Revenue

[BossJock1947]

Has anybody ever done the math on revenue lost/gained from firing high paid jocks.

Example: If Debi Diaz makes $150K a year...will kluv make up for it with a 30K talent? Will they gain revenue or lose revenue in middays?

 

[MikeShannon914]

Nobody there is even thinking about that. It's ALL about 'what can we show the stockholders' in terms of saving money anywhere they can, immediately. No one seems to care about any long-term ramifications. THIS is where the problem is in letting beancounters and ex-sales managers run the show...a temporary, quick gain in saved money "looks" much better than trying to sell stockholders on a long-term, well-thought savings plan. Talent be damned.

But please don't remind David Henry how easy his former sales staff had it when they were "selling" names like Terry, Debi, Ken, Chuck, Mary, Sandi, Carla, etc etc etc and gladly wrote the orders as fast as they could get them. Talent doesn't sell, right? Voicetracking, tired playlists, weak contests, syndicated filler, inexperienced "talent" and liner cards do, right?

"This is...............CBS."

 

[longtimelistener]

I've done the math. If KLUV's mid-day ratings are down only 5% next year because Debbie isn't there CBS will lose a LOT more money than whatever she was likely being paid. Penny wise & pound foolish---I suppose you've heard of the major clusters doing that before.

 

[little1]

Has anybody ever done the math on revenue lost/gained from firing high paid jocks.

Example: If Debi Diaz makes $150K a year...will kluv make up for it with a 30K talent? Will they gain revenue or lose revenue in middays?

Yes the math has been done.
And there's one important thing to remember. Much advertising is based strictly on demographics and ratings. Advertisers are buying the demographic they want (women aged 35-44, Men 18-24, teens 12-17, Persons 25-54, etc) much more than a specific jock. So advertisers on KLUV are probably buying to reach the P45-54 age group, more then they are to reach "Debi Diaz's audience'. As long as KLUV doesn't lose that audience, a large chunk of their advertisers will stay around.

Now will some people quit listening to KLUV because Debi's gone? Maybe. But most probably won't. If KLUV's ratings and revenue just stays flat, they're up 100K+.

(And here's something to think about -120K a year is 10K a month, 2500 a week. 400+ dollars a day for a 6 day week. That's 100 dollars for a 4 hour shift. Even at 5 hours, 80 bucks an hour. Now how much of that hour does a jock actually 'work'? Sure we can get into a discussion of show prep, and having bits, and working the phones, but in my time at KLUV, there was a lot of 'that was----, this is---- on 98.7 KLUV". Let's say 5 minutes of actual airtime? Can you blame bosses for questioning 100 bucks for 5 minutes of 'real' work?

It's totally different in the talk world, where it's much more personality driven. But in music radio? I'm tuning in for the 60's 70's and early 80's oldies first, Debbie Diaz second.

And if you don't think that's true ask yourself if you'd tune in to hear your favorite jock doa format that you absolutely hate? Let's say you liked Chapman on KVIL and KLUV. Now Imagine Ron Chapman on Z-Rock. Would you sit through the metallica and Pantera just to hear Ron? Of course not. music listeners tune in for the music first, the personalitys second...

 

[NealH]

The revenue equation I want to know is how rate cards compare now to 1980. I'd be willing to bet that ad rates have gotten cheaper, not more expensive, when adjusted for inflation and factoring in all the retarded combo-ing that goes on thanks to consolidation.

 

[davideduardo]

The revenue equation I want to know is how rate cards compare now to 1980. I'd be willing to bet that ad rates have gotten cheaper, not more expensive, when adjusted for inflation and factoring in all the retarded combo-ing that goes on thanks to consolidation.

Cost per point in major markets has increased ahead of inflation until last year. The amount paid per listener by ratings driven advertisers is a good index since it does not matter how many stations there are, just the value per listener.

The easiest way to see this is to look at the market revenue. In 1980 the market revenue was $54 million. In 2006, it was $428 million. Factoring in market growth and inflation, that looks pretty good.

 

[NealH]

Cost per point in major markets has increased ahead of inflation until last year. The amount paid per listener by ratings driven advertisers is a good index since it does not matter how many stations there are, just the value per listener.

