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Since "Change" is the Current Buzzword...

S

SirRoxalot

I originally started to write a response to some of comments in the "WHTT Flashback Weekend" thread, then decided that the topic deserves its own thread.

To quote Bob1370,
When you take the value-added of live, local, entertaining personalities out of the radio mix, you reduce radio to a jukebox with commercials. You remove the last incentive to listen, and encourage people to go to their iPods, cassette decks and CD decks, where there's never a commercial, and you know you'll like every song played because you bought or downloaded them all.
Click to expand...

He then goes on to cite the example of WCBS-FMs journey from live-and-local to Jack and back to live-and-local. That - and recent events around town - led me to think about the relationship between programming and revenues.

Since beancounters love numbers, let's look at radio revenue since 2003 from Radio Ink's published RAB summaries:

2003 - Total +1%, Local 0, National +6%,

2004 - Total +2%, Local + 3%, National 0%, Non-spot +11%

2005 - Total 0, Local +1%, National -2%, Non-spot +1%

2006 - Total +1%, Local -1%, National +5%, Non-spot +10%

2007 - Total -2%, Local -2%, National -5%, Non-spot +11%

2008 (1st quarter) Total -5%, Local -6%, National -11%, Non-spot +15%

So, what's happened in the last five years? More specifically, what's happened to the product - the radio listening experience?

Nationwide, we've read about more and more job cuts. First, it was the "Jackification" of America. Lately, it's the "Seacresting" of America. Local talent is replaced by syndication and/or voice-tracking. The immediacy of radio - once its strongest attraction - is removed from the equation.

On the sales side, it's obvious that local is the backbone of revenue. Total revenue mirrors local revenue so closely because local revenue is the bulk of money coming through the door. Non-spot, or Non-Traditional Revenue goes up huge percentages, but is such a small part of the total that it's impact is limited. Yet, considerable resources are thrown at NTR, and there's a real push by corporate management to boost NTR.

On the client side, if you have a budget of $5000, and you commit to a radio buy, the sales person is supposed to press you on NTR. So, what do you do? Your budget is still $5K. So, you work out a deal to put $4500 into the radio buy, put $500 into a website promotion with the station, and get "bonused" another $500 in "mentions" promoting the website promotion. How's that show up on the balance sheet? Local is down 1%, NTR is up big compared to 0 dollars last year/quarter/month. Corporate, who's trying to sell Wall Street on the "health" of radio, points to big gains in NTR in order to show how radio is "adapting to new media".

I've got a few ideas:

1. Focus on RADIO. Fix the PRODUCT - radio programming. Radio differentiated itself from 45s, LPs, 8-tracks, cassettes, and CDs by providing MORE than music. The same is true for MP3s and on-line streaming services. Radio is a companion for people. Good radio establishes a relationship with the listener. LOOK AT THE SUCCESSFUL SHOWS. They're more than just a "music machine". Even the Future of Music Coalition gets it - people usually find new (to them) music on the radio.

2. Let LOCAL management MANAGE. Edicts from corporate that "we're going to go with syndication because we've got a multi-market deal with ___" end up displacing good local jocks, in spite of their success. Does Kiss really need Seacrest? How about that awful syndication at night on Star? Is it true that Citadel has issued a corporate edict that 7-Midnight WILL be VT or syndication - leading to the end of Slick Tom's very successful radio show? Let LOCAL management make those decisions, not corporate. Local management certainly has the best handle on how to judge the impact of programming on revenue. Let them decide whether a live jock is revenue positive, negative, or neutral.

3. Remember the Peter Principle. Just because some people rose to the top doesn't mean that they haven't reached their level of incompetence. Don't reward them for failure.
 
Rox, great points!  Too bad we don't have the email addresses of Farid, Judy, Lew, Jeff, Mark, Bill, David, et al and their bean counting CFOs.  I would love to forward your posting to them. 

There's a lesson here and unfortunately, none of these big wigs are likely to benefit from what you have to teach them. 

Meanwhile, corporate stock prices keep falling, the radio death watch continues and these fat cats are sitting on their golden parachutes wondering what went wrong!
 
Re: An open Letter....

x13thfloorrand said:
Great points, Rox.
Can some be attributed to less local and regional election buys? Absent that, those are telling stats:

All Access published an 'open letter' which speaks to many of those same topics. It's tied into to the recent historic Presidential election.

http://www.allaccess.com/mail/eblasts/After_The_Cuts/after_the_cuts2.html
Click to expand...

