is still not going away.

And the replacement for radio's mobility became the cell phone while radio CEOs played Gordon Gekko.

The decline of radio will never become a Harvard case study.

It's a Shakespearean tragedy.

All 's Well that Ends Well, Act III, Sc. V

"No legacy is so rich as honesty".

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