The easiest way to see this is to look at the market revenue. In 1980 the market revenue was $54 million. In 2006, it was $428 million. Factoring in market growth and inflation, that looks pretty good.

Fair enough explanation, but why then is radio in the dung heap if revenue has far outpaced inflation? Did the big boys saddle themselves with too much debt when they went on their buying sprees? Are there too many VPs at the corporate offices drawing bigger paychecks than they deserve?

 

[Lancer]

Bean counters are only concerned with the current quarter. If they make the current finances look good then they are happy.

They could care less about the future, they will deal with that when it happens.

 

[Steve Eberhart]

Has anybody ever done the math on revenue lost/gained from firing high paid jocks.

Example: If Debi Diaz makes $150K a year...will kluv make up for it with a 30K talent? Will they gain revenue or lose revenue in middays?

Yes the math has been done.
And there's one important thing to remember. Much advertising is based strictly on demographics and ratings. Advertisers are buying the demographic they want (women aged 35-44, Men 18-24, teens 12-17, Persons 25-54, etc) much more than a specific jock. So advertisers on KLUV are probably buying to reach the P45-54 age group, more then they are to reach "Debi Diaz's audience'. As long as KLUV doesn't lose that audience, a large chunk of their advertisers will stay around.

Now will some people quit listening to KLUV because Debi's gone? Maybe. But most probably won't. If KLUV's ratings and revenue just stays flat, they're up 100K+.

(And here's something to think about -120K a year is 10K a month, 2500 a week. 400+ dollars a day for a 6 day week. That's 100 dollars for a 4 hour shift. Even at 5 hours, 80 bucks an hour. Now how much of that hour does a jock actually 'work'? Sure we can get into a discussion of show prep, and having bits, and working the phones, but in my time at KLUV, there was a lot of 'that was----, this is---- on 98.7 KLUV". Let's say 5 minutes of actual airtime? Can you blame bosses for questioning 100 bucks for 5 minutes of 'real' work?

It's totally different in the talk world, where it's much more personality driven. But in music radio? I'm tuning in for the 60's 70's and early 80's oldies first, Debbie Diaz second.

And if you don't think that's true ask yourself if you'd tune in to hear your favorite jock doa format that you absolutely hate? Let's say you liked Chapman on KVIL and KLUV. Now Imagine Ron Chapman on Z-Rock. Would you sit through the metallica and Pantera just to hear Ron? Of course not. music listeners tune in for the music first, the personalitys second...

I actually couldn't agree more with this post. As an air talent, this is not exactly what you like to hear, but it is reality.
One should also remember the role we all play in the puzzle of radio (or any industry). Jocks job is to entertain in whatever format they are asked to perform within. Management's job is to keep things operating smoothly and create a profit, the highest profit possible. Sometimes that takes hard decisions. I can tell you those who decided not to retain Debbie Diaz did not make that decision lightly. Have you ever had to fire someone? It's not an easy thing to do. You know you could be ruining their career, certainly upsetting their lifestyle, and perhaps causing serious problems for the individual concerned. There are some ruthless people in management sometimes, but most are not and labor over these decisions very dilligently. I don't expect any of them WANT to fire people. They have a job and sometimes difficult decisions must be made. What you may not know is how long they put off that decision. How long ago were they asked to make that decision and chose to find other ways to tighten the budget until it became impossible to do so any longer. There is usually a lot more that goes into it than "hey let's just blow them out and rock on".

I don't know what Debbie made at KLUV, she's been there a long time and through merit raises alone was probably doing pretty well. The problem is if she was making over $100K (good for her) then yes, that is a position that is being overpaid. It just doesn't require that high of a salary to accomplish the goals of a midday shift in this market on that particular station. In the heyday of KVIL those shifts did require that kind of committment because the station was predicated on talent first, everything else next. There aren't many of those stations left outside of talk radio. Think about it. Talk radio hosts ARE the product, so it requires more from a talent standpoint. A music station these days is less about the air talent and more about the music, promotions, marketing and then maybe air talent. Yes, we'd all like to think that as an air talent we are the most important factor and the point of difference, but the industry and marketplace hasn't evolved in that way, perhaps sadly....but it is reality.

