Jim Cramer Says: Radio Is Dead

[DToTheJ]

Quote from Radio & Records:

"... the ultimate dead deal is Clear Channel … We all know this, but you cannot short it because the deal will come. If it breaks down, the stock will probably go to the low twenties...

Radio is finished as we know it. But it doesn’t seem to matter to people who are in radio. They have always talked a big game and they will continue to talk a big game..."

All this coming from someone who deep down is probably bitter that his radio show was canned from not one, not two, but three different syndicators. But I digress...

Mr. Cramer's complete spiel on the topic can be accessed here:
http://www.thestreet.com/video/10402694/cramer-its-over-for-radio-stocks.html#10402694

 

[lalumia]

the truth hurts, eh?

 

[davideduardo]

the truth hurts, eh?

This is the "truth" from someone who, despite their noise and bluster, is right less than half the time.

But, for a moment, let's say he is "right." We have to put this in context. The real meaning is, "radio, today, is not a good investment." Kramer is not managing or working for a station. To him, radio is a sector to invest in... or not.

To that, I say "maybe."

Radio companies that pay dividends have good supporting cash flow. High-octane growth? Nope. But radio has not been fueled by growth for some time... it is fueled by profits at the good, healthy, viable stations. That's not sexy on Wall Street and among the day traders. That's why solid companies like GE have stagnant share prices, and biomeds with no profits ever command astronomical prices.

Most of us are not buying a station this week. Most of us are not day trading. Many of us sell commercials and campaigns to advertisers, in markets big and small, who get results from radio. Lots of us hope a more sane approach to the quality of product vs. short term expense cutting will prevail everywhere; at some groups this was never an issue.

There are nearly 14 thousand radio stations in the US. A few are bad, many have greatness in their local markets. But that greatness is not what the stock traders worship. I'd rather praise the good stuff... like the LA cluster I work with which raised nearly $3 million for St. Jude last week. That's the radio we can be proud of, and many, many stations have similar stories.

Caguy posted a big truth. The satellitee ad campaigns that demeaned terrestrial radio started a blizzard of negativity that pervails today. Unfortunately, all to many people believed the hype and did not check the reality.

 

[raydofan]

Quote from Radio & Records:

"... the ultimate dead deal is Clear Channel … We all know this, but you cannot short it because the deal will come. If it breaks down, the stock will probably go to the low twenties...

Radio is finished as we know it. But it doesn’t seem to matter to people who are in radio. They have always talked a big game and they will continue to talk a big game..."

All this coming from someone who deep down is probably bitter that his radio show was canned from not one, not two, but three different syndicators. But I digress...

Mr. Cramer's complete spiel on the topic can be accessed here:
http://www.thestreet.com/video/10402694/cramer-its-over-for-radio-stocks.html#10402694

Cramer was great on Stern last week.

A friend of mine-who is high placed in the syndication business-likes to micturate all over Howard Stern and Satellite ("that sounds really funny-too bad no one heard it") but pushes other shows by boring hosts with limited appeal. He doesn't like to hear my predictions a la Cramer. He likes his job.

The wave of the future-nothing new here-is minimize talent, and maximize the bird; removing that troubling 'human element'. Satellite removes the middleman, the FCC, a lot of funds needed for regulatory lobbying. Who's fighting? A lot of A-hole office weasels who would rather keep their large house and the kids' college fund-that beat upon the talent, who they see as totally dispensable. Radio has truly eaten its own.

So how long do you think it will take traditional radio to 'go dark' in its current form?

 

[davideduardo]

So how long do you think it will take traditional radio to 'go dark' in its current form?

Decades.

Our current form is based on content, not how we deliver content. Radio operations with great content will deliver in the best way possible and that is not limited to AM and FM.

 

[Jnavin]

"If it breaks down, the stock will probably go to the low twenties..."

Oh, it'll be much, much lower than that.
A bunch of signals in an antiquated technology?
What's a buggy whip company worth these days?

 

[radiotower40]

The sad part about this whole story is it does not have to be this way. If we could get radio stations into the hands of local people
who care about their station and the community that it serves, and get it out of the hands of CC, CBS etc. If they would put on formats
right now that targeted teenagers that may not pay off right away but would build a future "customer" base. Right now people under
20 for the most part are listening to I-pods. For one reason because all their friends are, and because radio today offers them nothing.
If you give them a reason to listen to radio they would. Like I have already said if we don't get radio back into the hands of people who
love radio and have a passion for it and out of the hands of people who only care about profit margins, radio will continue to be a shell
of it's former self.

 

[raydofan]

So how long do you think it will take traditional radio to 'go dark' in its current form?

Decades.

Our current form is based on content, not how we deliver content. Radio operations with great content will deliver in the best way possible and that is not limited to AM and FM.

So why the clinging to HD as an additional revenue stream possibility? Is it not just an altered form of the traditional, but with less ease of operation?

Until the internet is available to consumers with the ease and steadiness of a station with a large-radius signal, I would say the darkness is closer than you think.

As far as 'content' is concerned-well, that talent pool is getting smaller and smaller for numerous reasons. One is radio's desire-seemingly-to eat its own.

What content do you speak of? I get it all on satellite and the internet.

 

[Tom Wells]

Radio's not dead, it's not a sexy investment, that's all.

