Summer Board Reflections

[John FL]

A while back, the Business of Radio Board introduced a string regarding the worst radio markets in the country. Jacksonville radio has some very definitive bright spots and does certain things very well. IMHO, our market has not earned a place for that negative distinction.

We have in WOKV a really good operation. Occasionally, I’ll check out news/talk operations in much larger markets. Maybe part of it is what a person gets used to hearing and being comfortable but for a market our size, WOKV is probably the best example of that big city sound.

Then there is the talent. I’m convinced they make a huge difference in our market and listeners do respond to those who are genuine and relevant to them. For all those who advocate automation and voice tracking, it’s still good to see the prime time of radio – morning drive – has a pulse and has those on the air who know the market and they deliver far better than automation ever could.

What is reality is I would bet the farm all the major GMs in our town have been engaged in a cost analysis justifying the salaries of the morning teams on WQIK, WEJZ and WGNE. Obviously, the salary expense has been proven necessary to actually enhance revenue and market share. These teams are truly professional in that distractions do not exist on the air. It wouldn’t surprise me if there isn’t a certain amount of anxiety when the ratings come out. Love of radio makes many endure quite a lot. Our town is very well served by the local teams on those 3 stations. Alas, there are still way too many who have earned a place but are on the outside looking in. More on that later.

Do you recall a time when WAPE and WFKS were in a virtual horse race in the ratings? Here’s what I believe is a perfect example of what happens when the right person calls the shots and listeners relate to what they perceive as local and relevant.

Clearly, the PD over at WAPE makes a difference. In my travels, I’ve noticed an increased number of radios tuned to the morning show on WAPE. I don’t listen enough to comment on that program but one would think either they are doing something very right or MJ on WFKS just isn’t as good. To me, MJ was always overrated and all I see in him is a big ego with an insecurity that even I have picked up in casual listening.

But where I really believe WAPE became the more relevant station can be traced back to the untimely passing of Michael Jackson. WFKS was running pre-programmed voice tracking crap while WAPE responded and broadcast what was happening in real time. It became just about the biggest story of the year. WFKS was a day late and I believe many dollars short as a result. Yet another case where spending money can actually make more money in the long run. For many, it's the exception and not the rule.

More to come.

 

[John FL]

The other day Clear Channel indicated they would like the FCC to relax ownership rules and local ownership rules. We are once again hearing the need to be competitive and blaming radio’s recent economic downturn on increased media competition. Holly Cow!

Even beyond radio, there is so much sameness everywhere you turn. Mom and pop establishments are dying because they can’t compete with the giants. Good grief, CC is complaining of competition? What in the hell is a small operator to say?

I don’t have any faith in our politicians. Their motivation is to get re-elected and have a legacy where monuments are built in their honor. Money buys votes and so the small radio operator finds it very hard to stay afloat. People can point to CC’s success but let’s face it, if you own a good part of the real estate and others copy your methods, listeners just settle in as they have no choice when virtually everyone does the same thing. Success is then based on all the same formulas and business strategies.

It wasn’t too long ago that all we heard was how there was going to be a big sell-off and all these small operators were going to come in and offer a different kind of radio. I must have received dozens of emails over the years from well-intentioned people who told me not to give up. A small operator would see the virtues of many of the things I have been fighting for and would be more apt to seek alternative roads to success.

Now, the forecast is revenue is on the rise. Expenses have been cut to the bone. It’s anticipated the next couple election cycles will see tons of ads find it's way on the radio. In virtually ever other business, when revenue goes up, hiring goes up too. I never believed there would be a sell-off nor do I believe radio will invest in hiring more talent. Commercial real estate is down big time. This isn't rocket science but the biggest goal for radio is to keep the value of their clusters high. Owners and shareholders will derive the most benefit and listeners, as usual, will just need to be content in what they get.

I recently visited quite a few mom and pop restaurants on a recent trip through the south. For the sake of brevity, all I can say is I was made to feel really valued. The chains were around too but it seems in small town America, there is some kind of peaceful co-existence. I'm in the minority but I see a radio landscape where the big operators can co-exist with the mom and pop operators. There’s little we can do about the big radio operators but allowing them to get even bigger serves no one – except them. I hope it never happens.

For a long time I have been of the mindset that in any industry to include radio, diversity of opinion and varied skill sets and work experience are healthy. We’ve seen so many really good people come and go from our market because they didn’t fit in with the one, big size fits all way of thinking. To think radio ownership can be even further constricted just leaves me shaking my head in disbelief. The well-intentioned Government thought they were doing right for radio in the late 90's. Do they have the capacity to learn? The real answer is very scary.

 

[TheBigA]

I think you're missing one glaring fact: Radio ownership reflects changes in all business ownership in this country.

