Jim Cramer Says: Radio Is Dead

[radiorob2.0]

Radio was considered dead about fifty-five years ago. It was the independent mindset of those like Todd Storz, Bill Stewart and Gordon McLendon that reinvented the medium. They took advantage of research indicating radio was still perceived as a source of music. This went along with that new electronic portable device called the transistor radio. The kids carried them around and the rest is history. Today, the kids carry around a new electronic portable device, it's called a media player. Radio is no longer the only portable source of music and entertainment (read: the internet, cable, and other attention grabbers) that didn't exist back then.

Today, the independent mindset doesn't exist to figure out radio's next move to survive. Just like in 1953, corporate radio is incapable to perform this task. Especially today, there are end of year bonuses to protect.


Bottom line: You have to give them a reason to listen.

 

[oaktree]

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.

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.

Great idea! You've got it! You get it! Now...reality check:

1. You get radio stations into the hands of local people ... how? First of all if YOU don't have any money, YOU won't get local people to spend a dime in an investment such as radio stations.

2. Radio stations are poor risk investments for private investors and for banks ... who have shunned radio investments for years. Why? Return on investment is risky. Why do you think there is no "real value" to most radio stations? They are leased from land to tower, to buildings to equipment. There is little "asset value." Staffing becomes, unfortunately, an expensive proposition ... with no guarantees that YOUR winning format will a) be popular in a competitive marketplace, b) attract numerous advertisers on a consistent basis -- not depending on any change in the local or national economy and c) because radio's track record in fiscal management for profits (since the 50s) is not that great. Less than 50% of stations today make money.

3. With high interest and debt-leveraging (because corporate radio cannot survive on onesy and twosy radio deals like they could 40 years ago ... there is a great deal of debt service. That's right ... you have to pay debt every month ... be it to stockholders or to your bank account, to pay for the purchase price. Owners don't take "paper" on many, if not most radio station deals today. Once sold, they don't want the station back due to your "miracle format" not working and the debt-service goes south. You can lose a radio station very quickly doing business that way ... and this is business. Ask Clear Channel, Citadel, Emmis, Entercom, Cumulus and everyone else who is losing their shirts today.

You are correct about the teen base. Absolutely right on. But everyone knows that teen tastes change like day and night. What happens when your "best format" or business model starts to falter when things change because tastes, trends, etc. change? Who do you think pays for that? You think investors stand idly by and say, "This too will pass?" Believe me ... they don't You'll be out of business (and this is a business) in three months. Ownership is no time for "experimentation" or "patience" when it comes to spending money ... yours or other people's.

You'd damned well better care about profit margins. Radio stations don't come cheap and you're pretty much out there in a sea of financial sharks (investors and stockholders) who want only two things: Their money back and profit from that investment. Period.

"Passion" alone will not guarantee you success. There are plenty of great sounding radio stations that, unfortunately, don't make "enough" money.

With "other modes of delivery" of the product that radio used to call it's own, radio, today, does not provide the leading way it once did. It's now about content and delivery ... not just "live jocks, great liners and new jingles." It's about where people are when they listen to what THEY want (not what corporate thinks they want) and what they listen to for that content. The Internet is it. Not terrestrial radio.

And you, from what it sounds like, are a 24/7 AM listener, right? I bet not.

It's a business, my friend. Deal with it. Before you can fight the war ... know, first, who the enemy is. Then, have a plan...not a "hope" on how to fight it. The fight like hell, know the costs, be capitalized to do so and then, you might have a chance to win.

Finally, you can't, today, live in the past. It will never return. What Storz, McLendon, Drake, Joseph, Burkhart-Abrams and so many others created back then was focussed on a medium that was king. It reinvented itself out of necessity. There was TV. There weren't 14,000 thousand choices of radio like today, no satellite "radio", no Internet, no MP3 players, no iPod, no cellphone.

Radio, as we knew it, was exciting, live, alive and vibrant. Today ... it's voice tracked, understaffed and underperforming financially because advertisers don't like what radio offers to many times and because there are other alternatives.

Time's ... they have changed.

But instead of rhetorical thought ... how about some solutions to your thought ... and, please, base it on how you would do it from a business viewpoint ... because without knowing business ... you don't know how to save radio. Do you have any ideas? And please ... don't say it's HD. Where do you get the money?

 

[oaktree]

Sorry...accidental post.

 

[oaktree]

PS -

"Over? Did you say 'over'?" he says. "Nothing is over until we decide it is! Was it over when the Germans bombed Pearl Harbor? Hell no!"

And ... Cliff Claven was the mailman on "Cheers." (I'm in the demo for both.)

To date, over 100,000,000 iPods have been sold ... most (80 percent) in the US. Millions of other MP3 players have also been sold worldwide.

Internet penetration is debatable, but probably higher than 50%. 75,000,000 people alone in the US listen, according to Arbitron, to Internet radio each month. Think about the numbers that don't ...

