An observation from Gary Stevens

[yugoidar]

Gary, the former major market jock, WMCA/NYC "Good Guy", Group president and most recently a very, very successful station broker who, no doubt, made millions following deregulation.

Gary, if I'm not mistaken. grew up in Buffalo in the 50s and early 60s.

These comments were made in a note recently to Claude Hall, former Billboard magazine Radio/TV editor:

"I often think of those great old days, and can only watch in wonderment, as I see how the radio business simply devours itself in a sea of incompetence, and debt. I have to tread lightly on the latter, since, while radio was the most fun, getting a piece of the run up in prices, following dereg, as a broker, was the only real money I ever made. I think that's called ‘bittersweet’ ".

 

[JustPastBuffalo]

Stevens, according to his earlier bio, did grow up in Buffalo, or at least spend some time here as a yout'. IIRC, he ran DoubleDay and did a pretty good job of making money, so he's probably being modest about his income. I recently read that as a broker, Stevens handled about $300 million in station transactions over the years. If he got 6 per cent of that, he's living the good life these days. He's right about not biting the hand that fed/feeds him, but (IMMHO) he's dead on with his observations. BTW, I remember hearing him as a Good Guy on WMCA. He came in to do nights at WMCA after original motor mouth B. Mitchell Reed left for Los Angeles. This may be perceived as heresy, but "Big BMR" and Stevens were every bit as good if not better than Cousin' Brucie, who's certainly no slouch.

 

[amfmxm]

Radio devouring itself on incompetence and debt. That's the Elephant In The Room.

Gary Stevens should write a book on the subject, if at this point he's beyond the point of reprisal. Those of us still in radio all know it, but won't say it because our livelihoods depend on ignoring that particular piece of reality and making the cash flow machine work in spite of it.

Heard a story recently that is sort of related. One of the "C" companies (we all know which one) has started hiring its market managers from outside the radio industry, claiming they can't find smart, talented people from radio to fill those jobs. Truth is that radio pros won't work for them...

 

[TheBootlegger]

Agree with the post below. The C groups seem to be hiring people who "don't know enough to argue" with the obviously stupid management in place at some large radio companies.

 

[SirRoxalot]

Stand by. "TheBigA" will be here momentarily to assure us that we're wrong, and corporate radio is "doing just fine".

 

[yugoidar]

Stevens handled about $300 million in station transactions over the years. If he got 6 per cent of that, he's living the good life these days.

Jim, Tom Taylor mentions that Gary brokered over $3 Billion in sales in his newsletter today.  If that's the case, that means Gary's living a very, very, very good life today!  He, reportedly, has homes in CT, Seattle and Florida for starters!

 

[JustPastBuffalo]

Stevens handled about $300 million in station transactions over the years. If he got 6 per cent of that, he's living the good life these days.

Jim, Tom Taylor mentions that Gary brokered over $3 Billion in sales in his newsletter today. If that's the case, that means Gary's living a very, very, very good life today! He, reportedly, has homes in CT, Seattle and Florida for starters!

My bad. That's "3" followed not by eight zeros, but nine. Man! That's a lotta bread.

 

[TheBigA]

Stand by. "TheBigA" will be here momentarily to assure us that we're wrong, and corporate radio is "doing just fine".

That's actually not my point of view. I personally am offended by Gary Stevens not taking any responsibility for the current state of radio. He got rich beyond his imagination thanks to people like Robert Sillerman, one of his first clients, who bought a few radio stations in Middletown NY many years ago with another Top 40 jock, Bruce Morrow. Those early purchases set the theme for what was to become the feeding frenzy of radio purchases that took place in the 80s and 90s. Sillerman went on to run SFX Media, which became AMFM, which ultimately became the current incarnation of Clear Channel. Had that not happened, I dare say things would have been a bit more status quo today. A lot of books have been written about Clear Channel, but there's a real doozy to be written about the crossroads between Gary Stevens and Robert F. X. Sillerman.