I was looking back at who used to own radio stations 40 years ago. If you look at the list, you obviously had the big networks, newspapers (until that was made illegal), and various businesses like insurance companies, department stores, and electronics manufacturers. Today, only one major network, CBS, still owns radio. ABC and NBC don't, and Fox never bought radio. As I said, newspapers are prohibited from owning broadcast. In the old days, they were among the best owners, because of the natural synergy between news gathering operations. Local department stores were another big owner. In Chicago, WLS was owned by Sears. Lots of smaller local department stores, like Litt Brothers in Philadelphia, owned radio. Now the stores are all part of national chains. None own radio any more. Electronics manufacturers have largely left the US for foreign countries. It would be nice if Apple or Microsoft got into radio ownership, but that's pretty unlikely. One other group that owned radio was local car dealers. One of the main investors of Clear Channel in the 70s was a car dealer. Today, local car dealers are struggling with declining sales, and a lot of local dealerships have shut down.

The big problem companies like Clear Channel have now isn't the need to buy more stations, but who will buy their smaller stations. A lot of big companies like CBS and Citadel have put stations on the block, and the only people who buy them are investment banks and other radio companies. That's not good. Look around Jacksonville. Who would be a likely buyer if CC sold off its cluster? Who has a spare $10 million? Not too many people. That's the real problem when looking at media ownership today.

 

[John FL]

Welcome BigA to the North Florida board.

You bring up some interesting points regarding past radio ownership. I don’t have the answers but I have studied radio history. If there was any connection between varied ownership of the past, it was that owners entrusted radio people to actually run radio. Today, financial analysts exude a lot of influence. In the past, those who did not achieve goals or who had low ratings etc were dismissed. That’s the way it should be. Today, those who really know their craft are frequently let go for all sorts of reasons. This type of business operation is not limited to CC. That’s another major issue and a practice that has caught on among the copy cats.
As I look at the Jax market, as much as I would love to see some new blood come to our market, I just don’t see it happening anytime soon. If we assume radio is about to enter a revenue resurgence, why would anyone divest now after enduring many down years? Jacksonville is a growing and thriving city but there are also assumptions about the community that are misguided. But the only opinions that really count are from potential investors.

 

[TheBigA]

If there was any connection between varied ownership of the past, it was that owners entrusted radio people to actually run radio. Today, financial analysts exude a lot of influence.

That's partly because the stakes are a whole lot higher. A lot more money at stake. But the other part is that the current owners know more about radio than the insurance companies and department stores that used to own stations. That's part of what changed in 1996. Instead of absentee landlord who entrusted others to run their investment, you instead had radio-only companies owning stations. In the old days, a radio guy could BS the insurance company into giving him a bigger budget. Now, the radio guy was trying to BS someone who knew he didn't need the bigger budget. Say what you will about the guys running radio now. The fact is they were there before deregulation. The other frustrating part for the radio guys is they may know a lot, or think they know a lot, but they don't have the money or the ability to get money to carry out their ideas.

So that brings us back to my original question: Who in Jacksonville has an extra $10 million and would all YOU (or someone like you) to carry out what you'd like to do with radio? John Rook spent ten years crabbing about CC. He finally got someone to bankroll his idea. It lasted a few months, and shut down. I don't think that's an unusual situation. The radio environment has changed in the last ten years, and you can't put the toothpaste back in the tube. You can try what worked ten years ago, and it just might flop. Then what do you tell the money people?

 

[Tibbs4]

Interesting comments here, BigA. Question for you, sir? IF you had $10 M to spend, would YOU spend it on radio stations, even with your background, etc? Is it a wise investment?

 

[TheBigA]

In a word, no. I'm done investing my money in radio.

Which concerns me. If someone like me won't invest in it, then who will?

That's my question.

That's why I say it's one thing to wax philosophically about ownership, and concentration of media, and all the high minded topics on this issue. But at the end of the day, someone has to be willing to plunk their money down and buy a station. Who's going to do it when the current owners cash out? Someone should be worried about that.

 

[John FL]

Big A, You bring a lot of good points to the argument. As for the $10M figure you bring up, that in itself may not be the biggest obstacle for certain investors. The major concern involves commercial lending/lines of credit. Financing today through major banks and lenders have practically ceased. I’m of the opinion banks would consider an investment in radio as speculative and risky especially if the investors are a part of a new enterprise without a proven track record in radio.

It’s fairly easy to create an LLC for example. But realistically, even if some of the investors in the LLC group were former radio folks, banks would be looking at the credit and employment history of every investor for starters. Sporadic employment and occasional late payments on revolving credit (I would assume has happened to displaced talent) would be enough to kill the entire deal. Banks would also look at a station or cluster earnings over the years and if it shows as having variances, I suspect that could be a deal breaker too. If it was known that the intent of the purchase was to eventually flip format, then that could be another red flag to a lender because it becomes speculative.