 

[davideduardo]

Fair enough explanation, but why then is radio in the dung heap if revenue has far outpaced inflation? Did the big boys saddle themselves with too much debt when they went on their buying sprees? Are there too many VPs at the corporate offices drawing bigger paychecks than they deserve?

The issue in the last two years has been the "pre-recession" and the actual deep recession. Advertising is often the first expense to be cut, and ofteen the deepest.

Many large radio companies were built with little debt, using equity trades for acquisition or simply doing mergers. So, while some, like Citadel, are endangered by debt in a time of recession, others don't have that problem. Then again, what was safe debt in 2005 may be risky today because margins are down or non-existent.

Other than a few egregious excesses, spawned in another time and economic situation, there is no evidence that the corporate management is any more a burden than it was for Storer, Metromedia, Rounsaville, Taft and other publicly traded broadcast companies in the early 60's!

There is an effort by some posters to blame programming and management for the current state of radio. The real issue is the overall economy. Radio, as a service industry, gets pneumonia when the rest of the economy gets a cold. Remember, radio revenues were continuing to grow up until 2007 despite iPods and satellite and all the other new media.

 

[WheredidMergeGo]

Has anybody ever done the math on revenue lost/gained from firing high paid jocks.

Example: If Debi Diaz makes $150K a year...will kluv make up for it with a 30K talent? Will they gain revenue or lose revenue in middays?

Yes the math has been done.
And there's one important thing to remember. Much advertising is based strictly on demographics and ratings. Advertisers are buying the demographic they want (women aged 35-44, Men 18-24, teens 12-17, Persons 25-54, etc) much more than a specific jock. So advertisers on KLUV are probably buying to reach the P45-54 age group, more then they are to reach "Debi Diaz's audience'. As long as KLUV doesn't lose that audience, a large chunk of their advertisers will stay around.

Now will some people quit listening to KLUV because Debi's gone? Maybe. But most probably won't. If KLUV's ratings and revenue just stays flat, they're up 100K+.

(And here's something to think about -120K a year is 10K a month, 2500 a week. 400+ dollars a day for a 6 day week. That's 100 dollars for a 4 hour shift. Even at 5 hours, 80 bucks an hour. Now how much of that hour does a jock actually 'work'? Sure we can get into a discussion of show prep, and having bits, and working the phones, but in my time at KLUV, there was a lot of 'that was----, this is---- on 98.7 KLUV". Let's say 5 minutes of actual airtime? Can you blame bosses for questioning 100 bucks for 5 minutes of 'real' work?

It's totally different in the talk world, where it's much more personality driven. But in music radio? I'm tuning in for the 60's 70's and early 80's oldies first, Debbie Diaz second.

And if you don't think that's true ask yourself if you'd tune in to hear your favorite jock doa format that you absolutely hate? Let's say you liked Chapman on KVIL and KLUV. Now Imagine Ron Chapman on Z-Rock. Would you sit through the metallica and Pantera just to hear Ron? Of course not. music listeners tune in for the music first, the personalitys second...

And on top of that, DJ X could be the most beloved DJ in radio and station Y could have stellar ratings but if all those wonderful listeners aren't buying the product being advertised during DJ X's show, then are the advertisers really getting any return on their dollars?? If not, how long do they keep pumping dollars into something that isn't working?

Let's say you ran a station that played "smooth jazz"!! And you had great ratings and a great on air staff. DJ's making hmmm 80K. At first you can afford to pay them as you can sell the idea to advertisers you are the only smooth jazz station in the market. They pump cash into the station via advertising dollars and the peasants rejoice. Fast forward to a year later, the advertisers aren't seeing a negligible return on their dollars so they start to pull out. The people are listening cause they love the music but they aren't buying the Geritol and just for men! So as the boss, can you still justify paying 80K to DJ X?
OR
Do you hire cheaper "talent" or even automate, your still playing the music the people want to hear, and your operating costs are a fraction of what they were, you can then sell cheaper advertising and keep making a buck. The listeners still don't really care as they are hearing MORE of the music they tuned in to hear in the first place, and you are running a station that isn't losing money. Rating go up, and the cycle continues!