X13th, R-I apparently thought so much of that "open letter" that it's today's "On the Mic" column. I read the column a few days ago after it was sent to me by a friend. I'm sure that it influenced my thought process. I'm also sure that I'm not the only one who sees the current state of radio as a direct result of "top-down" management by people who have little connection with actual consumers of their product, the people that produce it, and the sponsors that pay the bills. Radio isn't the only industry facing huge problems due to a "vast high-level conspiracy" to reduce costs at the expense of the long-term health of the enterprise.
 
Wrong Citadel

AndrewLawson said:
This analysis seems pertinent to the discussion here: http://www.thestreet.com/_yahoo/video/cramermarketupdates/10444400.html?cm_ven=YAHOOV&cm_cat=FREE&cm_ite=NA As you folks say, "switch your sarcasm detectors to 'on.'"
Click to expand...

As apt as the video is in describing Citadel Broadcasting's response to their current financial situation, Cramer was actually commenting on Citadel Investment Group, a Chicago-based hedge fund led by Ken Griffin. There's no linkage that I'm aware of between Citadel Investment Group and Citadel Broadcasting.

Cramer has already expressed his bearish opinion about radio on his show...

BTW, I disagree with Cramer's view of radio's future - and especially with his predictions about the success of Sirius/XM post-merger.

PS - Citadel BROADCASTING would be dancing on Wall Street if their stock was down ONLY 35% in the past two years.
 
It’s interesting isn’t it how the different threads intertwine. I started out with the intent of posting this on the Fairness Doctrine thread which had been shunted to one side, but it perfectly fits in with the theme of “change” One of the contributors to that thread complained that the discussion was endless and pointless. Endless, perhaps. But pointless??? Hardly - unless one is so tied up in today’s way of doing business as to ignore what’s happening all around you. Deep denial, anybody?

The manner of Senator Obama’s victory is very revealing of the public mood. He suggested that tearing down one’s opponent by the kind of sleaze and character assassination that worked in previous elections (including the victimization of Senator McCain in the 2000 primaries) must not work - not this year. And it didn’t. Whatever one might think of Senator Obama’s politics, he ran his campaign like a gentleman and a respectful, responsible, disciplined leader. Just maybe, if radio proprietors ran their stations the same in the same spirit, they would change their way of doing business and abandon the contemptible blowhards, mostly on the far right, who make their living on insults.

It’s totally managements’ affair how they choose to program their stations, but they are too dumb to look beyond their short-term noses. They act frozen in the face of competing technologies and, as far as news-talk formats are concerned, they refuse to admit that airing some really obnoxious, offensive and insulting material alienates half or more of their potential audience. This reminds me of the short-sighted former election strategy of the Democrats, whose conventional wisdom used to be that they could win the Presidency by targeting only 18 states or so, conceding the remainder without a contest. Then Howard Dean came along as chairman and, in the face of strong opposition, instituted the 50-state strategy.

Bill Figenshu’s open letter linked to earlier in this thread makes it clear that there are radio people – unfortunately, too few in authority – who understand that they have a common interest with listeners in quality radio, and what radio needs to do about it.

What I see is an industry in severe denial relative to both content and technology.
 
Re: Wrong Citadel

SirRoxalot said:
AndrewLawson said:
This analysis seems pertinent to the discussion here: http://www.thestreet.com/_yahoo/video/cramermarketupdates/10444400.html?cm_ven=YAHOOV&cm_cat=FREE&cm_ite=NA As you folks say, "switch your sarcasm detectors to 'on.'"
Click to expand...
As apt as the video is in describing Citadel Broadcasting's response to their current financial situation, Cramer was actually commenting on Citadel Investment Group, a Chicago-based hedge fund led by Ken Griffin. There's no linkage that I'm aware of between Citadel Investment Group and Citadel Broadcasting.
Cramer has already expressed his bearish opinion about radio on his show...
BTW, I disagree with Cramer's view of radio's future - and especially with his predictions about the success of Sirius/XM post-merger.
PS - Citadel BROADCASTING would be dancing on Wall Street if their stock was down ONLY 35% in the past two years.
Click to expand...
My bad, Rox. Thanks for diplomatically setting the record straight. As you pointed out, it' mildly funny how the shoe actually fits broadcasting's dilema. In the future, I'll pay more attention to footnotes and attributions.
 
Belief Half of What You See...

AL, you weren't the only one fooled by that video. It made the rounds on a couple of other boards before the error was detected. The video is a frighteningly realistic depiction of the Citadel radio's situation - except Citadel radio isn't playing with its own money, and they're down way more than 35%.

To quote Edgar Allen Poe...

"Believe nothing you hear, and only one half that you see."
 
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