A more likely scenario is another communications company would make an offer to purchase a station or stations if they have an interest in the market. While perceptions are in the eyes of the beholder, that purchase may not make the radio landscape in any community any better. As is often said, sometimes you have to be careful what you wish for.

 

[John FL]

I think this should put the cherry on top...

Beyond appearing to wax nostalgic to a time and place that is no more, I believe firmly that ownership diversity is healthy for a radio market such as ours. Chalk that up as another reason why I don’t want to see market caps eased creating an almost monopoly scenario for some who are already at unfair advantage.

When I look at ratings no matter the location, my immediate thought is the numbers are based on listening behavior. Should radio concern itself with the amount of time people don’t listen? Today someone walks around with a meter and they could be anywhere a radio is picked up for as little as 5 minutes and that station will get credit. The fact the listener hasn’t a clue about the station doesn’t matter. Advertisers seem content that the listener was at least exposed to their ad and that seems to satisfy today’s business of radio.

So even given today’s methods, no one has adequately explained to my satisfaction how a limited number of owners who operate similarly are able to create a business environment that truly is optimal for all and the medium itself. Maybe it’s something that can’t be measured – I don’t know. But I still believe firmly that too much sameness holds the industry and specific market back as a whole.

Let me just use one station as an example because the story is known by virtually everyone. When WCBS FM flipped from oldies to Jack 5 years ago, the move was clearly done because the trend was moving away from oldies as we knew it and to correct decreasing numbers in 25-54.

Gone was the personality and energy and in its place we had automation and that lifeless sound so common in today’s radio and that includes Jacksonville. Perhaps as much as 2/3 of the audience was gone but all the “right” ones remained. Payroll was slashed and it was just a nice functioning profit center. Perhaps on the balance sheet, all looked hunky dorey but did it create strong bonds and time spent listening? Did it make radio better? Aren't these questions worth asking?

Obviously CBS radio came to their senses and today the station has remained strong Top 5 in 25-54, has been a perennial # 2 in total audience and in May they were #1 overall and I celebrated that moment as if I were on their payroll. It was all the validation I ever needed that there is more than one way to success given the parameters radio must work. As we all know, there are various subsets and targets in 25-54. We also know agency billing does consider the upper end of 25-54. We have numerous stations in our market who alrady benefit from this. But to potentially increase time spent listening as well as cume in our upcoming PPM world do not sound like some far out strategy to me. Tell me where I err. The first step I believe is to consider all viable options.

You see all I’m trying to say is this. We had a similar scenario in Jacksonville. But those who run radio here would more than likely be perfectly happy with Jack, its limited demo-appealing audience and no payroll and no life. I believe when radio is exciting and it motivates people to listen longer – everyone really wins. When driving around, listeners do bounce around from station to station. But they have to turn the radio on first. I think there’s opportunity to have that happen more often. It just makes better business sense to me.

Beyond all the financial considerations, opportunity should exist for other players. If and when that happens, I believe competition really is a healthy thing for everyone, especially the listener.

 

[TheBigA]

Beyond all the financial considerations, opportunity should exist for other players. If and when that happens, I believe competition really is a healthy thing for everyone, especially the listener.

Maybe. Maybe not. You really don't know. Opportunity exists now for other players. They're not taking it. Then what?

 

[Tibbs4]

You're with me on this. My heart says "yes." Fiscal responsibilty is another subject that rips my heart. It's tough watching a business (in general) slip into the gray area of "go for it." Certainly,
the prices have adjusted down, as have revenues, etc. I appreciate your honesty on the subject.
Thing is, there has to be a way for it to become a favorable buy option. Even low prices doesn't
make a station, group, cluster a good deal. I'd like to hear more of what you are thinking.

 

[John FL]

If we chose to believe business news, major investors in general are just gun shy as there is a lot of uncertainty about the future business climate. BigA asks where the buyers are. But are there really any sellers? Maybe now is not the time. If cashing in happens down the road, any significant buyer would have to believe radio is a viable long term investment. Is it? If uncertainly exists in how radio will compete 5-10 from now or what the ultimate effects technology will have on its value, new investors will go elsewhere.

Then we have CC. While requesting an ease in market caps involves more than radio, maybe these guys are anticipating a favorable media business climate. Maybe they see radio as part of what ever comes next. Who really knows. At this point anyone’s guess or prediction is valid.

Lastly, BigA – I should have been clearer. You are correct. An additional player in a market does not always equate to a better environment.

 

[John FL]

My original intent in starting this string was to bring up change and in the real scheme of things if we are better off as a result. Early in the summer a bunch of us decided to meet at the Riverside Market and then walk along the riverwalk to the Landing. On the way behind the T.U. building we got a big dose of reality. There must have been hundreds of newspaper vending machines all lying on top one another rusting away in the sun as they are no longer needed. For a moment I thought of radio too and wondered if all the traditional clock radios would meet a similar end one day.