Business is one thing, and investors look to rising valuations. They are as bad as "flippers" in real estate.
Radio, as an art, is poorly served by answering the investors only.
Art will always be hampered by subservience to the dollar.
Jim Cramer is speaking to investors.
Hopefully those who want to use radio to fatten corporate returns will eventually grow weary of the limited (not stellar) returns, and
radio will shake off these parasites.

The same thing happens when anything seems profitable as an investment.
Classic cars are a good example. When the stock market is performing poorly, an "art form" such as 60's-70's performance cars
becomes an investment vehicle. Are the buyers "really" "car guys"? No, but they do make it difficult for the true fans of such
autos to own such. Valuations go up and down, as more and more "brokers" try to make money on the limited resource.
Eventually something else catches the investor's eye, and a measure of true valuation returns.
Hopefully, many will get out of radio as an investment vehicle, and (painfully) we will return to something closer to actual value.
Let us hope that the medium is poised to grow as soon as those who toy with it as a "financial vehicle" are bored and leave.
Oh, it'll still make money, but it won't be enough for the day traders to bother with.

 

[TheGreenskeeper]

Over? Did you say "over"? Nothing is over until we decide it is! Was it over when the Germans bombed Pearl Harbor? Hell no! And it ain't over now. 'Cause when the goin' gets tough...

 

[davideduardo]

Over? Did you say "over"? Nothing is over until we decide it is! Was it over when the Germans bombed Pearl Harbor? Hell no! And it ain't over now. 'Cause when the goin' gets tough...

The "who" bombed Pearl Harbor?

A. Germans
B. Japanese
C. Klingons
D. All of the above in an alliance.

 

[raydofan]

Over? Did you say "over"? Nothing is over until we decide it is! Was it over when the Germans bombed Pearl Harbor? Hell no! And it ain't over now. 'Cause when the goin' gets tough...

The "who" bombed Pearl Harbor?

A. Germans
B. Japanese
C. Klingons
D. All of the above in an alliance.

Obviously, you missed one of Belushi's finest moments.

 

[daveallen99]

So how long do you think it will take traditional radio to 'go dark' in its current form?

Wellll... I think, no matter what Kramer says, every market will have a few heritage music signals with well-defined brands that hang on, and on, and on. That light AC station or country station or urban station that dominates? I think those stations could go on billing literally forever, no matter what technology comes along.

Everybody else? All the wanna-bes? The signals in anymarket, USA that are not market-dominating music FMs? In about ten years, I don't think we'll have any more of those. Those stations will be brokered-to-whoever wants to buy the air time, or attempt to flip to talk and take on the heritage talk stations, or the licenses will simply be handed in. I think the thinning-of-those ranks will start on a large scale in about 5 years (wanted to at least try to hazard a guess and answer your question, David!).

Talk stations in general will be viable longer (20 years? Again, just guessin'), but that's ONLY if new, compelling hosts come along, and the current crop of Becks, Limbaughs, Hannitys, etc... are replaced by new talent when they retire.

Good thing radio is developing all kinds of new on-air talent!

 

[SuperRadioFan]

Obviously, you missed one of Belushi's finest moments.

ROFLOL!!! ;D ;D

You're probably not surprised he missed it, right? He also needed to be schooled as to who/what Cliff Claven is/was

Sorry David that's the truth!

However I agree radio will be around a while, though I am listening almost exclusively to the Internet when I am in the office and if I listen at home, its usually the I-net as well (except for Handel in the Morning). BTW I AM listening a lot to the stream of an over-the-air station WXPK 107.1 The Peak because there is ZERO AAA station in LA and even San Diego's KPRI is a poor comparison to the Peak. Of course a lot good that does WXPK's advertisers haw!I did get a kick out of hearing Jimmy Fink talk about NYC's weather today... Sorry about that folks

from sunny 80 degree Orange County CA

 

[shirl]

There ya go blaming the Klingons for this, Klingons for that.......

 

[davideduardo]

[
You're probably not surprised he missed it, right? He also needed to be schooled as to who/what Cliff Claven is/was

Sorry David that's the truth!

You may be surprised to know that most of America does not get either of those references.

 

[davideduardo]

Obviously, you missed one of Belushi's finest moments.

I barely know who Belushi is.

 

[raydofan]

Obviously, you missed one of Belushi's finest moments.

I barely know who Belushi is.

IMDB.com

 

[herethere]

"You may be surprised to know that most of America does not get either of those references."


Are there numbers to back that one up? ;D

 

[whit979]

I think most people who have replied to this topic are missing a huge point. Yes -- we have iPods. Yes -- we have MySpace and other on-demand outlets. But what many seem to forget is that we also have a nation of over 300 million people. That's a few hundred million people who are potential listeners -- aka customers -- of terrestrial radio. Should we, as an industry, re-examine our approach to creative, compelling radio content? Absolutely...we should at every station, coast to coast. But too many radio programmers, managers, and pencil-pushers are making extreme assumptions: about how the audience at-large is listening, what they own, and what's on the horizon. Keep in mind that not even half of all Americans have Internet access in their home! I wouldn't even want to venture a guess on the number of iPod/mp3 owners. So while these new technologies seem like the "next big thing", let us not forget the millions and millions of late adopters, who will hold onto their plain-flavor terrestrial radios for decades to come. The industry is as viable as it ever was.

Bottom line: Don't give the entire industry a death sentence based upon sales of crap at Best Buy. Terrestrial radio is here for a long time to come.