 

[amfmxm]

That's actually not my point of view. I personally am offended by Gary Stevens not taking any responsibility for the current state of radio. He got rich beyond his imagination thanks to people like Robert Sillerman, one of his first clients, who bought a few radio stations in Middletown NY many years ago with another Top 40 jock, Bruce Morrow. Those early purchases set the theme for what was to become the feeding frenzy of radio purchases that took place in the 80s and 90s. Sillerman went on to run SFX Media, which became AMFM, which ultimately became the current incarnation of Clear Channel. Had that not happened, I dare say things would have been a bit more status quo today. A lot of books have been written about Clear Channel, but there's a real doozy to be written about the crossroads between Gary Stevens and Robert F. X. Sillerman.

What was the time frame? I've always figured the birth of this disaster as a TAB convention somewhere in the eighties when the two investment broker/broadcasters, Mays & Hicks, might have first shook hands with each other--most likely with a light Scotch in the other. But I'll grant you the SFX-(CapStar)-AMFM-CC thread. As I recall, Hicks was in that mix, too...

 

[TheBigA]

What was the time frame?

I think the friendship began in the mid 70s. Gary Stevens could easily write a book titled "I Was Broker To the Devil." It would make a great book. Sort of a new take on Bonfire of the Vanities. It's amazing how so many Top 40 radio people, from Gary to Randy Michaels, made the deals that basically changed the face of radio.

 

[TheBigA]

Wikipedia dates it to 1978: http://en.wikipedia.org/wiki/Robert_Sillerman

That sounds about right. It's just a fascinating story, and Gary was the man who brokered everything. It's hard to criticize what broadcasting has become when you got a commission as part of the process. And I don't think it was purposeful. I think it all began innocently enough. Perhaps he now feels some remorse? But someone let the wolves into the henhouse. They didn't come in uninvited.

 

[Element9]

Because greed is good, at least for those wearing $2 thousand suits. Speculation about "the next greater fool" lead the business to the brink and over. Stevens was an enabler for the likes of Mays, Hicks, Sillerman, Michaels, Sam Zell, Farid, Lowry and Dickey who were simply playing follow the leader, looking for the next big score inside the casino. Seriously and without malice aforethought, how long will Cumulus take to file for bankruptcy protection after it swallows Citadel for $2.4 billion.

 

[Paul_Warren]

Stevens was an enabler for the likes of Mays, Hicks, Sillerman, Michaels, Sam Zell, Farid, Lowry and Dickey who were simply playing follow the leader, looking for the next big score inside the casino...

To be fair, the broker isn't analogous to the casino owner. He's more like the guy in the vest and bowtie paid to stand and deal cards. If you have a buyer who's out to rule the world, and a seller who's there for the payday of a lifetime, someone's going to make the commission. It's not like the deals wouldn't have gone down without him.

I doubt these old top-40 guys wanted to destroy radio. If anything, they probably recalled what Storz and McClendon did with big groups, and wanted to recreate that. I especially remember Randy Michaels in the days he was turning huge, slumbering AMs back into hungry competitors. That worked pretty well until it all had to go on a diet.

At some point, it became obvious that "achieving critical mass" and getting much higher ad rates from agencies, which is the assumption that drove over-valuation, was not working out. That's when it went all Ponzi on us.

Shame on the FCC for putting the entire industry in the hands of people who were bad at math.

 

[TheBigA]

Shame on the FCC for putting the entire industry in the hands of people who were bad at math.

You're putting blame in the wrong place. The law doesn't allow the FCC to make those kinds of decisions. If applicant is a citizen, with the money to buy, and hasn't been convicted of a crime, he is qualified to own radio stations. The FCC can't discriminate between "good guys" and "bad guys." Once the wolf has been invited in the hen house, there's nothing the feds can do except watch. Their view would be "Shame on the broadcasters for not paying attention in math class."

 

[chas108]

What was the time frame?

I think the friendship began in the mid 70s. Gary Stevens could easily write a book titled "I Was Broker To the Devil." It would make a great book. Sort of a new take on Bonfire of the Vanities. It's amazing how so many Top 40 radio people, from Gary to Randy Michaels, made the deals that basically changed the face of radio.

For some reason, 1977 sticks in my mind as the year Sillerman/Morrow bought that station in Middletown...I can't even recall the call letters and have zero idea if Gary Stevens was involved, but I think that's where it all began. It piques my interest because Cousin Brucie was involved...that was right about the time he did his last shift on WNBC.