 

[davideduardo]

Radio was considered dead about fifty-five years ago. It was the independent mindset of those like Todd Storz, Bill Stewart and Gordon McLendon that reinvented the medium. They took advantage of research indicating radio was still perceived as a source of music.

Actually, there was no research except empirical evidence, like the "café waitress in Omaha" story. What they took advantage of was the fall of the Musicians' Union and Petrillo which opened up fulltime music programming with much easier conditions.

This went along with that new electronic portable device called the transistor radio. The kids carried them around and the rest is history.

The first Top 40 station debuted in Omaha in August of 1952, and it played adult hits, not rock and roll. The transistor radio was about four or five years in the future at the time.

Today, the kids carry around a new electronic portable device, it's called a media player. Radio is no longer the only portable source of music and entertainment (read: the internet, cable, and other attention grabbers) that didn't exist back then.

We have had "on the go" media players since the 8-Track. Cassettes, CDs, etc., have all expanded the ability of consumers to take personal music collections with them. Even the "fat spindle" 45 player in the 50's was an example of making non-radio music sources highly portable.

Today, the independent mindset doesn't exist to figure out radio's next move to survive.

Actually, the answer is what it has always been: content. Broadcasters who are more than a juke box with an antenna will survive.

Just like in 1953, corporate radio is incapable to perform this task. Especially today, there are end of year bonuses to protect.

Actually, it is only the larger broadcasters who can afford to maintain the big talents in radio that will be able to do that... although a parallel in smaller markets based on localism and service will also be an element in survival.

 

[davideduardo]

"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

No, just deductive reasoning. People under a certain age, and those over a certain age would not be familiar. Those who were not in the audience for movies or TV shows that contained such expressions would not, either. And many members of ethnic groups would not enjoy that rather "white" humor. Finally, immigrants since the date of those references would not have a clue about them, either.

Rough guess is that the "Germany" reference would be familiar to maybe 20% at the most, and the Cheers character (it was Cheers, wasn't it) to perhaps 35% of the population. Everyone else is out of demo or culturally not in the target for those productions. This is the same reason I don't find a thing on Seinfeld funny... it does not relate to me.

 

[davideduardo]

And ... Cliff Claven was the mailman on "Cheers." (I'm in the demo for both.)

That would be thirty something to fifty something, not ethnic and not immigrant, right? I'm not in demo!

To date, over 100,000,000 iPods have been sold ... most (80 percent) in the US. Millions of other MP3 players have also been sold worldwide.

I can't find it right now, but the foreign sales are more like 45% for iPods.

Internet penetration is debatable, but probably higher than 50%. 75,000,000 people alone in the US listen, according to Arbitron, to Internet radio each month. Think about the numbers that don't ...

There are about 235 million 12+ in the US, so only about 30% listen on-line. And if you do research, you find quickly that questioning has to be very specific. When you ask, "do you use a computer" you get the people who use a computer to take orders at Mickey D. When you drill down to personal use, the numbers collapse. While some may listen to radio online at work, that may be because they can not use a regular radio, due to interference or regulation... so that does not cut into radio listening as such is not an alternative.

 

[radiotower40]

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.

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.

Great idea! You've got it! You get it! Now...reality check:

1. You get radio stations into the hands of local people ... how? First of all if YOU don't have any money, YOU won't get local people to spend a dime in an investment such as radio stations.

2. Radio stations are poor risk investments for private investors and for banks ... who have shunned radio investments for years. Why? Return on investment is risky. Why do you think there is no "real value" to most radio stations? They are leased from land to tower, to buildings to equipment. There is little "asset value." Staffing becomes, unfortunately, an expensive proposition ... with no guarantees that YOUR winning format will a) be popular in a competitive marketplace, b) attract numerous advertisers on a consistent basis -- not depending on any change in the local or national economy and c) because radio's track record in fiscal management for profits (since the 50s) is not that great. Less than 50% of stations today make money.

3. With high interest and debt-leveraging (because corporate radio cannot survive on onesy and twosy radio deals like they could 40 years ago ... there is a great deal of debt service. That's right ... you have to pay debt every month ... be it to stockholders or to your bank account, to pay for the purchase price. Owners don't take "paper" on many, if not most radio station deals today. Once sold, they don't want the station back due to your "miracle format" not working and the debt-service goes south. You can lose a radio station very quickly doing business that way ... and this is business. Ask Clear Channel, Citadel, Emmis, Entercom, Cumulus and everyone else who is losing their shirts today.

You are correct about the teen base. Absolutely right on. But everyone knows that teen tastes change like day and night. What happens when your "best format" or business model starts to falter when things change because tastes, trends, etc. change? Who do you think pays for that? You think investors stand idly by and say, "This too will pass?" Believe me ... they don't You'll be out of business (and this is a business) in three months. Ownership is no time for "experimentation" or "patience" when it comes to spending money ... yours or other people's.

You'd damned well better care about profit margins. Radio stations don't come cheap and you're pretty much out there in a sea of financial sharks (investors and stockholders) who want only two things: Their money back and profit from that investment. Period.