We decided to have lunch at the Italian restaurant in the center of the Landing and I did what I do best – I observed people and their behavior. There was an obvious satellite station playing in the background featuring 60’s, 70’s and 80’s hits. Every song was a winner in my book and the overall sound was simply alive. Many from various age to gender to race responded by either singing along with the songs or dancing. The fact that a local radio station wasn’t broadcast said a lot but it didn’t surprise me. I find this to be the case more and more in my travels. But apparently radio only cares when people listen – not how much.

That week was the beginning of a little hiatus from my contractor job. Before leaving, my boss who I have known for over 10 years during my real career, treated me to lunch at one of my favorite spots in St. Augustine. It was nice getting paid while on a joy ride. It turns out he was an oldies fan and with all my radio discussions at work he figured he found a perfect send-off. On our way, I heard an actual broadcast from the old Cool 96.9 on CD from early 2002.

Our timing was as close to real time as you can get. We were in the car at high noon and there delighting my senses and literally bringing a tear to my eye was that wonderful Cool Café. Pat was at the helm and as much as I thought I understood Pat’s on-air style, I never realized just how much he effortlessly allowed the caller to be the star in those brief moments. As I heard the music featured that hour, I came to the conclusion that CBS FM TODAY regularly plays practically everything I heard. To me, it shows they really were ahead of their time and certainly they knew what they were doing. Today, after over 5 years we hear the same one liners, the same reminders of commercial free flights and even the same TV commercials and told too it’s still “new.” This is supposed to be progress because the balance sheet says it was the right decision. I consider it a travesty. When one considers all those who had real talent apparently banished from our market, I have to wonder why is radio so unforgiving and so reluctant to give opportunity to those who have earned a place.

When I started this post, I talked a lot of mom and pop operations. While away recently I found this little place where I went nuts over something I’m not supposed to eat – fried chicken. I guess I was carrying on so much that the owner actually brought us a (blank) load of chicken on the house. I’ll never forget what he said – try getting extra chicken free at a chain. He was right.

I know a number of people who manage chain franchise restaurants. They aren’t allowed to change recipes, all portions are weighed, salad can’t have more than 2 olives and on and on it goes. There’s so much science and cost analysis going on I often how chefs can put up with such nonsense. But it’s business. At the mom and pops you get an owner who delights in your enjoyment and if you want that extra meatball – no problem. But just like all those newspaper vending machines – so much of what was once so mainstream and familiar - are just going away in the name of progress.

Much of today’s radio has similarities to a chain restaurant. It satisfies a need but there’s just that little something that is missing. True, an additional or new owner coming to town can deliver more of the same. But perhaps not and I’ll take my chances that someone else would take a different road to achieve success. I hope it happens – I have little else on a local level.

The bean-counters would discourage a customer from getting that free extra meatball but the repeat business and customer satisfaction generated from that are priceless. Some don’t see things that way – some do. I say there is room for both. I'm hoping it happens - and soon.

 

[TheBigA]

Some don’t see things that way – some do. I say there is room for both. I'm hoping it happens - and soon.

They exist now, but like the mom & pop restaurant, it requires you to seek it out, rather than go to the most convenient spot on the highway. Most people don't take the time. But if you look beyond the exit on the interstate, you'll find lots of them.

 

[Stormychuck]

TheBigA, nice read from you, outstanding observations, all right on point. Look forward to reading more from you TheBIGA, you obviously have first hand information and you absolutely know what your talking about, and that's refreshing in today's radio world to finally read something from somebody who really knows radio and whats going on and without allll the babble and saying a whole bunch of nothing.....

Keep up the good work TheBigA...

 

[John FL]

Yes, Chuck I will acknowledge your comments in the spirit in which they were given. The Big A has a really good perspective on radio and other things as well. His opinions are among the several I make a point to read as often as I can. We have been on opposite sides of certain issues and sometimes he has made me very angry. But he is one who gets me to think and I have learned quite a lot about the medium I love through his many posts.

I dream of lots of things and different ways to get there. The Big A has grounded me more than I care to admit as he deals in facts and reality – a winning combo.

The whole point about this string was about change. Maybe I’m just at that age where so many dog-gone things are swirling and changing around me that I don’t know what is up or down anymore. Things familiar are like a security blanket and I can admit that here and now.

But in the end, the posters and massive number of readers to these boards are united in one thing - wanting radio to succeed. Few of us may think alike as to how to get there or what the real or unreal problems are. Few would bother to visit the website if one thought process prevailed. I think it’s pretty cool to express differing opinions, learn, grow and even retract stupid comments every now and then and I’m pretty good at that.