I think if the FCC is to blame for anything, it's for handing out broadcast licenses like candy from a Pez dispenser. Allowing 20 signals in a market that can only support eight can only lead to lower ad rates. In that respect, the FCC was - and remains - bad at math.

 

[TheBigA]

For some reason, 1977 sticks in my mind as the year Sillerman/Morrow bought that station in Middletown

Read the Wikipedia link I posted earlier in this thread. It gives all the specifics.

 

[amfmxm]

Sort of a new take on Bonfire of the Vanities.

For some reason, 1977 sticks in my mind as the year Sillerman/Morrow bought that station in Middletown...I can't even recall the call letters and have zero idea if Gary Stevens was involved, but I think that's where it all began. It piques my interest because Cousin Brucie was involved...that was right about the time he did his last shift on WNBC.

I think if the FCC is to blame for anything, it's for handing out broadcast licenses like candy from a Pez dispenser. Allowing 20 signals in a market that can only support eight can only lead to lower ad rates. In that respect, the FCC was - and remains - bad at math.
[/quote]

Love the "Bonfires" analogy. 80-90 + moveable COLs didn't help. But I'm still leaning toward Tom & Lowry as the culprits who cooked up the dereg legislation. Two Texans who both happened to be station owners & investment brokers and who ultimately create the CC monster in a whirlwind 3-year merger & acquistion blitz? Too many coincidences for this veteran campaigner...

 

[Mike Sheridan]

Shame on the FCC for putting the entire industry in the hands of people who were bad at math.

You're putting blame in the wrong place. The law doesn't allow the FCC to make those kinds of decisions. If applicant is a citizen, with the money to buy, and hasn't been convicted of a crime, he is qualified to own radio stations. The FCC can't discriminate between "good guys" and "bad guys." Once the wolf has been invited in the hen house, there's nothing the feds can do except watch. Their view would be "Shame on the broadcasters for not paying attention in math class."

You have to point the finger somewhere. Radio at some point was trivialized. Sure big groups you can own a half dozen or more stations in a market, that's fine. In the 1940's the Buffalo Broadcasting Company ran WGR and WKBW they were forced to divest with the stations going to separate ownership. While I realize these two stations at the time had a bigger audience share than a half dozen stations do now it might have been a good idea to leave the one to a market rule alone.

 

[Paul_Warren]

Shame on the FCC for putting the entire industry in the hands of people who were bad at math.

You're putting blame in the wrong place. The law doesn't allow the FCC to make those kinds of decisions...The FCC can't discriminate between "good guys" and "bad guys."

I wasn't referring to any specific individual applicants, but rather to the decision to open up ownership limits so wide that a bad business plan would leave not just a station or a company without the resources to serve the public properly, but the entire industry.

 

[SirRoxalot]

FCC policy has been a nightmare of laissez-faire business policies and unintended consequences. The attempt to create more local service with Docket 80-90 put a bunch of lower power signals on the books in an attempt to serve areas grew as a result of population shifts.

Allowing groups to purchase a large number of stations in a single market reduced competition, lowering overall quality. On top of that, the consolidators started playing chess with station COLs, adding fringe signals to larger markets while abandoning the smaller markets that many of those stations were designed to server. The FCC not only let them get away with it, they approved the move-ins.

Then the whole "centralization-synergies-saving radio" debacle led to the run-up in prices, over-leveraging, and visions of "driving rate" just as radio was being challenged by new technologies. The recession didn't help, but radio had actually thrived in past recessions as the "low cost provider" for advertising. This time, many advertisers bailed, opting for the even lower cost of Internet advertising. You can argue effectiveness of either medium, but for too many, the answer was "none of the above". Banner ads are easy to ignore. Commercials buried in the middle of endless stopsets are easy to ignore - or avoid.

It looked like we might enter the "post-bankruptcy" era of radio, where the market would self-correct, but Lew Dickey is leading the charge into "Over-leverage, Part 2". Anybody want to guess where that's going to take us?

Oh, don't worry. "We're from Corporate, and we're here to help."