"Passion" alone will not guarantee you success. There are plenty of great sounding radio stations that, unfortunately, don't make "enough" money.

With "other modes of delivery" of the product that radio used to call it's own, radio, today, does not provide the leading way it once did. It's now about content and delivery ... not just "live jocks, great liners and new jingles." It's about where people are when they listen to what THEY want (not what corporate thinks they want) and what they listen to for that content. The Internet is it. Not terrestrial radio.

And you, from what it sounds like, are a 24/7 AM listener, right? I bet not.

It's a business, my friend. Deal with it. Before you can fight the war ... know, first, who the enemy is. Then, have a plan...not a "hope" on how to fight it. The fight like hell, know the costs, be capitalized to do so and then, you might have a chance to win.

Finally, you can't, today, live in the past. It will never return. What Storz, McLendon, Drake, Joseph, Burkhart-Abrams and so many others created back then was focussed on a medium that was king. It reinvented itself out of necessity. There was TV. There weren't 14,000 thousand choices of radio like today, no satellite "radio", no Internet, no MP3 players, no iPod, no cellphone.

Radio, as we knew it, was exciting, live, alive and vibrant. Today ... it's voice tracked, understaffed and underperforming financially because advertisers don't like what radio offers to many times and because there are other alternatives.

Time's ... they have changed.

But instead of rhetorical thought ... how about some solutions to your thought ... and, please, base it on how you would do it from a business viewpoint ... because without knowing business ... you don't know how to save radio. Do you have any ideas? And please ... don't say it's HD. Where do you get the money?

[/quote DEAR OLDTREE, Do you care to share with the rest of us on this board which big radio company you work for? :-*

 

[DashRiprock]

De-regulation and corporate ownership have screwed things up, but I agree will Belushi. It ain’t over. Not by a long shot.

Radio is not just AM/FM broadcasting, radio is show business. There will always be show business.

 

[DToTheJ]

... I agree will Belushi. It ain’t over. Not by a long shot.

Gee, where have I heard that before?

BWAHHHHH...

 

[DToTheJ]

...Time's ... they have changed...

DEAR OLDTREE, Do you care to share with the rest of us on this board which big radio company you work for? :-*

As a friend of the "mighty oak" and without speaking on his behalf, I can assure you he is a level-headed individual with a prime game plan.

 

[Kenroberts]

Jim Cramer is a Phenomenal TV personality. That's what he is. If you look at his recommendations, and you look at the results, you will find out where he came from. If you do the opposite of what he says, 99 percent of the time, you will make money. His bashing of radio is a way to short the stocks and eventually change his mind, start to recommend and then cover the short. He is very smart, he makes a lot of money. Take what he says with a grain of salt and you will always prosper.

 

[board_manager]

Some posts have been relocated to Take It Outside

http://www.radio-info.com/smf/index.php/topic,92655.msg708578.html#msg708578

 

[oaktree]

Thanks, DJ ... much appreciated, my friend.

And I might add, I am proudly and successfully independent, not a large conglomerate. But I'm honored and humbled by the thought.

- Oaktree -

 

[oaktree]

My understanding is that Cramer is right almost half the time. In baseball, that would be phenomenal. OK, let's say he's right 40 percent of the time. That's a pretty good batting average. 30% would get you millions. It was, if nothing else, food for thought. And if he calls a "short" ... and profits, then, good for him.

The bigger question ... what group does he call? I'd bet on Citadel, first.

 

[davideduardo]

My understanding is that Cramer is right almost half the time. In baseball, that would be phenomenal. OK, let's say he's right 40 percent of the time. That's a pretty good batting average. 30% would get you millions. It was, if nothing else, food for thought.

In investments, if two thirds of your investments go down, and a third go up, and the average increase is equal to the average loss, you lose. In general, you have to be right 51% of the time or better.

 

[larnov]

Everyone of those stock shows should be banned, They are all idiots.
Watch the Sat AM shows on FOX, They all say Stocks will make you rich this Year.

They all say Bush Is God and all Democrats will bring the end of the world withen hours of taking office.
Then they give there Stock Tips to make you rich withen 1 Month and then all 4 of the other panelists say that the stock is Crap and you will go broke. I have never seen more than 2 of the 5 people agree on a stock. They are all commiting fraud.

 

[adma]

Everyone of those stock shows should be banned, They are all idiots.
Watch the Sat AM shows on FOX, They all say Stocks will make you rich this Year.

They all say Bush Is God and all Democrats will bring the end of the world withen hours of taking office.
Then they give there Stock Tips to make you rich withen 1 Month and then all 4 of the other panelists say that the stock is Crap and you will go broke. I have never seen more than 2 of the 5 people agree on a stock. They are all commiting fraud.

Yes, but as Neanderpaul said in another thread...

All money is green.

'tis the lifeblood of society. Can't blame them for catering to the masses. That's just good business.

Whether you like it, or not.
: